Should I Still Invest In My 401K

401K plans are employer based retirement savings plan that you can contribute to while you are employed. The contributions that you make are often times matched by your employer and then that money is invested in the stock market.

Should I Invest

Yes! Investing in your 401K is a great way to save for retirement and have your employer help pay the bill. Consider that the average stock market returns are going to be 10 percent a year and you will double your investment every 10 years.

What About The Risk Of Losing My Money

Yes, you might lose your money in the stock market, but that is only if you are thinking short term. Remember that the market feasts on those who invest based on emotions, so keeping your everyday reactions out of it and thinking for the future will ensure that you keep your money secure.

Another rule of thumb is to be more aggressive in your investing when you are younger and to be less risky when you are older. The reason is that you have more time to make up your losses if you are younger.

Social Security Isn't Going To Cut It

Unless you have a great level of savings, you aren't going to rely on the government to take care of you. Social Security will pay maybe a few hundred dollars a month, and that isn't going to be enough to sustain your lifestyle. This is assuming that social security may even be around when younger workers start to retire.

This means that you are going to need to invest if you want to have a comfortable retirement. It might seem scary, but you can always hire a professional for guidance as to what you do with your money.

A 401K Makes It Harder To Take Out Your Money

Your 401K account is a great retirement asset because there are so many penalties for early withdrawal. This makes your account less susceptible to you raiding it on a whim. Think about the consequences of taking money out before you are 59 1/2.

-You have to pay a 10 percent penalty on your withdrawal
-You have to pay tax on that amount as well.

This means a 10,000 dollar withdrawal from your account could cost you 2,000 dollars even if you are in the lowest tax bracket. The 401K essentially says that you put your money in there until retirement.

So should you invest into a 401K? Of course you should, there is no reason not to, and very few alternatives to doing so. Your employer will pitch in, meaning that is free money for retirement. The money will continue to grow over time in the market and it will be a great way to supplement your social security income upon retirement.

Cassie Wilson is a writer at


  1. While I agree the answer is "yes" the suggestion that average stock market returns ARE going to be 10% is not accurate or helpful. Over the past 10 years the compound average growth rate in the SPX has been 0.37%. The typical 401k plan participant has not experienced this kind of return. The plan participant needs to take personal responsibility and maintain an attitude of flexibility toward their investment portfolios. Buy and hold is a myth. If you would like to read more about it google "Your Wealth Preservation Center"