Why doesn't everyone maximize their 401k??

[joe moving]

Originally Posted by mrzod

I come from a pretty frugal family and we always believed in saving until I moved to California. I spoke with some co-workers and they all contribute 6%, which is the max. matching limit set by our employer.

If it were up to me, I would contribute the max of 30% per pay check so I hit the $16k 2009 max. Am I missing something that would preclude people from saving and maximizing their tax benefits? Apart from them having more urgent needs (e.g. buying a car, new family) doesn't it just make sense to save and put away the max. amount of money?

Here are my reasons:

1) Company does not match anything
2) IMO, we are poor enough (low tax rate ) that making out the Roth IRA makes more sense first. After that we start contributing to regular IRA.

Good reasons???

[Braunwyn]

I can't afford to contribute right now (buying a home so we're putting money in the bank). I plan to start this summer. My company does an ok match. They contribute 2%, match 4% than contribute another 5% to a separate retirement account. I haven't contributed since last June and given the down's this past year, it's just as well.

[esya]

I agree it's about timing--and market advice which is for chumps like me that don't really "manage" accts but just do what they are told so the professionals can rake in the dough.

My first one tanked in 1999 and I never did recover from the shock of loosing my first 30K. Why didn't I pull it? because of an address change due to a legal separation and by the time I got the notice it was too late.

By the next time I was really situated in a job to maximize putting aside money, my kids were starting college! So guess where my money goes now. Then, I had one well started and my employer went from a 401K/403B to a state retirement fund status which puts all kinds of longevity rules that I will have to work forever to really make money on.

So I am seriously wanting to pull out the whole damned lot, pay cash for a retirement hovel, and go broke. why should I work my ass off just to pay for other people's kids, govt benefits, etc when at 55 I saw my mom work until she was 70 after raising 6 kids (several adopted) and then take on another one and loose the foster aid money for that kid bec she gave the kid a permanent home--now she has two mouths to feed on one (reduced) social security income, bec my dad died in his fifties.

[esya]

It's not true that it is as accessable as savings. I am ready to retire early due to health problems and find I can't access the funds now without paying taxes anyway. So really it's just govt mandated savings, why is that better?