Should you max out 401K if you’re in your 20s?

401K is a retirement fund where you can contribute money, tax-free, and withdraw it upon retirement without a penalty. You will have to pay tax when you withdraw from it, but the idea is that during your retirement, you will be earning less than when you are working, hence, paying less tax. Most companies offer some sort of 401K matching where you put some amount of money in your 401K, and they match a certain amount. I’m sure you have heard “Max out your 401K, it’s the right thing to do.” Then, you start of think “woah, I’m not going to see this money for 30–40 years, but it’s probably the right thing to do.” Well, my advice to you is: “max out your 401K, it’s the right thing to do” — except I will back it up:

It is literally free money. You can literally “put that money in your 401k” and withdraw it, and you made free money, given that your company matches more than the 10% penalty. Example for a company that matches 50% of your 401K contribution (pretty standard): You put in $1,000, your company puts in $500. Your 401K now has $1,500. You can take out the $1,500 at any time with a 10% penalty, so now you will have $1,350. You just made $350, that you can use right away! If you do this, please don’t come yelling at me that you were only able to withdraw less than the $1,350, because you will have to pay taxes — regardless of if you put your money in 401K. Your $1,000 that you put into 401K in the first place was not taxed, and if you didn’t put that money in 401K, you wouldn’t have gotten the full $1,000, there would have been tax deductions, same thing with your $1,350.

Of course, my advice is still to keep that money in your 401K, unless there’s a dire need for the cash, but for those of you out there who work for a company that offers 401K matching, and are not taking advantage of it, start doing so because taking advantage of that and withdrawing it right away is better than not doing it all. In fact, I wish there was a way I could take advantage of your 401K matching if you don’t want to — given the large number of people that don’t take advantage of this, I’m pretty sure I would be able to retire soon anyways if that service existed and I could take advantage of this for everyone… Food for thought: Why isn’t benefits bartering a thing? If someone is not taking advantage of a benefit that they are offered, why can’t they sell that benefit?