Newly eligible to invest (retirement mostly). Next steps?

[raz]

pdq wrote:
And even though we all like to, picking stocks (on your own or per a broker's rec)

A broker is a salesman. He make his nut on your buy/sell orders - not on whether you do well or not.

I had a good friend who became a broker for a while. He apologized to me afterwards when he'd realized just how bad the data was that he had been fed.

[anonymouse1]

This lets me realize how lucky I’ve been-I’ve always had access to low fee 401ks with a wide range of market-tracking very low fee options, including retirement-age based funds that balance between a market index fund and bonds. There are emerging market options, etc. and the 4% match is free money! Most years I’ve made 5 to 10%-i pick aggressive options.

Sarcany wrote:
[quote=anonymouse1]
What’s wrong with putting the total amount ino the 401K, assuming there are good investment options?

1. Not a valid assumption. You're stuck with whatever funds they allow you to put money into. Most 401ks are structured to pay off the investment firm and fund-managers first. You're an afterthought at best, and your investments are entirely subject to the whims of the fund managers who may not care whether they lose money on a downturn because they've got their own millions or billions safely invested elsewhere.

You can easily make 7-10% putting your money in a tracker ETF in the market while your 401k makes 2-3% and charges you monthly or yearly fees for the privilege. The main benefit of a 401k is simply that it's a small amount regularly set aside from your paycheck. That doesn't mean it's going to grow to fund 25 years of retirement.

2. 401ks were not supposed to be retirement vehicles. They're designed to provide tax-deferred executive compensation. Using them as a substitute for a pension rarely works. The money has none of the protections of a pension, the people running the plans don't have fiduciary duties as with a pension.

https://www.cnbc.com/2017/01/04/a-brief-...etire.html

https://www.nasdaq.com/articles/the-surp...2013-07-08

"We know after 30 years of this 401(k) experiment that people do worse in 401(k)s than they would have if their money was in a traditional plan or if it was in a plain vanilla retirement account," Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at The New School for Social Research, told PBS's Frontline in April.

...Despite the growth of 401(k) plans, there's an estimated $6.6 trillion deficit in what Americans currently have in savings compared to what they will actually need in retirement, according to an analysis by theCenter for Retirement Research at Boston College.

[Acer]

We max out our IRAs so 401K is the only tax-advantaged retirement option remaining for additional funds, or am I wrong on that?

[Sarcany]

Acer wrote:
We max out our IRAs so 401K is the only tax-advantaged retirement option remaining for additional funds, or am I wrong on that?

Maybe a HSA if you have a qualifying high deductible health plan.

There are other devices, but they can be tricky to implement as a tax-advantaged savings vehicle. Insurance policies and trusts are sometimes used that way.