Satan’s argument to young people for contributing to a 401(k)

Hello young people! Satan here. Call me whatever you like. Prince of Darkness, Beelzebub, Old Scratch. Heck, call me Stan, if it keeps you from cowering in the corner like that.

Look, I’m here to talk to you about contributing to your 401(k). You’ve heard all the arguments before: You need to save for your retirement, you won’t be young forever, it doesn’t really take that much out of your salary, blah, blah,  blah.

devilheadBut you just won’t budge. Well, let me tempt you. You’ve always wanted that nice car, right? You know the one. But you can’t afford a down payment, and you’re not quite ready to sell your soul for it. Stupid human!

Sorry. I have these outbursts. Did I scorch the couch? My bad.

Anyway, as I was saying. Your company will match your contributions dollar for dollar, up to 5% of your salary, right? You make $50,000 a year, so that means if you save 5%, you’ll have $5,000 after one year (with the match), even if you don’t earn a cent on your investments.

Now, let’s say you quit that loser job after just two years. So you have $10,000 in your account now. After paying $1,000 taxes for taking money out before age 59 1/2, and paying $2,500 (roughly) in federal income tax on the withdrawal, you’ll still have $6,500 left for that down payment. That’s a 30% return on your $5,000 investment, thanks to your employer’s foolish generosity. And that’s not counting any gains you may have made in the funds you bought in the 401(k).

Pretty tempting, eh? Go on, kid. Open that 401(k). You’ll feel 10 feet tall.

Just one thing. Don’t get all impressed by the power of saving and decide to actually, you know, save that money. Stay away from compound interest tables. Don’t start looking up how much you’d have after 30 years. Wait! What are you doing with that infernal phone? Stupid human!

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