I’ve Never Participated in My Companies 401(k). – Steve

“Dear Steve,

I am 40 yrs old and have been working at the current corporation for about 10 years now. I have not participated in the 401K plan(they do not contribute or match at all). I feel like i am the only one there who doesnt. Now everyone probably have some decent money towards retirement and I have nothing at all towards retirement. 6 months ago, i looked into contributing 3 or 4% and there was nobody available to help me allocate how much to each fund. so i checked the website for each of the available mutual funds, and all of them are at a loss for the last few years so i was stumped. So the other option is to just put it all in the money market which is a 3% or 4% or so return. I ended up doing nothing and still dont participate.

Anyway, My question is, here it is 10 yrs later, was that a mistake not to have been participating? and the other question – is there anything else i can do for retirement,outside of the 401k through my job, that would be just as good or better than this 401k? or is this my best option?? any other comments on this situation would be greatly appreciated too. Thanks so much


Dear Steve,

The stock market is the one area that over time has performed better than almost any other investment. While the market has been down if you look back on a short period of time, you need to look at it like this, right not we are in a valley. The valley is the cheapest and best time to invest. You are buying low and by the time you get towards retirement those stocks would be worth a lot right now. Imagine if you had been diligently investing every payday since 1979, you’d be in awesome shape for retirement now.

See also  I Am Permanently Disabled. Should I Take Money Out of My 401(k) to Pay My Credit Card? - Jeri

Your 401(k) must work with some investment company. I’d suggest you contact that mutual fund company and discuss your situation with them. They will guide you into a fund that meets your current goals and can suggest other ways to invest. Maybe you are a more aggressive investor, willing to take bigger risks for bigger rewards. maybe you are more comfortable with less volatility and more conservative investments.

Now just because many funds have been down over the last few years, not all have. Some have posted good gains, or not lost value. And some over the past year have returned over 60%.

Bottom line, you will never regret saving money for retirement.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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14 thoughts on “I’ve Never Participated in My Companies 401(k). – Steve”

  1. so it seems as though between you and Joe, you are saying to focus first on getting $2000 in savings, then focus on getting out of cc debt, then start the traditional IRA? I guess since it could take many many years to get out of cc debt, i thought i was wasting valuable time of not building anything towards retirement. on the other hand, when the cc debt is gone, there will be so much extra $ to put in the IRA :o) Thanks so much for all of your help and advice!

  2. Yup, thats it Steve. They give you 1 page to fill out and choose to allocate between those funds. Honestly when i joined the company, i had a feeling the 401K was not very good and also no company match or contribution and i didnt really feel comfortable with the whole thing. I really love that idea of getting a self-directed traditional IRA. Do people do this though? is this a smart idea? i remember reading in David Bach’s book last year(start late,finish rich), he pushes big time in using our 401k if our company offers it. with the 401k, the money comes automatically out of our paycheck pre-tax each week. with the IRA, i would have to contribute out of my checking account, so is the tax shelter the same? And isnt there a small limit on the IRA? Also, since i dont know any good financial planners, what do you think about getting an IRA going through my local bank/credit union or maybe through Chase?

    my minimum credit card payment is over $400, i have been paying about $600 or $700 per month on that.
    Thanks again

    • Steve,

      I’d cut back to minimums and get $2,000 in a savings account in case of an unexpected expense so you don’t have to put that back on the card and then go full speed and pay as much as you can each month to pay off the debts. You may also want to look at LendingClub.com to see if you are eligible for an unsecured debt consolidation loan at a fixed rate and it it is a lower interest rate than you are currently paying it could help you get out of debt faster with some certainty.


  3. Steve – If you had no debt, I’d spend the time to help you choose from those funds. With that debt, and no matching, the point is moot.

    For Steve Rhode and me I thing your question becomes “where do I go from here”?
    With no match, you ignore saving for now. You calmly sit with the mrs and figure out how to budget so your debt is paid off on a reasonable plan. Only after you are debt free does it make sense to start investing long term.

    You might hear me state the opposite, but that’s only when there is a good company match.

    This is why most questions are not stand-alone, we ask a question in return and really get to the bottom of the issue. Once the CC debt is behind you, the IRA is good for $10K between you and your wife, enough to not worry about the 401(k) at all.
    .-= JoeTaxpayer´s last blog ..The Naughty Double Ohs =-.

  4. Hi Steve, yes. the spending plan is what ive been looking for assuming we are on the same page. i was looking for something that take how much i make, less all the bills, less additional spending $, and tell me how much is left for investing and saving. I will download your book and refer to that page.
    Hi Joe, yup – i do have $20K in credit card debt as well and no im not saving and also i dont think i could possibly afford 20% for investing.. the monthly credit card payments are a killer and that is really what has been preventing me from saving. my spending is in very good control these days. i rarely use the credit card anymore, just a few here and there. the only things i ever used the card for mostly was 1 inexpensive local vacation per year for the family and emergencies like getting the cards fixed and new tires etc… not too much more than that but wow in 10 years that adds up.
    i wasnt sure if u meant to list to choices here but here they are:
    and thanks so much for your help guys!
    MetLife Stable Value Fund

    Fidelity Adv Government Income T FVITX

    PIMCO Total Return II Admin PRADX

    Fidelity Puritan FPURX

    American Funds Investment Co America R3 RICCX

    American Beacon Large Cap Value Pln AAGPX

    Davis NY Venture A NYVTX

    Fidelity Dividend Growth FDGFX

    T. Rowe Price Growth Stock Adv TRSAX

    Lord Abbett Mid-Cap Value A LAVLX

    Westcore Midco Growth WTMGX

    Delaware Small Cap Value A DEVLX

    Columbia Acorn USA Z AUSAX

    Oppenheimer Global A OPPAX

    First Eagle Overseas A SGOVX

    Lifestyle Portfolios:

    Russell LifePoints Conservative E RCLEX

    Russell LifePoints Moderate E RMLEX

    Russell LifePoints Balanced E RBLEX

    Russell LifePoints Growth St E RALEX

    Russell LifePoints Equity Growth St E RELEX

    • Steve,

      Really? That’s it?

      I’d look into self directed IRA suggestion from Joe Taxpayer. It might be very wise for you to find a local Certified Financial Planner to meet with and get a plan going to meet your goals. It just sounds like the 401(k) offered by your company sucks.

      Dealing with the credit card debt is a different issue. How much are you able to pay towards eliminating that debt each month?


  5. At 40 you are in ‘catch up’ mode. My question back to you – do you have any credit card debt? Are you saving, just not in the 401(k)?
    I don’t want to scare you, but 20% is what you should start saving right now. Read “The Intelligent Asset Allocator”, your library should have it. On my own blog I just posted a beautiful NYT chart that shows that by investing over the decade and spreading the funds between stocks and bonds, the decade wasn’t so bad.
    If you come back here and list the choices, you’ll probably get some good consensus on how to divvy up the deposits. With no company match, an Traditional IRA would be my first choice to invest the first $5000/yr of your savings, if you are within the income limits.
    .-= JoeTaxpayer´s last blog ..The Naughty Double Ohs =-.

  6. Steve, Thanks for the advice. I actually did call the mutual fund company and they actually told me they cant help me but that i should simply choose how much i want to allocate into each fund and each fund tells you how aggresive of a fund it is. Anyway, my other question – is there a way i can figure out what % i can afford to take out of my paycheck for 401k or do you just recommend 2-4% or so?
    Also, being that im starting so late at 40, is it still possible to create some significant retirement savings?
    Thanks again 🙂

    • Steve,

      That’s odd. Most mutual fund companies can direct you to at least an online tool they have to help guide you to the right fund. Who is the mutual fund company?

      Whatever the amount is that you decide to invest, if you don’t have any cash in savings to protect you in case of an emergency, consider first putting at least $2,000 in a boring old savings account first and then maybe putting 70% of your available funds in the 401(k) and 40% in the savings account.


      • The name of the company is The Geller Group.
        Not sure what you mean by “available funds”?
        After putting $2000 into savings like you suggest, i have no idea how much i can afford to then put into the 401k and savings each week where i wont have any issues/problems with paying my bills.

        • Steve,

          The Geller Group sounds like the plan administrator, ask them where the 401(k) funds are invested and talk to those people. To figure out how much you have available to save or invest, create a spending plan for yourself. You can download my book, “Eliminate Your Debt Like a Pro” and look at the section that begins on page 81.



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