If I earn $100 and it's taxed at 50% then my after tax earning is $50.
So without a 401k I have $50.
With a 401k I have $100 and then when I withdraw it I have $50. So it's exactly the same as income tax.
The advantage of a 401k comes from the fact there's no capital gains or dividend tax. So say I get $50 and then invest it in a stock and earn a 10% return. I have $55 but that $5 is taxed say at 25% do I have 53.75 now.
With a 401k I earn 10% on $100 so I have $110 then it's taxed at 50% when I withdraw do I have $55 now.
The 401k is better presuming I want to invest the money.
Only if you invest poorly. All my investments have always left me with more money than before even factoring inflation. I do agree the average person likely will end up with less.
Every investment scheme is composed to be more complicated than what the avg peasant can navigate, on (((purpose))). This is why ayh am disgruntled with economists and investors who speak to skillfully navigating the system and explaining the system as if this is a healthy coherent reasonable system. Great if peasant investors managed to come out ahead by gambling but to then advocate for the system bcz of this grift, is why every one needs to lose at the same time.
You're right. It's actually really easy once you understand it but average peasants don't. I work in finance so I know.
Honestly, just take all your money and invest in URTH. That's good enough. You can get a little more complicated than that if you want but if you wanna keep it simple, that's all you need.
>they only pay if
How is that any different. Rolled over or withdrawn, both penalize the beneficiary and favor the banks, as stated.
If I earn $100 and it's taxed at 50% then my after tax earning is $50.
So without a 401k I have $50.
With a 401k I have $100 and then when I withdraw it I have $50. So it's exactly the same as income tax.
The advantage of a 401k comes from the fact there's no capital gains or dividend tax. So say I get $50 and then invest it in a stock and earn a 10% return. I have $55 but that $5 is taxed say at 25% do I have 53.75 now.
With a 401k I earn 10% on $100 so I have $110 then it's taxed at 50% when I withdraw do I have $55 now.
The 401k is better presuming I want to invest the money.
Honestly, just take all your money and invest in URTH. That's good enough. You can get a little more complicated than that if you want but if you wanna keep it simple, that's all you need.