The tax benefit of the 401(k) is awesome, and the higher your tax bracket, the more of a steal it is. Most people with the means to max out their 401(k) will save on taxes by doing so.
Whether you're in a position to max out or not, once you get the match, you have to decide what to do with your savings.
Can you max out your 401(k)?
• Center for Retirement Research – 6.7% contributed max
• 72% contribute enough to get full employer match
• Of those with incomes over $100k, 28% maxed out.
What should we do with the money saved?
• Bulk up emergency fund
• 44% of Americans have less than 3 months cash savings
• A patch for tough times
How about debt and maxing out 401(k)?
• Pay off cards before investing beyond match
• It's like earning interest on investment, risk-free
• Also pay down student & car loans, and mortgage
Other suggestions regarding maxing out 401(k)?
• Invest in your career
• Consider a Roth or Traditional IRA
• Max out before investing in a taxable account