The 401k is one of the most woefully light retirement instruments ever invented. The maximum amount you can contribute is $19,500 for 2020. Let’s go through how much 401k savings by age you should to live a comfortable retirement.
Although the 401k pales in comparison to a nicely funded pension, even more disappointing than thee 401k is the IRA. With the IRA retirement plan, you can only contribute $6,000 in pre-tax dollars. Further, you can only contribute if you make under $72,000 a year as an individual and $119,000 as a married couple. What about the rest of us?
Meanwhile, you have to make less than $139,000 a year as a single person or $206,000 as a married couple for the privilege of contributing the maximum $6,000 in after- tax dollars to a Roth IRA. I do not recommend doing this before maxing out your 401k.
Give me a pension that pays 70% of my last year’s salary for the rest of my life over a 401k or IRA any time! At least with the 401k, anybody can contribute.