My old lady got a new job. It is a very small company that has no 401k, no direct deposit, practically nothing modern financially, or technologically speaking. This being the case, I have been doing lots of research on things like health insurance, life insurance, dental and vision insurance, IRAs 401Ks, etc..

In the process I had a revelation of sorts. It occurred to me that since I am putting 8% of my income into my pre-tax 401k, that at retirement time, I will be taxed normal income rate on every single penny in the 401K. This may very well be into the millions of dollars that I will be taxed on. Since my company matches 50% up to 4% of the money I put into my 401K, this is absolutely free money, and there is absolutely no excuse for passing up free money. So everyone should put as much percentage into their 401K as their employer will match, but beyond that, why stick so much additional money in there in top of that amount, only to have the fine government take 25% of it away when you retire.

The alternative here is our good friend the Roth IRA. If you are not familiar with the Roth IRA, it is basically a traditional IRA with the following differences:

A: The contributions are made from your post taxed money, so the contribution are NOT tax deductible. What does this mean? Well, since you cannot deduct the amount from your taxes, you will pay in a little more, or more to the point, get back a little bit less in your tax return.

B: The contributions can be withdraw any time, without penalty! Since the government already has been paid the taxes on the money, you can just pull it back out if you want to. Here is the kicker though... Assuming you do not take the money out until retirement age, YOUR EARNINGS ARE NOT TAXED!!! What does this mean? This means if you somehow made a trillion dollars with the account, the government gets ZERO.

So the plan is to reduce my 401K contribution down to 4% to get all the free money possible from my company, then put the other 4% into a Roth IRA.

So get off your ass and be smart with your money. When you are old you will be glad you did.