Some companies will offer a 401K retirement plan or 403b/457b for State/City and County employees
These allow you to contribute more to a retirement account
In some cases, private companies will do a matching contribution (typically up to $500/year) for a 401k
You should absolutely take advantage of this contribution as it offers a 100% rate of return
If you deposit $500, they will deposit $500
You should always determine any matching fund offers from your company and take advantage of the 100% return regardless of you wanting to invest personally or with a brokerage
These plans have a $22,500/year limit (based on 2023)
These funds are tax-deferred
Uses pretax dollar to contribute
Taxed based upon income tax bracket after 59.5
Early withdrawals subject to 10% penalty and income taxation (since pretax dollars were used)
What is their annual return?
How are they invested?
Do you want to actively manage your funds?
Do you have the time to manage?
Can you get a return bigger than the retirement plan?
If your investments did not work out, will that impact your current budget or your ability to retire?
Are you able to get bigger and better returns than the funds consistently?
If the answer is no, then consider using the fund and investing smaller amounts on the side
e.g. If you had an extra $5,000 a year to invest you could allocate 75-90% to your 401k fund and the remaining into a personal investment account. This allows the fund to grow and for you to attempt to grow your own money
401k's/403b's are held separately from other business activities
Businesses cannot legally take the money for business operations
Creditors cannot go after the funds should a company go into bankruptcy