Well that's the question asked by a 26 year old writer, "Are 401ks stupid?". Wow, I can't believe there is a 20-something who doesn't believe in the 401k.
Now she's got reasonable arguments when she says she needs to pay off credit card debt, student loans, car loans. Those cost more than investing in a 401k. However this women gets a company match, so free money. She should be putting in minimally to the match.
But her main argument is she wants to live now. She doesn't want to save money to buy a trailer in 40 years, she wants to buy stuff now. I'd like to know how she plans to live in 40 years? Guess that hasn't hit her yet.
A second issue she raises is the 401k match is not guaranteed, but discretionary where they can be "Nixed" if the business does bad. Also the match usually requires people to stay at certain period of time to "vest". Both valid points, but your contributions are always there. So at least you are saving something for retirement. Also employers matches should be considered "gravy" not the main entree of retirement savings. Many financial advisors say don't count on it and save 10-15% of your income without the match.
Third, while she makes the point highly compensated employees don't get to contribute as much, I'd argue that's not necessarily true. What? Well DH is highly compensated but his company and previous company did something called safe harbour contributions for all employees which meant that everyone could contribute the maximum $15.5k no matter what their income, because the employer put in $X for every employee. Many companies do this to allow their HCEs an opporunity to save as well while not being dependent on lesser wage earners to save. It also helps lower wage earners have something saved for retirement.
Fourth she argues why save in a 401k if you get hit with a hardship withdrawal? Say you kid is ill or mortgage shoots through the roof? Well you should be saving for these expenses outside your 401k. And if you aren't even saving in a 401k, what makes you think you'll save outside of it? A 401k is designed to support you in retirement, not during your working years. Also trust me, if you can't find a penny to save into the 401k which is tax free, you're probably living paycheck to paycheck right now. And if an emergency happened you'd be screwed whether you are saving into a 401k or not. And I'd rather see you have the tiny 401k savings than NONE at all.
Fifth, she says people who save are steady eddies, but she'll have spent her younger years living. And if she's eating cat food at 65, at least she'll have had fun eating great cheese, travelling, and enjoying life.
I'd personally rather eat rice and beans my whole life than eat gourmet cheese for 30 years and suddenly have to eat cat food. A steady diet of knowing what I have to eat is more appealing than having been used to a better quality of life that I'm unable to maintain as I get old. Plus honestly who'd rather have a few luxuries as they age and need it more than when they are young and able to live leaner?
Well you've got a lot of thinking to do Ms Twenty-Something. I'm also a twenty-something, but I'd prefer a slightly different lifestyle than the one you've got planned for your future.