Hello and welcome to the forum. I may be repeating what some others are saying, but here goes.
I think you've got some misconceptions and it seems that the comparison you've set up isn't really comparing apples to apples.
There is really only one scenario in which saving in a taxable account is better than saving in a 401(k), and your scenario definitely isn't this
That one scenario where taxable investing might
be better is:
* The 401(k) plan has very high expenses AND you anticipate being in the plan for 15+ years. Not sure about your plan's expenses
* The 401(k) plan does not provide a match. Your plan does provide a very good match - 6% of your salary is good. Many plans only do 3%, many others do less.
I think you've over thought this and went down a rabbit hole. Just consider this: YOUR COMPANY IS GIVING YOU FREE MONEY. DON'T TURN IT DOWN!
Sorry, I almost never write in ALL CAPS but I wanted to get your attention.
OK, on to some specifics.
r2006 wrote:Hello, new member here, I am 52 years old and just started to read about investments and 401k plans. I have no savings and no assets, and I am trying to figure out a plan for my remaining 15 years until retirement (assuming I could work until I am 67).
My company matches 75% for the first 8% on a 401k plan, and I have a question about 401k plans in general.
r2006, let's be blunt here, you're behind and you really need to step up your savings. If at all possible, consider contributing the maximum allowed to the 401(k), which is $17,500 plus a $5,500 catch up for those over 50 years old. If you can't do that, try to work up to it. At a minimum, you should contribute 8% of your salary, whatever that is, to earn the maximum company match you are entitled to. This is not just my opinion. Everything you'll ever read on 401(k) plans tells you that you're turning down free money if you don't contribute up to the point where you get the maximum match.
r2006 wrote:Admittedly, my contribution will be less than $600/month for the 401k and I could end up with $40k more over 15 years, but 401k is taxable, while my savings are tax free. I also understand the 401k contributions are pre-tax, although I don’t see the true advantage, in the end these money will be taxed anyway.
I think this is a misconception.
The "true advantage" of the pre-tax contributions to the 401(k) are that even though they "will be taxed anyway", they are likely to be taxed at a lower rate when you withdraw that money upon retirement. Suppose you're in the 15% Federal tax bracket today. You may very likely be withdrawing
your 401(k) contributions where all or part of those dollars are being taxed at the 10% or even 0% Federal tax bracket. So, rather than taking a 15% tax hit today, you could defer that tax hit until tomorrow and possibly take no tax hit at all.
Given your profile, it's likely that you'll be paying very low or no Federal income taxes during retirement. If that's the case, your 401(k) contributions will be essentially tax-free.
Also, keep in mind that your savings are not
tax-free. You paid taxes on them today, at whatever your marginal tax rate is (defined as the tax rate you paid on your last dollar of income). And you will be taxed every year on the dividends, if any, that you earn on those savings. Finally, upon selling the investments, you'll be taxed on any capital gains (which , granted, is likely to be low based on your profile).