I actually do think that what I said is correct simply because it FORCES you to save for retirement.
Other than that I kind of agree. The non matching part isn't wholly different from putting the rest in a Traditional IRA - you get the tax benefit now but pay taxes when you retire. Now, in my situation I'm being inconsistent - the combined income of my wife and I is too high for the benefits of an IRA, I can still contribute but without the tax benefits. Based on that I choose to put the money in my Vanguard mutual funds instead - this costs me a little money having to pay tax on the dividends and capital gains but that small cost is worth it to me to keep the money more liquid than it would be in an IRA.
But I basically stand behind my statement, too many people just don't save for retirement. I understand some can't but a LOT of people who can choose not to. That's why I like my blanket "max out your 401K (if you can)" so that you guarantee yourself a good amount of retirement savings. If you will actually save the money in other ways, there are certainly other options. Like tax free college savings accounts, etc.
Like I said, you could do worse. But economically, it is just not always the most efficient way to save. I agree that the forced savings is a wonderful aspect of company plans. Hell, I have a handful of clients that have so little discipline that they choose to have extra withholding from their pay just to get a huge refund. It is the only way that they can save for vacations or other short-term items because they spend everything they get.
But, if you have discipline than you will often find other opportunities. For instance, I have a client that just closed out a position of 1244 stock from a company that he started. He has another job and could afford to put money into his 401k, but it makes no sense because 1244 stock is deductible as income up to $100,000 (rather than the $3,000 ordinary income deduction regularly on investment losses). His income bracket will be far lower than normal, even lower than what it will be in retirement. Deducting anything this year will actually *cost* him taxes.
Another example is a family that has a few foster kids. Because the income they get for being foster parents is tax exempt, all the examptions that they receive actually put them in a negative bracket. No joke. They get more back than they withhold every year. These people were stuffing their 457 plan only to find out that it saved them nothing and will be taxed later.
These a just a few examples. I am not disagreeing with you, I am saying that blanket statements like "always max the 401k first" can be big mistakes to the wrong person.
You are right that people don't save enough for retirement. When young people come into my office, they build up these gorgeous retirement dreams and then almost universally are shocked when they find out that the $200/mth they are saving isn;t even close to enough.
It is funny how even those in their late teens have already felt the effects of inflation, but people just forget about it when thinking about their future.
