[dylangs1030]

Regarding your example about 100k and 20k 401k vs taxable 120k, it's probably not fiscally responsible to choose the latter except for certain fringe cases.

Without going into the deep financials, it's much easier to live below your means now in your 20s then when you are raising a family later on in life. It would therefore be wiser to live below your means (even if this means living like a college student in San Fran or NYC) and choose 100k, be relatively frugal, and put away that extra 20k without tax. Starting a solid 401k in your early 20s is one of the most fiscally sound decisions you can make.

I don't mean to criticize your reasoning, I'm just offering another perspective.

[rdl]

It's great to say that (and it may be technically correct), but it's a generalization of cashflow > revenue at startups. If you're established and have a buffer, it's safe to optimize for revenue. Early on, you optimize for cashflow.

If I were a 22 year old with 120k in college debt, I'd probably prioritize building a cash hoard. Plus, there are actually investments in operational stuff which will give you a higher return than even compounded 401k gains, and making those early might make sense. e.g. spending $500 to learn a key technology, living in a place which exposes you to the cofounders of your first startup or your future spouse, etc.

401k > college loan repayments above the minimum, probably generally true -- loan repayments are risk free, but it would depend a lot on the rate. If it's a 9% college loan, and you're in a 22% marginal tax bracket, and can get 3% return on your money, yeah. If you financed your college education on credit cards, ...

[throwmeaway33]

This entirely depends on your loans.

If you're loan rates are larger than the rate you're making in your 401k, then it's better to pay off the loans.

[rdl]

There's also marginal income tax rate vs. compounded gains to take into account. You can also deduct some student loan interest.