@Earthbound_Misfit I believe you, it just hasn’t been my experience. If people are spenders I would think they still would have nothing whether they paid a mortgage or not, and then they also have less equity in their home if they have been paying a mortgage. My inlaws for instance I think would have been better buying a house outright, or paying off a mortgage when it’s possible, because then when they were low on funds they wouldn’t be worrying about losing their house.
@Dutchess_III Actually, @2davidc8 makes a good point. If you don’t have the savings to pay off $60k then how much are you saving now? Or, do you have the savings, but want to know if it is better to use the 401k money than to use savings? Although, I do believe you will save some of the money if you don’t have the mortgage payment, just from knowing you here so many years.
To answer the question of why have a 401k, it’s because the money is sheltered from taxes for many years. If your husband makes $50k a year, and he puts $5k in the 401k per year, the whole $5k goes into the account and then when you do your taxes you are only taxed on the $45k. While the $5k is in the 401k and makes money, that money is not taxed either. Usually interest and dividends you need to add to income on your taxes, but the interest or dividends in the 401k you don’t add to your income on your taxes until you take the money out. For people who make a lot of money it is very beneficial they might be in a 28% tax bracket now, but once they retire they might only be in a 15% tax bracket.