It is always a good idea to invest in 401K for a number of resons
- First its pre-tax deduction from your income , which gives changes of you saving in taxes
-your employer matches it , so thats another advantage
-The value of your 401K grows in long term as its ultimately invested in bonds and stock options.History has shows it tends to do so .All financial consultants encourage people to invest when market is down
.Because the layman's rule is Buy when its low , sell when its high :)
However , you would wanna think long term in terms of investing on it .
-First you benifit a lot if you can take the amount after your retirement age (I think its 65 currently) as your taxable income will be very minimum after you retire and so will be your tax on your 401K then
-There is a fine when you either cash and/or take loan from your 401K before your retirement age .
-Plus they will tax you on the remaining amount (As it was pre-tax to begin with)
So the basic rule is if you think you can put aside a portion of your pay now and wait untill you retire in Hawaii :) ,go for it .Else I would think as per my personal situation .
I would recommend you watch Suzi Orman show regularly .She has lot a personal insite on this .You can also email or call on her show personally .
FYI , I invested in 401K when i had opportunity .Since i,m not in US now , i have let it stay and mature so i can be there next to you in Hawaii :)