Should you contribute to a 401(k) over the age of 65?

More and more of our readers are going back to work after retirement because they need the money. Some are offered 401(k) plans by their employers. They wonder whether or not they should contribute to a 401(k). Here's one recent question from a reader:

I am a 72 yrs old man, single, live alone, still working and hanging in there. I will start in a 401K plan with my employer. Half of paycheck will go to the fund, the other half to cover expenses. I receive Soc. Sec, and a very small pension. My debts amount to about $40.000.00, Home equity and a mortgage. Small amount in credit cards. After deductions of 401K and taxes and utilities my take home pay is over $1,000.00 a month. I own my home. Question " How can I maximize my savings and pay off my debts?. I hope to keep working to my middle 70's. Thanks

Once you are over the age of 65, there isn't enough time for your money to grow by a significant amount before you'll need to use it. While there should be some portion of growth stocks even in a retirement portfolio, that portion should be between 20% and 50% depending upon your risk tolerance and the amount of time before you need the money.