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I would suggest you max out the 401K contribution. The money probably can be invested in an equity fund even if there is no index fund option.

My guess is you are at least 30 years from retirement. That is a long time and you can take the stock market risks over that period. If you happen to be very, very bright and really know the stock market will be down over the period from now until you expect to leave, then go for a money market. (You might also get very rich selling your ability to predict the stock market.)

Generally speaking, fewer and fewer jobs have traditional defined benifit pension plans or for that matter any pension plan. Social security is going to need more money then the working people will want to pay. So the bottom line is most people today will be retiring on their own savings - kind of like it was back in the early part of the 20th Century!

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