A generation ago, retirement investing didn’t worry Americans because most had a defined-benefit pension plan that pooled investments by professional outside managers to ensure a fixed payment based on salary and years of service. Pensions would pay you in retirement until the day you died and most would then pay your beneficiary. Now defined-contribution plans like 401k, 403b and 457 plans are the dominant form of employer-sponsored programs. Unfortunately, they were NEVER meant to be mainstream pensions so they do not provide the protection most people need. They were supposed to be simple savings plans as part of a retirement portfolio along with a pension.

But 401k programs are now the primary company-sponsored retirement investment vehicles for most people.  Not only are they more expensive for participants, but unlike Social Security or private annuity payments, nothing is guaranteed in 401k land. You’re handed a lump sum at a certain age and you’re on your own nearly every step of the way. Also, many companies are lowering or eliminating their contribution so what use to be free money from the company is going away!

Additionally, the last decade saw millions of people lose over 50% of their 401k savings because most were  invested in the stock market.  Here are other 
problems with many 401k plans:

  • Some are invested in the company's own stock, so if the company does poorly the 401k does poorly
  • You are told when you can take money out or you pay substantial penalties
  • In most cases you CANNOT freely borrow from your 401k account
  • Many people invest the 401k on their own and choose the wrong type of investment portfolio (after all, most people are not investment experts)
  • It is possible you could outlive your money 
  • You are taxed when you take money rates will probably be higher in the future

Don't just take our word for it. There are many news stories and articles about 401k plans and the effect of the recent financial crisis on these investments that may have outlived their useful time.  Click the links below.

While it is impossible to recover previous loses, you can take action NOW by using your money to purchase risk-free products with guaranteed returns.  These products pay you a consistent interest rate, you can NEVER lose any money you earned previously, in most cases you can take limited FREE withdrawals for life events such as purchasing a house or college expenses and you can take advantage of tax laws so you keep more of what you contribute and earn. 

Contact us to make an appointment to learn more.  Or join us at one of our Money 101 classes to learn how you can take more control of your money before it is too late.

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