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We all have been told a 401K
• Will replace a pension
• Can help pay less taxes overall
• Maxing it out is the best retirement strategy
This couldn't be further from the truth.
Here's why:
1. Limited Investment Options:
Low investment options with generic investments don't accomplish personal financial
goals.
2. No access before 59 1/2.
You can't access your money without paying a 10% penalty. Horrible vehicle for shortterm requirements.
3. Required Minimum Distributions
You are required to take distributions by age 72 to pay the taxes you saved on.
4. Tax Rate
Your distribution amount is taxed at your ordinary income tax rate, which could
potentially be higher in the future.
This does have a use for the average investor, but its benefits are better for Big Brother.
Yeah, 401k's have their place in your tax strategy. But only if it aligns with your future goals.
Otherwise, the future won't seem that bright.
Did we mention you won't have a guaranteed stream of income for life, like a pension did in the past?
Contact us with "401K' as main message so we can show you how we can help plan.
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