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MAIN FEATURE
The Man Who Invented The 401k Says It's Broken
The 401(k) was created in 1981 by a benefits consultant named Ted Benna.
Three decades later he said his creation had become a monster. He said…
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It had become too complex and there were tons of hidden fees
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He was disturbed how employers shifted expenses onto employees
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For many people it had replaced their pensions which was never the goal
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It benefited the least the people who needed the most
A scathing review from the person who actually created it.
Yet the average American still thinks it’s the gold standard.
Most people assume the 401(k) was designed to provide a secure retirement.
It wasn’t.
It started as a way to let employees save money and delay paying taxes on it. Over time, it also gave companies a way to stop managing pensions and put the responsibility for retirement on their employees.
With a pension, your employer promised to pay you a certain amount after you retired.
With a 401(k), you’re on your own.
Sure, you get a tax break today. But…
You’re responsible for saving enough.
You’re responsible for choosing from the investments your employer offers.
You’re responsible for dealing with market crashes, inflation, taxes, and the possibility that you live much longer than you planned.
That’s a different deal.
THE MILLION-DOLLAR ILLUSION
A million dollars sounds like a lot of money. That’s why it became the retirement goal for an entire generation.
But if you’re retiring 40 years from now, a million dollars will buy a fraction of what it does today.
It sounds greedy to say a million dollars isn’t enough, but that’s just facts.
So the number you were told to chase may not be enough to fund the life you’re picturing.
Maybe you need $2 million.
Maybe you need $4 million.
Maybe you need much more.
It depends on when you retire, how you want to live, how much prices rise, what taxes look like, and how long you live.
But even that misses the biggest problem.
The traditional retirement plan tells you to spend 30 or 40 years building the largest pile of money possible.
Then you retire and start tearing it down.
Every month, you sell a little more.
Every vacation, emergency, or medical bill removes another piece.
The older you get, the less money you have.
You spend your retirement watching the balance fall and hoping you die before it reaches zero.
That sounds like a pretty stressful retirement to me.
THE WEALTHY BUILD A DIFFERENT SYSTEM
The wealthy don’t spend decades buying assets just to sell everything when they stop working.
They build assets that produce income.
They keep multiple places they can get cash when they need it.
They issue credit against their assets instead of selling them and giving up all of the future growth.
They coordinate their income, taxes, investments, cash, and available credit so every part of their financial life works together.
Their assets keep working even when they don’t.
That’s the goal.
Retirement shouldn’t be the day compounding stops.
It should be the day you finally have enough assets to fund your life. And that shouldn’t happen at 65. It should happen as soon as possible.
I’m not saying you shouldn’t have a 401(k). There are still benefits.
A 401(k) can be one part of your plan.
It should never be the whole plan.
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