There are major challenges ahead for the future of the 401k. On today’s show, you’re going to learn the latest data behind why the 401k is headed for disaster. You’re going to hear the latest statistics on retirement contribution, hardship loans, and more.
We’re also going to discuss why the 401k on its own, does not lead to a comfortable retirement. If you’re ready to learn about the future of your 401k, tune in to this episode of Investing in Real Estate!
More About This Show
A 2024 research report published by the Employee Benefit Research Institute found that resuming student loan payments has had a direct impact on how much money Americans are able to contribute to their 401ks, which of course puts a massive damper on account balances over time.
On top of that, more and more people are taking hardship loans from their plans.. Vanguard reported in 2022, a record-high number of workers had to tap into their accounts. The report said that 80% of withdrawals initiated by lower-income participants were used to avoid losing their home, to repair their home, or to pay for medical expenses.
One third of Vanguard participants who took a hardship loan from their retirement plan had also done so the year prior.
The 401k cannot sustain any more pressure. We already know that the average balance of the 401k is only about $112,000. These plans get slowly eaten up by high fees, taxes, and inflation over time. And sadly, this is the primary retirement vehicle most people have in place.
No matter where you look, it’s clear that Americans are struggling. Between inflation, credit card debt, and resuming student loan payments, people can barely pay for their day-to-day expenses, let alone save for retirement.
Most Americans have been told that the 401k is the number one way to save for retirement, but it’s a lie. The 401k has proven time and time again to produce horrible results. And now, people are contributing less and less… there are very few scenarios in which a 401k can produce the results you want.
This idea of basing your entire future on this one retirement plan is fundamentally flawed. But no one is telling you this. In fact, when troubling data like this is released, companies and Wall Street tend to double down. They blame the 401k’s decline on the consumer but forget to mention all of the fees and taxes that play a role in shriveling balances.
I’m telling you, it’s all a lie. According to Business Wire, only 157,000 people have balances of over $1M in their 401k. That is nothing, when you consider how many people are actually contributing to the 401k. And if I had to guess, I’d say that those 401k millionaires just so happen to be CEOs. The 401k is not designed to make the average American wealthy; it’s just not.
But, it’s not all doom and gloom. Everything you need to know about empowering yourself, building out a comfortable retirement plan, and building a financial education that helps you reach your goals is right here – for free.
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