The 401k hoax is a pretty strong statement but that is potentially what one of these plans is.
A quick breakdown of a 401k; It is money that is typically invested in stocks and mutual funds. The market goes up, so does your money. But that is not a guarantee because the market can go down and when it does so does your money putting it at risk. Also it ties up your money until you retire unless you want to pay penalties and taxes on early withdrawals.
A lot of people assume that a 401k plan or mutual funds is the best way to save for retirement especially with all of these pop culture experts and gurus advising us to invest in them but let's take a look at a financial analyst warning: "The American public has been lulled by political and corporate coercion into depending on the 401k as the primary long-term investment vehicle. Wall Street and the stock market has become the focal point for providing a comfortable retirement for the average American. The 401k is an emphatic promise to the middle-class that they will be able to live off of the income that they receive from stock ownership, just like the rich do. It is a promise that is impossible to fulfill, it is the great 401k hoax ".
There are three main threats you need to protect yourself from to retire with a peace of mind. First is the loss of your money within the market from downturns and once you lose your money it can become extremely difficult and frustrating just to break even. Second are taxes and third is the interest you pay your money.
Something else that I wanted to point out is that most people don't even know who their 401k manager is not to mention their financial background. They also don't know what funds or even the companies their money is invested in? In my opinion that is a very risky gamble when considering your retirement money is something you want to be able to depend on.
I want you to think about this, you constantly hear your employers talking about a 401k plan and how they match your funds that you deposit which some interpret as free money. The 401k plan is estimated to have around 10 trillion dollars in qualified plans which in turn make it a trillion dollar business. The 401k is a business people, do not get that misconstrued or twisted. Do you agree that, that's a lot of to trust in the hands of Wall Street advisors and their computer systems which cannot guarantee that you will receive the your invested money?
John D. Rockefeller is quoted with saying "If I had to give advice, it would be keep out of Wall Street."
Just ask yourself, is there the possibility and I'm saying just a "possibility" that investment bankers, stockbrokers and their brokerage houses are a little more concerned with their own assets? Could they be passing on these Wall Street strategies knowing that without your investments they can no longer thrive?
As some of you may know, that conventional wisdom preached from financial experts, gurus, and TV personalities isn't always true and it's definitely not set up to make you "the average American" rich. Their main focus is to force feed you these get rich techniques to keep enough content in the magazines or their radio stations to keep you tuned in for the duration. Not all of them are like this but I want you to be conscious of the fact that there are some personalities out there that do this. For the most part, Wall Street was never set up to make the citizens of the nation rich, but it was more so geared to enhance those who are inside those gold-plated walls financially.
We all remember the government bailout after the market crash; Let's take a look at some of the compensation packages distributed to a few of the banks. Now according to the American Federation of Labor and Congress of Industrial Organizations in 2009, Goldman Sachs's Lloyd Blankfein and JP Morgan Chase both received roughly $ 10 million in compensation, John Stumpf of Wells Fargo received about $ 20 million while Bank of America's Thomas Montag received amount $ 30 million in compensation. This is all over the course of one year people. Now I don't knock anyone who wants to work hard and receive this kind of money but who do you think is paying for these ridiculous CEO paychecks? That's right; you guessed it; me, you, and whoever else that can fog up a mirror.
The market can be prosperous if you got the money to gamble but betting on your retirement money is not a very wise move financially. Now I am not a financial guru but I am someone who focuses on safe money investments. I want to help people understand that there are ways to build a strong foundation of safety and never lose any money in the market turmoil. 401k and mutual funds are very risky investments and could potentially deplete your entire investment depending on how you set up your contributions.
Some of the better plans to look into are 101 plans, annuities, and other cash value Life Insurance plans. I won't go into those plans in detail here but find an advisor in your area who specializes in those products and get informed.