Is Your 401K Enough?

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I see lots of different statistics about retirement nest eggs, such as 43% of Americans have less than $10,000 saved for retirement.  These are extremely surprising numbers, but at the same time it only confirms what we see all around us.  People are unprepared for retirement, and appear to be sacrificing their future in order to finance today.

I recently read an article about a 70-year-old woman who has nothing for retirement.  I feel bad for her, because I don’t know what her actual life story is, but if her life story is like many others, she did it to herself. People who don’t make wise decisions now, will not enjoy a good retirement later.  It’s a very basic truth that we must all understand.

We should be investing up to the 401K contribution limits and and into any other retirement accounts that we can.  Once all of those are maxed for the year, we need to be investing outside of retirement accounts to ensure reaching our retirement goals.

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Savings Plans and Roth Accounts

With all of the uncertainty in the marketplace, I’m honestly surprised that more people aren’t taking their retirement into their own hands.  Why depend on your company to ensure your retirement?  Don’t get me wrong, a 401K is an excellent program, but you should be saving outside of it.

There are a lot of different plans out there such as the 10-10-80 where you save 10, tithe 10, and live off of the remaining 80 percent.  Find a plan that is right for you, try to automate it with the WMD savings plan, and pretend the money doesn’t exit.  You can also use Roth accounts to leverage tax advantages for you future.

You can open Roth accounts with a stock broker, a bank, and some employers offer them as well.  Don’t leave your future in the hands of the stock market, your company, and a limited choice of funds.  Take control and get down to business.

Other Options

There are a number of ways that you can take your living money and invest it into your future.  If you’re fairly risk averse then you can leverage CDs (although the yields aren’t amazing) or you can add bonds.  If you want tax advantages then you can look into municipal bonds, although you should understand that while the yields might be attractive, many municipalities are in financial dire straits.

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Other options can be Corporate bonds, or if you’re feeling super daring, in my opinion, you can take on lots of risk and get meager yield by purchasing US Treasuries.  I’m not confident in Ben Bernanke‘s current cheap money policies.  Regardless of your risk aversion, I think that any money you can take off of your consumption table and put into the retirement table is a good move.

401Ks are nice, but you still need to take on the burden of planning.  There’s no such thing as easy retirement planning, anything that is extremely easy is often fueled by pure luck.