Financial Health and Wealth Advice - Downsides Of A Traditional 401k

Downsides Of A Traditional 401k

You may think that since you already have a traditional 401k from your employer that you already have it made for when you retire. The truth is there are some things that you do not know about your 401k that your bosses are not telling you, and if you want to change things it is best that you explore other retirement options besides it. In this article, you will learn about the downsides of a traditional 401k that your company has conveniently forgotten to tell you (or probably didn’t even know about!).

The first downside of a 401k plan is that there are very limited investment options open to you. The usual choices that are available are stocks, bonds, and mutual funds, that’s it; and the worst part is that you do not even have any control on which of those options you should place your money in, they are all up to your employer.

A traditional 401k is good for your employer

Since the investment choices are left to your employer, there is a high chance that your money will go to investments that will greatly benefit the company, rather than being the best option for you. Using a 401k means that you are giving free rein to your employer to make themselves richer, while giving you the bare minimum for your retirement. If you want your retirement to be more financially secure, then you should explore other alternatives out there.

Limited access to your money is also a big problem of 401k plans. You are not allowed to withdraw your savings from your 401k plan without incurring a ten percent penalty; it’s like you have to pay a fine just for taking back money that belongs to you in the first place. This is the biggest reason why many people rollover their 401k to a Roth IRA, Gold IRA, and other self directed retirement funds.

If you want to take back control of your retirement fund, the best option that you have right now is to place it in a gold IRA. Unlike traditional retirement plans that are based on paper currency, gold IRAs are backed by actual physical gold; and this makes it better at preserving the value of your money.

Best 401k Plans

Gold has a very distinct characteristic of being resistant to the effects of inflation, so you can be sure that the amount of money that you place into it is extremely likely to at least stay the same even after many years have passed. Doing a rollover to a gold IRA from your traditional 401k is actually very easy, and pain-free because there are no additional fees that you will incur; especially if you use a reputable company.

So even though there are certain benefits to having a traditional 401k, it is the disadvantages that they have that really makes people want to look for something a little more substantial. If you want to make your money work for you instead of your employer, then you should seriously consider rolling over to a different retirement plan, like a gold IRA; it’s your money, so you should be the one deciding on how you use it.

References: IRA FAQs – Investments – Internal Revenue Service]]>