Are you blindly trusting your 401k to secure your financial future? You might be making a costly mistake.
In this eye-opening episode of Wealthy Wellthy podcast, we dive deep into her wealth of experience in personal finance and investing, and offers a fresh perspective on building long-term wealth beyond traditional corporate retirement accounts.
The main focus of this episode is debunking the myth that maxing out your 401k is the best path to a comfortable retirement. Krisstina explains why “matching, not maxing” your 401k contributions and diversifying your investments can lead to greater financial freedom. Krisstina emphasizes the importance of having control over your money and being an active, knowledgeable investor to maximize returns.
Throughout the conversation, we dive into topics such as the limitations of government-controlled retirement accounts, the benefits of real estate investing, and the crucial difference between financial security and financial freedom. They also touch on the value of financial literacy and the need to calculate your specific retirement needs.
Ready to take control of your financial future and explore investment strategies beyond your 401k? Listen to this episode of Wealthy Wellthy for actionable insights that could transform your approach to retirement planning and wealth building.
—
Top 5 Takeaways From This Conversation:
- Why matching, not maxing out, your 401k could be the key to building true wealth!
- How creating a diversified “pie chart” portfolio gives you more control over your financial future!
- The surprising truth that 75% of retirees may only have 30% of their working income in retirement!
- Why having control and access to your investments is crucial for seizing opportunities and handling life’s curveballs!
- How combining 401k contributions with self-directed investments creates the “practical magic” needed for lasting financial freedom!
Here Are My Favorite Quotes:
- “Retirement plans are based on a history that’s not applicable today. We want to live to 100, maybe more. But these plans are not set up to live to 100, which means if we just rely on traditional retirement plans, it’s very likely that we’ll run out of money.”
- “Match, don’t max because you just want to take advantage of what the company is matching. But we don’t want to max out everything that we can put into these types of programs.”
- “To really build wealth and to build it powerfully, you might say, ‘Hey, there’s my neighbor. The estate wants to dump this property really fast. I can get a great deal on this house.’ But wait, I can’t touch that retirement income to take advantage of this opportunity.”
Time Stamps:
- [5:05] History of pensions and retirement plans
- [10:52] Limitations and drawbacks of 401k plans
- [16:46] Risks of relying solely on 401ks
- [22:17] Match don’t max: 401k investment strategy
- [28:42] Options for investing outside 401ks
- [34:24] Comparing different investment vehicles
- [40:48] Strategies for building wealth long-term
MYTH BUSTED: “Maxing out your 401k is the best strategy for retirement savings.”
Krisstina Wise, a financial expert and host of the Wealthy Wellthy podcast, challenges the common belief that maxing out your 401k is the optimal approach to retirement planning. Despite the widespread advice to contribute the maximum amount to employer-sponsored retirement accounts, Krisstina advocates for a more nuanced strategy: “match, don’t max.”
She explains that while taking advantage of employer matching is beneficial, allocating all available funds to a 401k can limit financial flexibility and control. The key insight? True financial freedom requires a diversified approach that balances retirement accounts with other investment vehicles. As Krisstina shares, “I like to think of a pie chart… I do have a piece of the pie that’s retirement… but it’s just a small piece.”
By maintaining control over a portion of their investments, individuals can seize opportunities, navigate unexpected life events, and potentially achieve higher returns. The myth-busting revelation is that optimal retirement planning isn’t about blindly maxing out a 401k, but rather creating a balanced portfolio that offers both security and freedom.
Resources Mentioned
Vanguard (for index funds) – https://investor.vanguard.com/
