FAQ: Are IRA / 401k the best option?« Back to Questions List

Aren’t 401(k) and IRA accounts the preferred retirement option? Back in the 1970’s these programs were heavily lobbied to the representatives in Congress by Wall Street.  It’s certainly no mystery when you consider the results. At the time of this writing, there are approximately 167-Million working US citizens.  Of those, approximately 40%, or 66.8-million participate in their employer-sponsored 401(k) tax-deferred retirement programs.  For each participant paycheck, whether weekly, bi-weekly, or monthly, a significant number of dollars is channeled to Wall Street into shares of mutual funds (to a large degree).  That value cannot be accessed by the account holder by law until they are age 59-1/2. How long until you are 59-1/2? If they access the fund early, the government levies taxes that year, which may bounce the employee into the next tax bracket, as well as levying a 10% penalty for accessing funds prior to 59-1/2.  The result?  …More money for Wall Street and more money for government. Wall Street stands to benefit.  The government stands to benefit.  Your broker stands to benefit.  Your employer, to a much lesser degree but still, stands to benefit.] Ask yourself ”how much money is channeled to Wall Street through these programs” and you’ll have a good explanation of why these programs are promoted to the working populace and why highly effective options to these programs are so rarely discussed or even mentioned by anyone selling the tax-deferred options.