Why Your 401k Alone Will Not Be Enough to Retire On | What the Wealthy Do Ep. 13

Most of us think we know what retirement is going to look like. But here is the truth that nobody really says out loud. For most people, a 401k alone will not be enough to fund the retirement they actually envision for themselves.This is Episode 13 of What the Wealthy Do, Part 1 of a two-part series on retirement strategy. If you are between 38 and 55, this episode is for you.Stephanie Dorsey, CEO and Co-Founder of Margins Capital, breaks down why relying solely on your 401k puts your retirement at serious risk and what the wealthy do differently to protect their money from taxes before and after they retire.The 401k was introduced in 1978 as a supplement to pensions, not a replacement. Corporations eventually shifted the entire weight of retirement planning onto employees, and now millions of Americans are trying to retire on a savings vehicle that was never designed to carry 20, 30, or 40 years of retirement on its own.Three core problems get covered in this episode. The first is that contribution limits are simply too low to build the retirement wealth most people need. The second is zero tax diversification, meaning every dollar in a traditional 401k will be taxed at ordinary income rates when you withdraw it, and the IRS will force you to start withdrawing at age 73 whether you need the money or not. The third is limited investment options that keep most 401k savers locked out of the asset classes where the wealthy actually build wealth.Stephanie also walks through what required minimum distributions really mean for your finances, how the retirement tax trap works in practice, and how the wealthy spread their money across tax deferred, tax free, and taxable accounts to control their taxable income in retirement.Next week in Part 2, we build an actual retirement portfolio strategy. But today is about making sure you understand what is at stake and what needs to change right now while you still have time.Join the next Sovereign Collective cohort for high-earning Black women ready to build real generational wealth: joinsovereign.coThis podcast provides financial education and not financial advice.