Episode 143: Why You Should NOT Invest in Your 401(k) with Rebecca Walser

Posted Aug 27, 2020 | Chris Petrie

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Today on the show I am talking with 401k expert Rebecca Walser. She is actually going say something you probably have never heard before….don’t invest in your 401k plan.

Yes, this may sound a little crazy on the surface, but wait until you hear her tell you why…you may just change your mind about the 401k. I know I did.

Listen to the Interview Here

Rebecca Walser comes on the show to share with us why your 401k isn’t just hurting you…it’s actually KILLING your financial plan.

It all started back in 1978 when the famous 401k plan was in a way created by accident. Back in the late 1970s, most employers contributed to a defined benefit plan (AKA a pension) and that cost employers a lot of money.

During this same time, tax rates were much higher than they were today and some very highly compensated executives were looking for loopholes to avoid these high taxes. What they proposed was they could be bonused out in the form of a 401k plan, which allowed them to take their bonus, dump it into a 401k plan to avoid paying the high taxes now, and then grab that bonus money at retirement when taxes were much lower.

However, a few years later businesses started catching on and realized they would save millions upon millions of dollars by getting rid of the pension plan and moving to a 401k plan. Instead of having to fund a pension for years after retirement, they could offer a company match and have the employees contribute the majority to their retirement.

And that’s how the 401k became the retirement standard in today’s world…on accident.

But, it’s not 1978 anymore. Taxes are much different than they were then, the government debt is much higher than it was then, and there is a huge problem facing social security.

How are we going to pay for social security AND how are we going to pay off this massive $23 Trillion of debt?

Is it possible that taxes could go up from their all-time lows of 2017???

Wait a minute….if taxes are at an all-time low and we forecast we may need to raise taxes in the future to pay for the government’s financial mess….then does it make sense to save in a 401k today?

Are we avoiding having to pay very low taxes today so we can pay much higher taxes in retirement?

In the interview, Rebecca and I talk about:

  • Conventional financial literacy and why it’s backwards for today’s world
  • The Social Security stats: the money is going to run out
  • Taxes and how they WILL affect you later in life
  • The history of the 401k and tax loopholes it once provided
  • How 4 out of 100 Americans will retire above the poverty line
  • Where you should be investing instead of the 401k
  • How to maximize your ROTH IRA using a conversion
  • And much much more…

Are you living on a written plan each month?

Before you decide how much you’re going to invest, you need to know how much you have to invest.

Creating a simple plan (a budget) is the best way to maximize your retirement savings efforts. It all starts with a plan.

What gets measured gets managed.

Thanks so much for listening to the show and if you feel the content of this podcast was helpful, please subscribe to the podcast where you listen and leave a review!

Today’s show was brought to you by OneAZ Credit Union — my very own credit union I have been proud a member of since 2011. 

If you live in Arizona and are looking for a large credit union with a local, customer-focused feel for your personal or business banking needs, look no further than OneAZ Credit Union.

Chris Peach Author 150x150

Chris Petrie

Chris (Peach) Petrie is a personal finance expert, money coach, speaker and podcaster.

In 2011, Chris and his family were exhausted from living paycheck-to-paycheck and facing a mountain of debt. They started going against the society standards of misbehaving with money and made the decision to take back control of their lives and money. Within seven months they paid off $52,000, started saving like crazy and began building real wealth.

The word spread fast and Chris started showing friends how to create a budget over dinner. Soon after he started showing their friends how to do the same and eventually Chris started teaching personal finance classes around the community. As the need for the classes grew, Chris launched Money Peach in 2015.

Money Peach was created to help everyday people remove the stress and fear of money by showing them how to save more, make more, and keep more of their money.

Chris Peach has been featured in places like Business Insider, The Huffington Post, Elite Daily, and CheddarTV.

When Chris isn’t at “work” he can be found at the Crossfit gym or riding on the fire truck — Chris is also a full-time firefighter in Phoenix, Arizona.

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