Six Reasons Your 401(k) is a Scam

I’m going to make a very bold statement that’s sure to get me some nasty blowback. But as a financial investigator who’s exposed the truth about the conventional financial wisdom, I’m used to that, so here goes…

401(k)s are a scam. Want proof?

Here Are Six Reasons Why 401(k)s Are a Scam…

Reason #1: The Tax-Deferral Scam

In our immediate-gratification society, deferring your taxes by funding your 401(k) sounds so good.

But when the tax man eventually comes calling, he won’t ask you to pay what your tax liability would have been if you’d been paying taxes all along. He’ll tell you what your tax liability is at the time your taxes are due.

So let me ask you a question: Can you tell me what your tax rate will be 30 years from now? Didn’t think so.

And 89% of the people we’ve surveyed believe tax rates can only go up over the long term, due to our country’s unsustainable debt and aging demographics. Unfortunately, if tax rates do go up and you’re successful in growing your nest-egg, you’ll only be paying higher taxes on a bigger number.

Oops! That destroys the whole “tax-deferral” argument.

Reason #2: The “Free Money” Scam

Who doesn’t love getting “free money” in the form of the 401(k) employer match? Do you really believe your employer is giving you something for nothing? (If you believe that, I’ve got a Rolex watch I’ll sell you for $10.)

The Center for Retirement Research did a study based on tax data and found that for every dollar an employer contributes to your 401(k) match, they pay 90 cents less salary to men and 99 cents less to women on average. Whoa! Doesn’t sound like such a good deal now, does it?

That’s why one of the Bank On Yourself Revolutionaries had no trouble convincing his boss to pay him the money that he was getting as an employer match in salary instead, so he could use it to fund his Bank On Yourself plan.

Plus, you don’t even get all of the employer match during the first 4-6 years you work for the company – you need to be “vested” first. If you leave your job before that, you typically don’t get the full match.

And according to the Bureau of Labor Statistics, the average time a person stays on the job is only 4.2 years.

Oops! There goes the employer match “carrot.”

Reason #3: Fees that Devour Your Hard-Earned Money

In spite of the rules passed a few years ago requiring better 401(k) fee disclosure, surveys show most participants still have NO clue how much they’re actually paying.

But according to Brightscope, participants in small plans pay 1.9% in fees annually, and participants in large plans pay 1.08% per year. If those fees sound like “small change” to you, then here’s a wake-up call: Fees of only 1% per year can slash the value of your savings by 28% over the next 35 years, according to the Department of Labor.

Poof! There goes nearly one-third of your hard-earned dollars. I can assure you somebody is getting rich on this, but it’s not you!

Reason #4: Funding a 401(k) is Like Putting Your Money in Prison

It’s like a trade with the devil: Give me all your savings in return for tax-deferral (a scam as we’ve seen) and an employer match (another scam), and I’ll keep it under lock and key for you until you’re 59.5 years old.

You have to beg for permission to use your own money! There are all kinds of restrictions and penalties for accessing your own money.

My investigation into more than 450 different financial products and strategies revealed you don’t have to risk your money to get a decent return. You can reach your financial goals and dreams without taking any unnecessary risk. And you can have access to and control of your retirement savings.

Request a free Bank On Yourself Analysis here to find out how you could benefit from a custom-tailored plan.


Reason #5: The Myth of Market Returns

You’re told that over the long term, you can do well in the stock market. But over the last three decades, the average equity mutual fund investor has earned only 3.66% per year, beating inflation by only 1% per year, according to the DALBAR studies.

Yet Wall Street has brainwashed us into believing we have to risk our money in order to get any kind of decent returns. And so we continue to blindly fund our 401(k)s like lemmings following each other off a cliff.

Reason #6: After Decades of Being Lab Rats in the Great 401(k) Experiment, Most Pre-Retirees Still Don’t Have Enough Saved

Even the “father” of the 401(k), Ted Benna, has called it an “out of control monster” that should be blown up.

How much more evidence do we need that 401(k)s are not the solution they’re touted to be? The more accurate name for a 401(k) is a hope and pray plan.

So are there any good alternatives to the 401(k)? The answer is YES, but of course you won’t hear about it from Wall Street.

Here Are 8 Reasons Bank On Yourself Makes an Excellent Alternative to Conventional Retirement Plans…

  1. Guaranteed, predictable growth and retirement income – with no luck, skill, or guesswork required.
  2. No volatility. Your plan doesn’t go backward when the markets tumble. Your principal and growth are locked in. It’s not subject to market risks.
  3. You’re in control. You have control of your money without government penalties or restrictions on how much income you can take or when you can take it.
  4. Tax advantages. You can access your principal and growth with no taxes due, under current tax law.
  5. Liquidity. Your cash value can easily and immediately be tapped for any purpose at all, and your plan can continue growing as though you never touched a dime of it.
  6. Fees don’t compound against you. Studies show that the fees in traditional retirement plans can consume as much as one-third to one-half of your savings over time. With a Bank On Yourself plan, all fees have already been deducted from the bottom-line numbers and results you’ll get.
  7. Income tax-free legacy. The death benefit is likely to be many times larger than the total amount you’ve paid into your policy. This passes to your loved ones and/or favorite charities income tax-free and without going through probate. If you die prematurely, the death benefit allows your plan to finish funding itself. That won’t happen with traditional retirement plans.
  8. Peace of mind. Perhaps the best reason of all: You’ll know the minimum guaranteed value of your plan on the day you plan to tap into it – and at every point along the way! So request your free Analysis here now:

Find out how you could benefit from a safe and proven 401(k) alternative today…

You can easily find out what your bottom-line numbers and results could be BEFORE you decide whether to add the Bank On Yourself method to your financial plan. Just request your free Analysis.

Take the first step to a lifetime of financial security right now, while you’re thinking of it:



  1. Frankly, this article is a scam. There is nothing better than a long-term, steady investment into the United States stock market. Sure, IF and ONLY IF you invest in the right funds (which is: low-cost, index funds tracking the US stock market).

    There are risks within the 401K because there will always be risks with any investment. Anyone that tells you a sure way to make money with no potential downside is a liar and you should be careful. Most employees fail to make money from their 401K because the system is filled with people and tricks built to scam money out of you, so they listen to these people and invest in the worst funds. It’s not their fault, very intelligent people fall under these sophisticated traps all the time.

    The right thing to do is NOT to abandon your 401K, but to watch out for the scams and do the right things to avoid the scams.

  2. I agree with all the point against the 401k and the like. Don’t know what type of investment this article is selling and I don’t much care either. I don’t like giving my money to someone else to watch over, I can do that myself. There are ways of earning money for and during retirement without giving it to someone else.

    When is the last time government had your best interest in mind? What about those big corporations? Since when have they done anything but take your money and keep it? Why would retirement money be any different.? They don’t care about the financial state of America. If they did, the government would t continue to fell further into debt and the corporations woulld preserve a healthy middle class. But they don’t. Don’t trust them or anyone else for that matter when it comes to my family’s well being.

    • WOW! That was very refreshing… I am pleased that others understand the True Nature of the Finance Beast. 🙂

  3. The comedy of those that defend the “tax deferred” retirement plan keep me laughing all day. Ask your fund manager what their net worth is (usually negative). They have an income from getting your account, not what you “earn” in the fund. They also peddle diversification within the market, which is also a farce. Do your homework, become financially intelligent, stop believing your broke advisors and start following a mentor that has actually earned money from a business or investment (real money, not 4%/yr over 30 years). Inflation will destroy your earnings in this “tax haven”, and then you will pay taxes on the entire amount of your distributions later on under whatever income tax law is around at that point. The huge fund owners are making a killing, you are making nothing after taxes, save what you would’ve made if you were not brainwashed into thinking someone else will do this for me with my best interest in mind. Look at it this way, if you ask an insurance agent if you should purchase life insurance, do you think a successful one will tell you “no”? Most fund managers or investment bankers are poor. They are simply employees like all the rest of us paying into their 401K. When the day comes and you realize you contributed 300K to your account, its value is now 900K and you need to pay 40 cents on every dollar you take from it in income, you should be dismayed at the idea of barely beating inflation over all those years. Next lesson, your house is the Bank’s asset, not yours! An asset earns you money, your house doesn’t.

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