We rely entirely on our 401k
The sad reality for most of us is that we did not have a “saving” culture in our youth. Yes, when we were kids our parents gave us a piggy bank and we saved our pocket or birthday money to buy ourselves that special gift that we wanted. In many cases, as we reached our teens we forgot about saving. Our parents or grandparents did not grow up in a society that was filled with loans and dept. It was a simpler society. Once where you paid cash for what you wanted or you simply did not buy it.
As society changed so did our reliance on loans and credit. We stopped saving and for many middle-class Americans, we now rely solely on our 401k to provide for us in our retirement. This is not going to be enough for us to retire with ease and we will constantly worry about running out of money.
Also, remember that if you only have your 401k you will still have to pay tax on that amount when you take your retirement. So a portion of what you have been putting away over the years will go to the IRA, leaving you short on your monthly income through your retirement plan.
Many of us rely solely on our 401k’s as we keep saying to ourselves we will get around to saving more for the future. Reality is that we don’t. So in addition to our 401’s we should also be putting money away monthly into a Roth IRA. This way when we retire we are able to access these funds – in many cases, these schemes/funds will give us “tax-free” amounts in our retirement and help reduce our future tax payments to the IRA.