Page 3 - The Great 401k Rip-Off

This paper seeks to explain the major effects of this, the reasons behind it, and some of the solutions
available. I urge you to read it in its entirety before coming to any conclusions. All the assertions in
this paper have been carefully researched and sourced by other publications and broadcasts, or we
have been able to model them to our satisfaction internally. When appropriate we have included
those models here.
As you leave your old job and settle into your new position, consider what you want to do with your
retirement savings going forward. For many, this is an excellent opportunity, as you may not have
had access to your employer‐sponsored retirement savings before this. Now you do.
Do you know what you want to do with them? The fact is, the great 401(k) experience has been a
colossal failure [1] [2]
This paper seeks to explain why we believe that, the major effects of it, the reasons behind it, and
some of the solutions available. I urge you to read it in its entirety before coming to any conclusions.
All the assertions in this paper have been carefully researched and sourced by other publications and
broadcasts, or we have been able to model them to our satisfaction internally. When appropriate we
have included those models here.
As you leave your old job and settle into your new position, consider what you want to do with your
retirement savings going forward. For many, this is an excellent opportunity, as you may not have
had access to your employer‐sponsored retirement savings before this. Now you do. Do you know
what you want to do with them? Same ol’ same ol’, or something new and amazing?

You’ve been lied to.

So what does all this have to do with your 401(k)? Simple. You’ve been lied to. You’ve been stolen
from. We all have. Moreover, we swallowed it hook, line and 401(k), and most of us are loathe to
admit it.
First, they said the pension was old fashioned, and the 401(k) would empower you because you get
to make the decisions about how to invest it. Second, they said you must get the highest return
possible by exposing your retirement accounts to potentially devastating market risk if you want to
have enough to retire. Third, they told you if you are not getting a big enough return to support your
retirement, all you need to do is increase the risk. Fourth, they promised you should expect 8% and
more in returns, after fees. Fifth, they said deferring taxes was going to make your retirement easier
and save you money. Really?
If you look at the growth in retirement accounts over the past 20 years, the real rate of return after
inflation is around 3.7% [3]. Average 401(k) fees are 2% to 5% [4], which puts accumulation into
break even or negative territory. Add to that the fact that investors are generally irrational when it
comes to making investment decisions [5], and the real growth of 401(k)s over the past generation is
really very flat, if there is growth to begin with.

3 www.TheGreat401kRipoff.com