The Retirementeering™ Newsletter
Retirement planning often revolves around 401(k)s, IRAs, or pensions, but relying solely on these qualified plans can leave you short of the life you envision after work. Learning to invest outside these plans is crucial for building an additional financial cushion, and it’s something anyone can do with a bit of effort, curiosity, and research.
Here’s why it’s so important. To begin with, qualified plans have limitations. Contribution caps mean you can only sock away so much each year—$23,000 for a 401(k) in 2025, for example, or $7,000 for an IRA if you’re under 50. That’s not always enough to fund a comfortable retirement, especially if you dream of travel, a second home, or not stressing about bills. These plans are often tied to market performance through mutual funds or target-date funds, which can feel like a black box.
Learning to invest gives you more control to diversify and grow your wealth beyond what your employer or a robo-advisor picks for you. I have addressed whole rooms full of well paid employees who are doing nothing other than contributing to a 401K plan that they haven't looked at in years. They have no idea if it is performing well, if it will provide enough for them in their later years, how much is in it or even how it works. That is not the way to go about becoming successful when it comes to being able to retire with adequate funds.
Investing in things like individual stocks, ETFs, or even real estate can open up new streams of income or growth. Take the stock market: historically, it’s returned about 7-10% annually after inflation. If you start investing $200 a month in your 30s, even in a simple S&P 500 ETF, you could have over $200,000 by 65, assuming a 7% return. That’s a nice chunk of change to supplement your 401(k), and it’s money you can access without the strict rules or penalties of qualified plans. Plus, taxable brokerage accounts let you pull funds before 59½ if needed, offering flexibility pensions or IRAs don’t.
But it’s not just about the money—it’s about empowerment. Learning to invest teaches you how markets work, how to spot opportunities, and how to manage risk. You’re not just handing your future to a financial advisor who might not care as much as you do. You’re building skills to navigate uncertainty, whether it’s a market dip or an unexpected expense. That confidence spills over into other parts of your life, too.
Of course, it’s not without challenges. Investing takes time to learn—reading up on strategies, understanding terms like “dividends” or “P/E ratios", and staying disciplined through market swings. But you don’t need to be a Wall Street whiz. Start small—maybe a low-cost index fund or a few shares of a company you know. Over time, you’ll get the hang of it.
The bottom line? Qualified plans are a solid start, but they’re not the whole story, and just because you have one and have been contributing to it for decades, there is no guarantee it will fund your retirement. Learning to invest gives you another tool to secure your retirement, letting you build wealth on your terms and create a safety net for the future. It’s not just about dollars—it’s about freedom and peace of mind and gaining confidence about providing for yourself. Take the time, make the effort, it will be well worth your while.
6 June 2025 All Rights Reserved © Creative Process Consulting, LLC