3 Ways 401(k)s Make It Difficult to Save for Retirement
You'll often hear that when it comes to saving for retirement, 401(k)s offer an advantage over IRAs. And there's certainly some truth to that.
With a 401(k), you'll get to contribute much more money toward retirement on an annual basis than you will with an IRA -- $19,500 versus $6,000 if you're under 50, and $26,000 versus $7,000 if you're 50 or older. (These limits apply to 2020 as well as 2021.) Also, because 401(k)s are employer-sponsored, many offer an opportunity to snag matching dollars for contributing out of your own wages. Traditional and Roth IRAs don't have matching contributions because they're self-funded. And finally, 401(k) contributions themselves are seamless. You simply sign up with your payroll department to have funds deducted from your earnings, and voila -- your account is funded.
But despite these benefits, saving for retirement solely in a 401(k) could actually limit your ability to grow long-term wealth. Here's why.
Source Fool.com
