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Your 401(k) or IRA is Not a Retirement Plan

October 24, 2017 by Eric C. Jansen, ChFC®

If you save in a 401(k) or IRA, congratulations! You’re taking a great step toward financial success and well being — and potentially making use of tax advantages through these accounts, or picking up free money in the form of employer contributions.

There’s no doubt that contributing to these retirement plans is a must if you want financial independence and stability down the road. But the phrases “employer-sponsored retirement plan” or “IRA plan” can be a little misleading. A 401(k) or IRA is not actually a retirement plan.

They are useful investment vehicles in helping you save for retirement. These accounts help you develop the resources you need to live the life you want.

But they’re only pieces to a retirement plan — not a retirement plan in itself.

A retirement plan is a well-thought-out blueprint towards achieving your specific retirement goals. The foundation of this blueprint is defining the retirement lifestyle you want to have and then putting a price tag on it. It is on this foundation that your retirement savings and investment strategies should be built.

If Your 401(k) or IRA is Not a Retirement Plan… What Is?

If you have a 401(k) or IRA, that’s great! Again, these accounts are part of a plan that can help set you up for the kind of lifestyle you want once you quit working.

The overall plan should include the following:

  • Your current financial situation: Where are you right now? What have you saved up to this point for your retirement years? How much are you currently saving each paycheck, yearly for retirement?
  • Your goals: What do you want your retirement lifestyle to look like? When would you like to retire? Where would you want to live in retirement?
  • Your estimate of what you need and how long it will take you to get there: How much will you need to live the life you want? What will your tax situation look like when you retire? How will you pay for unforeseen healthcare costs? What’s the difference between how much you will need saved versus where you are today? What adjustments will you need to make in terms of the amount you are saving?
  • Your Investment Selections: Have you properly linked your retirement account’s investment decisions with your retirement goals and risk tolerance? Are you monitoring and adjusting your investment portfolio as your life evolves and the economic environment changes? Have you sought our professional help in doing so?
  • Your tools and resources: What’s available for you to use to help you reach your goals? How will you use these resources effectively?
  • Your action steps: What will it take for you to get to where you are today to where you want to be in retirement?

A retirement plan isn’t just one thing. It’s an entire system, or a roadmap, that plots out how to get to where you want to go and what you need to do along the way.

It’s a powerful tool because it allows you to be proactive rather than just reactive. You can see what needs to get done — and how! And perhaps even more importantly, your plan can help you foresee challenges before they become problems that are hard to solve.

Considerations for Your Retirement Accounts in Your Plan

Your 401k or IRA comes into play in a few places in your retirement plan.

The balances of these accounts contribute to the assets in your net worth. The balances also help you determine where you are today versus how much you need to have before you can retire. And you can list these accounts as some of the tools and resources at your disposal.

You’ll also want to look at exactly how your accounts, whether you have a 401k or IRA or both, best fit into the overall big picture.

Retirement planning includes asking (and answering) questions like:
How long should I max out my 401(k) if I can?

  • Does my 401(k) offer the best funds (with reasonable fees) for my goals?
  • Should I rollover my 401k?
  • Does it make more sense to contribute to an IRA or Roth IRA?
  • How do I withdraw money from my 401(k) or IRA?
  • How do I deal with Social Security?
  • What’s the best way to minimize my tax burden?
  • What do I do if I’m self-employed?

These questions may or may not apply to you — and that’s because each retirement plan should be unique to your goals, needs, challenges, and available resources.

Do You Have a Plan?

Now that you know a 401(k) or IRA isn’t a retirement plan in itself — just one piece of a much larger puzzle — it’s worth asking: do you have a plan?

If not, the time to start is now. It doesn’t matter how young or old you are. You need a plan in place to help you make the most of the opportunities available to you. It’s never too early or too late to take action and be proactive about living the life you want.


Eric C. Jansen, ChFC is the founder, president and chief investment officer of Westborough Massachusetts-based Finivi, which provides fee-based retirement income planning and investment management services for successful individuals and families nationwide. Do you need help planning for retirement? You can click here to schedule a complimentary consultation with a financial plan.

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Eric C. Jansen, ChFC

Fun Facts About Me

When he is not researching the next great stock to add to client portfolios, you can find him travelling frequently with his family to Jackson Hole Wyoming.

  • Hometown: Chicago, IL
  • Birth Month & Year: November, 1964
  • Favorite Hobby: Goldmining in Nome, AK
  • Favorite Food: Steak at Charley’s Steakhouse in Orlando FL
  • Can't be interrupted when: Watching the Discovery Channel
  • Hidden Talent: Finish Carpenter
  • Something on bucket list: Obtain Helicopter Pilot License
  • Family Pet: Goldfish

Steven C. Johnson, ChFC

Fun Facts About Me

Steve would tell you that one of the best parts of the day is spent talking to clients and relationships that result from it. When away from the office, he loves to travel the back roads of New England enjoying all the great sites that can be found off the beaten path.

  • Hometown: Townsend, MA
  • Birth Month & Year: December, 1967
  • Favorite Hobby: Playing Hockey
  • Favorite Food: Chicken Caesar Salad
  • Can't be interrupted when: Watching the Bruins
  • Hidden Talent: Cooking – Makes a great Thanksgiving turkey
  • Something on bucket list: Travel to Italy and Greece
  • Family Pet: Max – our Pomeranian

Frederick M. Lane, ChFC, CASL

Fun Facts About Me

When not managing client portfolios, Fred can be found relaxing with family and friends.

  • Hometown: Nutley, NJ
  • Birth Month & Year: July, 1954
  • Favorite Hobby: Dog Walking
  • Favorite Food: Italian
  • Can't be interrupted when: Listening to Pink Floyd
  • Hidden Talent: Landscaping
  • Something on bucket list: Space Flight - Tourism
  • Family Pet: None

Catherine M. Gareri

Fun Facts About Me

When not caring for her clients Cathy enjoys relaxing in her yard at home.

  • Hometown: Bellingham, MA
  • Birth Month & Year: July, 1957
  • Favorite Hobby: Cooking and Entertaining
  • Favorite Food: Steak at the Capital Grille
  • Can't be interrupted when: It's family time
  • Hidden Talent: Dog Whisperer
  • Something on bucket list: Spending a couple months on the Almalfi Coast
  • Family Pet: In Between Mastiffs now so a little blue fish “Willy”

Katie E. Moore, CLTC

Fun Facts About Me

When Katie is not busy taking care of her clients, she spends her time being a mom to her two little ones, Owen and Isla.

  • Hometown: Modesto, CA
  • Birth Month & Year: September, 1982
  • Favorite Hobby: Swimming
  • Favorite Food: Mexican Food
  • Can't be interrupted when: I'm cooking
  • Hidden Talent: Climbed Yosemite's Half Dome, twice - no fear :)
  • Something on bucket list: See the Northern Lights and Potty Train my 2 year old
  • Family Pet: Caddy and Sierra – our two cats

Hesper Duval

Fun Facts About Me

Loves spending time with 2 daughters and enjoys participating in 5k obstacle races throughout the year.

  • Hometown: Charlton, MA
  • Birth Month & Year: October, 1981
  • Favorite Hobby: Running
  • Favorite Food: Cheesecake
  • Can't be interrupted when: Reading a good book
  • Hidden Talent: Interior Design and furniture restoration
  • Something on bucket list: To travel cross-country in an RV
  • Family Pet: Charlie and Nora, both black labs from the same litter

Donna Fournier

Fun Facts About Me

When not cheering for the Patriots, Donna spends her free time travelling throughout the United States looking for new haunted places to explore. She loves to wear her cowboy hat and boots when travelling out west.

  • Hometown: Swansea, MA
  • Birth Month & Year: February, 1961
  • Favorite Hobby: Exploring haunted locations
  • Favorite Food: Pizza
  • Can't be interrupted when: Eating my pizza
  • Hidden Talent: Rollerblading
  • Something on bucket list: Travel to Australia
  • Family Pet:  Had a pet skunk

Danielle Drew

When Danielle does not have her head in a book studying to expanding her financial planning knowledge, she enjoys anything active and outdoors, including visits to the beach and hiking.  

  • Hometown: Dennis, MA
  • Birth Month & Year: November, 1985
  • Favorite Hobby: Working out, concerts, and exploring wineries
  • Favorite Food: Lobster pot pie, cheeseburgers, BBQ, the list goes on...
  • Can't be interrupted when: Working out 
  • Hidden Talent: Country line dancing
  • Something on bucket list: To hike the 48, 4000 footers of New Hampshire
  • Family Pet: none, hopefully a big dog someday

Jay Willwerth, ChFC

Fun Facts About Me

Jay’s days are spent helping clients achieve their financial goals, followed by nights and weekends typically watching his daughters play competitive volleyball.

  • Hometown: Melrose, MA
  • Birth Month & Year: September, 1959
  • Favorite Hobby: Golf
  • Favorite Food: Anything at a Patriot’s Tailgate
  • Can't be interrupted when: Watching the Patriot’s Game
  • Hidden Talent: Competitive Volleyball Watcher (Mostly his 2 daughters)
  • Something on bucket list: Play a round of Golf at Pebble Beach
  • Family Pet: Bella, our Shih-poo
 

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