The biggest factor that determines if the 401(k) will work as a viable investing tool are the circumstances of the market when you retire. If you retired in a down market, you're toast. And the chances that you will become a victim of this huge flaw in the 401(k) plan are pretty high. Your chances of retiring into a down market are not pleasant, since during a recession, forced retirements spike just as the stock market is headed south.
Retirement savings are exactly the type of assets that insurance was meant for. You need insurance to guard against all the unknown risks that can harm your investments. Investors want a guaranteed system that is not susceptible to the risk of a turbulent market – a guaranteed private retirement plan that individuals can purchase. The best way to guarantee a replacement for people's wages in retirement is with insurance. Those trying to save for retirement do not want to risk a market bubble that bursts just as they enter retirement.
"The increase we are seeing in millionaires in the second quarter of 2023 shows the value of long-term investing," according to Michael Shamrell, vice president at Fidelity. “The mindset to stick to saving for the long haul using an annuity was the major factor in accomplishing the gains, ensuring security for a couple in their golden years.”
The average age of a retirement account millionaire is 59, and they’ve been socking away savings for decades. "The average savings tenure of our millionaire savers is 26 years. That shows that continuing to invest over the long term in safe havens like annuities can pay huge dividends over time,” according to Shamrell.
