In order to retire, you might need to save less. Not less overall, but less into the wrong

accounts. Because I don't care if you have $10 million in your 401k. If you're 52 and want to retire,

that money is locked up. You'll either need to jump through complicated hoops, pay a big penalty,

or pay a massive tax bill, and order to access that money. And that is exactly how people

become qualified rich,

but cash poor. Today I want to explain how saving less money into qualified accounts like 401k's

and more into what I'm going to call a freedom account may very well be the key to you actually

retiring when you want to. For 30 to 40 years, people hear one single message, max your 401k, max your traditional IRA,

defer taxes, build up those accounts. That advice isn't wrong, but it is incomplete. And it's incomplete

because retirement is not just about accumulation. It's about accessibility. And accessibility

is where too many retirement plans break down. Let's look at a real-world scenario to illustrate this.

You're 52 years old. You have $5 million, but it's all in 401ks and pre-tax IRAs. You very clearly saved diligently. But now all of a sudden, you're done working. You're burned out, you're exhausted, maybe your job was eliminated, and you don't know where you're going to go to find the next one. You want freedom and looking at your portfolio balance, you'd think that you have it.

You have $5 million there.

But that's when you realize that if you actually want to access that money, you either need to wait until $59.5. Implement what could be a very complicated 72T distribution, do a Roth conversion ladder, which still isn't going to free your money up immediately, pay penalties on everything you pull out or trigger massive ordinary income taxes. That's not freedom. That is restriction

because you did everything right. You have the money, but you don't have the accessibility. And because

you don't have the accessibility, you don't truly have the freedom. So all of a sudden you're in this

position where the account type that your money is in is what's dictating your freedom, not the amount of money that you have,

though ordinarily put you in a position to be completely financially independent. So let's clarify

something important. Putting money into a 401k doesn't eliminate taxes. It doesn't even save you

taxes. It simply defers your taxes.

Now, this works beautifully when in your working gears, you're in the 35% tax bracket, saving

35 cents on every dollar that you put into your 401k.

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