JOHN NUNES FINANCIAL & INSURANCE SERVICES
"Strength and Wisdom, Eternal Prosperity. Your Path to Financial Independence Begins Today"

Why Your 401(k) Might Be a Scam
And What You Should Know...
April 16, 2025
For decades, the 401(k) has been marketed as the ultimate retirement solution. “Just contribute regularly, and you’ll retire comfortably,” they say. But is it really that simple?
Let’s dig a little deeper—and you might start to wonder whether your 401(k) is more of a government-backed trap than a trustworthy retirement plan.
1. The Hidden Fees That Eat Your Nest Egg
Most people have no idea how many hands are dipping into their 401(k). It’s like owning a restaurant where everyone else gets paid before you see a dime.
Here’s where your money goes:
-
Administrative Fees – These cover plan recordkeeping, compliance, legal filings, and more. Seem small? They’re not.
-
Investment Management Fees – Every mutual fund in your 401(k) charges a fee (called an “expense ratio”), even if it loses money.
-
Revenue Sharing Fees – Kickbacks paid between fund companies and plan administrators—rarely disclosed.
-
Wrap Fees – Layered fees charged by financial intermediaries on top of the fund fees.
-
Advisory Fees – If you’re working with a financial advisor through your 401(k), that’s another cut.

According to the Department of Labor, fees can eat up as much as 30% of your returns over time. That’s not a rounding error. That’s a retirement disaster.
If you have $500,000 in a 401(k), and you're paying just 1% in fees annually, that’s $5,000 gone every year—even if the market tanks.
2. You Don't Control The Tax Rules - The Government Does
Here’s the uncomfortable truth: the U.S. government is your business partner in a 401(k), whether you like it or not.
-
You defer taxes now…
-
But you pay ordinary income tax later—on every dime you withdraw.
-
And guess who decides what the tax rates will be when you retire? That’s right—not you.
If you believe taxes will be higher in the future (and let’s be honest, when have they ever gone down long-term?), you could be setting yourself up to pay more in retirement than you would today.
With a traditional 401(k), you’ve effectively said, “I’ll pay whatever tax rate the government decides—years from now, when I have no control over it.”
That's not a retirement plan. That’s a gamble.

3. Required Minimum Distributions (RMDs): You're Forced To Pay Up
At age 73 (as of current law), the government doesn’t just ask for their cut—they demand it. Required Minimum Distributions (RMDs) force you to start pulling money out of your account, even if you don’t need it.
Not only are these withdrawals taxed as income, but they can:
-
Increase your Medicare premiums
-
Push you into a higher tax bracket
-
Trigger taxation on your Social Security benefits
4. Market Risk? That's On You
401(k)s are typically tied to mutual funds, which means your retirement is exposed to market volatility. You absorb all the downside—while fund managers still get paid, no matter what.
And when the market crashes (as it has, and will again), you don’t get a bailout. You just get less money.
So... Is The 401(k) Really A Scam?
Let’s be clear: a 401(k) is not illegal, but that doesn’t mean it’s the best vehicle for everyone. If you strip away the marketing and dig into the mechanics, here’s what you get:
-
High fees
-
No control over future tax rates
-
Forced government partnership
-
Market risk with no guarantees
Does that sound like a retirement strategy you’d knowingly sign up for?
A Better Way: Control, Growth, and Guarantees
At John Nunes Financial & Insurance Services, we help clients explore retirement strategies that offer tax-free income, guaranteed growth, and no market downside.
Fixed Indexed Annuities, for example, provide:
-
Principal protection
-
Market-linked upside (without the risk)
-
Tax-deferred growth
-
Guaranteed lifetime income
And most importantly—no surprise fees, and no government IOUs waiting to be cashed in.
💬 Ready to rethink retirement? Let’s talk about options that put you in control—not Wall Street or Washington.
📞 Contact John Nunes Financial & Insurance Services today.
(800) 900-3150 |
