Is Your 401(k) Enough?

Your 401(k) can be the foundation of a strong retirement plan—but is it enough by itself? The answer depends on your goals, your understanding of your plan, and how well your strategy adapts over time. Let’s explore what really matters as you approach retirement, so you can move forward with clarity and confidence.

It’s no surprise why 401(k) plans remain a cornerstone of retirement savings. They offer tax-deferred growth, generous contribution limits, and in many cases, an employer match—an immediate return on your savings.

But as retirement approaches, many Americans are asking a key question: Will my 401(k) actually deliver the income I need for a fulfilling post-work life?

Despite these benefits, many people want more control, clarity, and confidence from their plan. Common frustrations include limited investment choices, lack of personalized guidance, and reduced control over account decisions.

Compounding these challenges is a widespread lack of practical financial education. While 401(k)s dominate workplace savings plans, many people aren’t sure how their accounts work—or how to make the most of them. The good news? Anyone can build this knowledge, and it starts with asking the right questions.

According to the Investment Company Institute, as of Q4 2023, Americans held $11.5 trillion in defined-contribution retirement plans. Of that, approximately $7.2 trillion—over 62%—was held in 401(k) accounts.

Lack of Financial Literacy Takes Its Toll

Many frustrations surrounding 401(k) plans are rooted in a lack of basic financial knowledge. Consider the results of the “Wellness in the Workplace” survey from KRC Research:

Knowledge Gap	Survey Findings
Basic 401(k) knowledge	71% failed a retirement quiz (missed ≥3 of 9 questions)
Understanding mutual funds	76% could not define a mutual fund
Knowing contribution targets	57% didn’t know what % of income to save
Plan provider awareness	66% didn’t know who managed their 401(k)
Small business workers	Nearly 80% failed the 401(k) knowledge quiz

This knowledge gap often leads to decreased confidence. The same survey found:

Confidence & Behavior	Response
One-on-one guidance	50% said they receive none—most want it
Comfort making investment choices	69% were not confident
Fear of falling short	40%+ worried they wouldn’t meet their goals
Recalling investment choices	25% couldn’t remember how they chose their 401(k) investments
Account monitoring	Only 16% regularly check their account
Time spent planning	Just 12% consistently plan for retirement

Why Are 401(k)s So Dominant?

With so many savers uncertain or underinformed, why do 401(k)s continue to lead the way in retirement funding?

A primary reason is the employer match. It’s a powerful incentive. According to the Plan Sponsor Council of America’s 67th Annual Survey of Profit Sharing and 401(k) Plans, companies contributed an average of 4.9% of pay to 401(k) plans in 2023, reflecting a modest increase from the prior year.

For many employees, matching funds represent a no-brainer way to build retirement savings—despite the plan’s complexity or limitations.

Confidence Begins with Education and Knowing Your Options

The data is clear: Americans need better financial education—and that includes understanding how their 401(k) fits into the broader retirement picture.

Bridging the confidence gap starts with financial literacy. The more you understand your plan’s structure, fees, and investment choices, the better positioned you are to build wealth and avoid surprises later.

If you’re unsure about your plan or your future income, now is the time to get answers. Foxcove Financial can help you review your 401(k) alongside other income and protection strategies—so you can make decisions that fit your retirement vision.

You Can Unlock Your 401(k) Before Age 59½ Without Penalty

If you’re dissatisfied with your 401(k), you’re not alone. Some people consider a 401(k) rollover to gain more control. But before you take action, consider this: rollover decisions are often irreversible. Work with a qualified financial, tax, or legal professional to evaluate your situation carefully.

Many people believe they can’t touch their 401(k) without penalties until age 59½. But there are exceptions. In the right circumstances, it may be possible to access your current 401(k) at any age, in any amount—without penalties.

While this isn’t the right move for everyone, it could be a smart strategy for certain individuals. As always, the key is making sure the decision fits your retirement needs, financial goals, and broader planning context.

Several life events may allow penalty-free access to your 401(k), depending on your plan’s rules and IRS exceptions. Here’s a breakdown:

Life Event	Penalty-Free Access?	Key Notes
Changing Jobs	✅ Yes (via rollover)	You can roll your 401(k) into an IRA or new employer plan without taxes or penalties
Retiring from Your Job at Age 55 or Older	✅ Yes	Penalty-free withdrawals allowed if you separate from service at 55+ (50+ for public safety employees)
Divorce (Qualified Domestic Relations Order)	✅ Yes	A QDRO allows funds to be transferred to an ex-spouse without penalty
Total and Permanent Disability	✅ Yes	IRS allows early withdrawals if you meet their definition of total disability
Leaving Your Employer at Any Age	❌ Not by itself	Withdrawals before 59½ still trigger penalty unless exceptions apply
Rolling Over to an IRA and Using Exceptions	✅ In Some Cases	IRA withdrawals for first-time home purchase, higher education, etc. may avoid penalties (not 401(k) direct)

For questions about your personal tax situation, be sure to consult your CPA.