Annuities, Whole Life Insurance & 401(k)s: What Most People Get Wrong

After my last lesson on retirement income, the comments came flooding in. Some said whole life insurance is a scam. Others said annuities are a joke. And plenty stood by their 401(k) like it was gospel.

And honestly? I get it. There's a lot of noise out there. It's hard to know who to trust and what to believe — especially when it comes to financial products that no one ever taught you about in school.

That’s exactly why I created the Retirement Income School — to help you understand the tools that actually create income, protection, and peace of mind in retirement. In this blog post, we’re breaking down the pros and cons of 401(k)s, annuities, and whole life insurance — so you can make informed decisions with confidence.

My 401(k) Backstory — Or Lack Thereof

I’ve never had a 401(k). I’ve been an entrepreneur most of my life, and when I was in grad school earning my PhD, I wasn’t offered one. But my husband did have a 401(k). He contributed consistently throughout his employment — until we made a pivot.

We realized that while the 401(k) was good at helping us accumulate savings, it offered zero guarantees for income, tax protection, or long-term care. So he cashed it out, and we began exploring other options — including whole life insurance and annuities.

That journey led me to become a licensed insurance agent, earn my RSSA certification, and pursue my RICP designation. Today, I help people like you build customized income plans using safe money strategies.

A Brief History of the 401(k)

The 401(k) was never designed to be a full retirement plan. It was introduced in 1978 as a tax-deferred supplement to pensions. But in the 1980s, companies realized they could replace traditional pensions with 401(k)s — shifting the responsibility of retirement planning from employers to employees.

By the 1990s, 401(k)s had become the dominant retirement savings vehicle in America. But here's the thing:

• They're great at building wealth.
• They’re not great at turning that wealth into reliable income.

6 Major Drawbacks of the 401(k)

1. It’s not an income plan.
The outdated “4% rule” often fails in the real world. Sequence-of-return risk, longevity, and market timing all make income from a 401(k) unpredictable.

2. You’re exposed to market risk.
There’s no floor. No downside protection. Just hope the market doesn’t crash when you need your money most.

3. It’s fully taxable.
Every dollar withdrawn from a traditional 401(k) is taxed as income — reducing your retirement spending power and potentially increasing your Medicare premiums.

4. The fees add up fast.
Many plans charge 1–3% annually in hidden fees — which can drain hundreds of thousands of dollars over a lifetime.

5. You don’t control your own money.
Funds are locked until age 59½. Loans come with fees and risks. And at age 73, RMDs force you to withdraw money whether you need it or not.

6. No long-term care protection.
One health event can wipe out your savings. There’s no built-in coverage for assisted living, nursing care, or memory care.

What Whole Life Insurance Can Do

Whole life insurance is often misunderstood — but when structured properly, it becomes one of the most powerful financial tools available.

• Tax-free access to your money via policy loans
• Guaranteed growth that isn’t tied to market performance
• Living benefits for long-term care and critical illness
• A leveraged, tax-free legacy through the death benefit

It’s not just about what happens when you die. It’s about what you can do while you’re alive — and retired.

What Annuities Can Do

Annuities solve one of the biggest problems in retirement: running out of money.

• Convert savings into guaranteed income for life
• Provide principal protection against market losses
• Eliminate sequence-of-return risk
• Include death benefit or refund options for legacy planning

And if you’re wondering what happens if you die early — don’t worry. Many annuities return the remaining value to your beneficiaries. Some even include joint lifetime income options for your spouse.

But What About the Fees?

Yes — annuities and whole life have costs. But unlike 401(k) fees, those costs actually fund benefits.

• 401(k): ~1–3% annual fees BUT with no income guarantee
• Annuities with income riders: ~1.2% fee for lifetime income
• Whole life premiums: Typically covered by dividends within 3–5 years

You’re not just paying to manage your money — you’re buying protection, access, and long-term financial confidence.

And Yes, Commissions Exist — Everywhere

Let’s address the elephant in the room: commissions. Yes, insurance agents get paid. So do financial advisors. So do fund managers. The difference?

• With me, there’s transparency.
• You’ll know exactly what you’re paying for, and why.

My goal is never to “sell” you something. It’s to help you feel confident and secure with your plan — and to protect what you’ve worked so hard to build.

Your Next Step: Secure Your Income Plan

You’ve spent years building your wealth. Now it’s time to protect it.

Whether or not you have a 401(k), you deserve a retirement plan that gives you:

• Predictable, guaranteed income
• Access to your money — on your terms
• Protection from market risk and taxes
• A way to leave a lasting legacy

That’s what safe money strategies are all about.

Ready to Retire Financially Relaxed?

My goal is to help you eliminate the fear of running out of money, avoid costly mistakes, and retire with confidence and security. When you have safe, predictable income in place, you’re free to actually enjoy retirement — not just worry your way through it.

Learn more at the Retirement Income School
Want to talk? Schedule a Retirement Income Q&A Call — I’d love to support you.

This is your chance to learn what you wish school had taught you so you can learn how to keep your money safe and make it last, so you can enjoy retirement!