Is Your 401(k) Enough? Here’s What You Should Know

04.24.2026 | Category: Build Your Financial Future

Estimated Read Time: ~7.5 minutes

Reviewer: Adam Olson, CFP®, LUTCF, FSCP, RICP
Certified Financial Planner®

Summary: A 401(k) is a popular choice for retirement savings, but it might not be enough on its own. This guide explains why relying solely on a 401(k) could be insufficient, explores other options to consider, and offers smart strategies to enhance your retirement plan.

Since its inception in 1978, the 401(k) has become the primary retirement savings plan for many Americans. As of September 2025, these accounts collectively hold about $10 trillion across more than 730,000 plans, supporting roughly 70 million active workers and additional millions of retirees who depend on them for income.¹

While a 401(k) can be a solid piece of a retirement savings plan, all by itself, it may not be enough to help you reach your financial goals. Additionally, since a 401(k) is tied to your job, you won’t be able to contribute if your employer does not offer one or if you spend any time out of work.

You might wonder if your 401(k) balance is sufficient for a comfortable retirement. The answer involves more than just your account balance. Factors such as the cost of living, healthcare expenses, tax planning and your lifestyle choices in retirement all play a significant role in determining if your 401(k) will meet your needs.

Why a 401(k) alone may not be sufficient

Maximizing your contributions to your 401(k) plan is almost always a great idea. But broadening your strategies beyond what’s offered by your employer can help augment even the best 401(k) plan and give you more options to accumulate assets as well as help protect them.

Contribution limits: Annual contribution limits typically change each year. But even if the current contribution limit seems like a decent amount, it might not cover your retirement income needs.
Job dependency: Since your 401(k) is linked to your job, frequent job changes, career breaks, or working at places without a plan could lead to significant contribution gaps.
Tax treatment: Withdrawals from a traditional 401(k) are taxed as regular income, potentially pushing you into a higher tax bracket during retirement.
Investment limitations: Most 401(k) plans only offer mutual funds. For exposure to alternative assets, real estate, or broader index funds, you might need to explore options beyond your workplace plan.

In summary, while a 401(k) can be a powerful savings tool, depending solely on it might not suffice for a comfortable retirement. To answer the question, “Is a 401(k) enough for retirement?” requires considering the broader financial picture, not just your account balance.

Alternatives to augment your 401(k)

While a company 401(k) plan can be an easy and effective way to start saving for retirement, additional strategies can offer a mix of options, tax benefits, lower fees and benefits to help build a robust financial future.

Contribute to an Individual Retirement Account (IRA)

As with 401(k)s, annual IRA contribution limits also can change year to year. Additionally, the money is untaxed until you start making withdrawals. You get tax-free growth and a tax deduction in the year you make contributions. IRAs also may be protected in bankruptcy and can be passed to heirs. Your investment choices can be more robust, especially if you use a self-directed IRA, which can invest in real estate, businesses and other assets beyond mutual funds.

But be aware that you can’t touch the money before age 59-1/2 and the account must be at least five years old, or you may pay a significant penalty, plus taxes. Once you stop working, you can’t make new contributions.

Contribute to a Roth IRA

This functions like an IRA, but you contribute after-tax dollars, so you don’t get a deduction. But while you do pay tax on your contributions, you can get tax-free growth on all your money. As with a regular IRA, you can’t withdraw earnings before age 59-1/2 and until five years after the account is opened without penalty. However, you can withdraw your contributions at any time, making this a good account for young savers who might hit a rough patch. However, you may have to pay taxes and penalties on earnings in your Roth IRA for early withdrawals before age 59.5.

Your contributions to a Roth IRA are combined with contributions to any regular IRAs under the same annual limit. Early withdrawals of earnings may also face a 10-percent penalty, plus taxes.

Invest in life insurance

Universal, permanent or whole life insurance is an option for those who have maxed out contributions to other tax-deferred accounts, such as 401(k) plans. Insurance policies can provide several different options within the contract, including tax benefits, death benefits, estate planning options and more. Policy owners can also take loans against their policies, offering additional financial flexibility. You can also keep most policies for your entire life, unlike term insurance policies that expire after a fixed period.

A popular permanent life insurance policy is indexed universal life insurance. This type of insurance policy pays a death benefit and builds cash value, like regular whole life insurance, but ties its return to a standard benchmark index, such as the S&P 500. Premiums and the death benefit can be adjusted based on your needs, compared to typical whole life policies, while offering the potential for larger gains.

If the benchmark index that the policy is tied to declines, policyholders may see less profit, and as with any policy, returns will lag the underlying index. Be aware that some policies cap the amount of gains.

How much retirement savings do you actually need?

The amount you’ll need in retirement varies widely. What might be enough for one person may not suit another. Consider personal goals and circumstances:

Living expenses: Include housing, food, transportation, and leisure.
Healthcare costs: Plan for potential medical expenses and insurance.
Debt: Account for any debt you may carry into retirement.
Longevity: Many underestimate how long they might live.

Some people want to travel and explore the world, while others plan to stay closer to home. Some expect significant healthcare costs, others may not. Overall, the exact amount of retirement savings you’ll need depends on your situation and your plans for retirement.

Smart strategies to strengthen your retirement plan

Building a more financially secure retirement means thinking beyond just contributing to a 401(k). Here are a few practical approaches to consider:

Diversify accounts: Balance between tax-deferred (401(k), traditional IRA), tax-free (Roth IRA) and different types of life insurance.
Automate savings: Use automatic transfers into an IRA or brokerage account.
Plan for healthcare: Consider using a Health Savings Account (HSA) for future medical expenses.
Monitor fees: Regularly review investment fees and policy costs.
Stress-test your plan: Consider scenarios like market downturns or unexpected expenses.

Strengthening your retirement plan is about preparing for the unexpected and avoiding reliance on a single account. The more levers you have to pull, the better positioned you’ll be when it’s time to stop working.

Certified Financial Planner™ Adam Olson adds that it’s also important to consider your income when thinking about your retirement strategy. He adds, “If you’re making $100,000, maxing out your 401(k) might be enough. But if you’re making $500,000, that alone won’t get the job done, you need a smarter order of operations.”

If you’re in that income range, he adds to consider maxing out a 401(k), funding a Roth IRA if you’re eligible, maxing out your HAS, building a taxable brokerage account and exploring life insurance strategies.

“Just as important is building tax diversification by saving across pre‑tax accounts like 401(k)s and IRAs that are taxed later, tax‑free Roth accounts that are never taxed, and taxable brokerage accounts that offer flexible access,” Olson says.

Taking control of your retirement future

Your 401(k) can be a sound foundation, but it’s rarely the full picture. Exploring diverse saving and investing strategies can boost your financial confidence.

Mutual of Omaha offers many tools and resources to help you understand your retirement readiness, ensuring you feel secure about your future lifestyle. To understand what is best for you, schedule an appointment with a Mutual of Omaha financial professional.

Wondering how long your money will last in retirement?

Try our complimentary calculator to track your retirement savings progress.

Frequently asked questions (FAQs)

Can delaying retirement help me build a better 401(k) balance?

Yes. Working longer allows more time for contributions, employer matches, and investment growth. It also reduces the number of years you’ll rely on savings, potentially increasing financial security.

What is the average 401(k) balance at retirement?

It varies, but many retirees have between $200,000 and $300,000 saved, which may not cover all expenses.² Additional savings or income streams are often necessary to meet retirement needs.

How much of my monthly income should I save for retirement?

The exact percentage depends on when you start saving and on your goals. Consistency and increasing contributions matter more than reaching a specific percentage. A Mutual of Omaha financial professional can help you determine how your savings fit into your plan and what needs to be saved to pursue your goals.

How does inflation impact my retirement savings?

Inflation reduces the purchasing power of your savings over time. Diversifying investments and adjusting your retirement plan can help mitigate its effects.

Reviewer: Adam Olson, CFP®, LUTCF, FSCP, RICP

Certified Financial Planner®

Adam is a Certified Financial Planner, author and podcast host with a deep passion for helping clients navigate all aspects of personal finance, from financial planning and investment management to life and health insurance. His goal is to empower individuals and families with the knowledge and tools they need to make confident financial decisions. He resides in Norfolk, Nebraska with his wife, Katie, where they are raising their four boys.

Sources:

ICI, 401(k) | Investment Company Institute, Accessed April 2026
SmartAsset, What Is the Average 401(k) Balance for Retirees?, May 2025

Disclosures:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

466625_0426