If you were born between 1946 through 1964, you’re a BabyBoomer. Born in the first 10 years of that range? You’re anticipating retirement — retirement is imminent — you are retired — or you can’t retire due to finances. It’s my opinion there’s a huge new class emerging. Americans who will either never be financially able to retire — or retire on a similar budget to the one on which they lived while a young adult, in the infancy of their career. They’ll be movin’ in with younger family, most often one of their kids, or dependent upon their financial help. For the most part, they were responsible, hard working, tax paying Americans. They were told the retirement for which they yearned was within their grasp, if only they opted to go all in on their employer’s retirement plan — a 401k. Again, in my opinion, history will show the 401k to be a decidedly significant factor in the epic fail of an appallingly sad last chapter for a large segment of the BabyBoomer generation. The IRA and it’s various iterations are equally guilty. Every year for awhile now, a steadily increasing percentage of the conversations I’m having with folks, have one thing in common. They’ve been contributing to their employer’s 401k plan for 15-30 years. Yet, they realize it’s been for naught. Though a few hundred grand seems like a lotta money to most, imagine you’re 52. You own your home, which, Lord willin’ and the creek don’t rise, will be debt free at 65. You have around $3-500,000 in your 401k. The phrase ‘screwed the pooch’ comes to mind — and it ain’t funny. The first reality hittin’ your forehead like a sledgehammer is that your plan to retire before 60 has been shredded. In fact, what’s really keepin’ you and your better half up at night is wondering if you’ll be able to quit workin’ before you’re 70. It won’t make ya feel any better, but you’re rowin’ a very crowded boat. You’re not alone by any means. Fact: By the time the typical American man is tasting his 57th birthday cake, he has considerably less than $100,000 in his 401k. Fact: IF he owns a home, and IF that home is debt free at retirement? He’ll be working ’til he physically can’t work any longer. Fact: He has the next decade or so to figure out a better way. Picture retirement with a free ‘n clear home, Social Security, and an ever dwindling savings account. What I’m so desperately trying to tell you, is that there’s a virus inside your retirement plan. It’s called a 401k, sometimes an IRA. It will not get you to retirement. It’s a virtual lock to fail. The average return for the typical American employee’s 401k the last two decades is less than 3.5%. Stop reading a minute and ponder what that means for your retirement. It means you won’t be retiring. I wish there was another way to say it, but the BabyBoomers have been colossally, expertly duped. Using the bait of relatively meaningless tax deductions annually, the government has purposefully arranged to reap the benefits of your hard work AFTER you retire. They give you $1-4,000 in tax savings a year. Even if you built your 401k to a million bucks — you won’t, but let’s say you do — and you figure how to safely generate a 7% annual yield — you won’t, but let’s say you do — that’s $70,000 a year. If it took you 30 years to get there, you saved a total of $90,000 in income taxes. At $70,000 a year, a laughable return from a 401k in retirement, you’d be paying at least $15,000 a year in state/federal income taxes. In other words, in just six years you’d pay Uncle Sam the same amount you ‘saved’ in the 30 years it took you to get there. Why would you do that to yourself on purpose? Of course, the reality is even worse. Even if you managed to retire with $1 million in your 401k, you simply are not gonna find a safe yield of 7%. Today, the people who’ve been told by their company’s retirement plan advisor for the last 20-30 years to expect a 4% yield? They’re now figuring out how they can live on the $20,000 a year their 10 year Treasury Bond is now yielding. That is, before taxes. It’s best to realize sooner rather than later, that in the race to a magnificently abundant retirement, the 401k is a dead horse. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free I’m here to tell ya that if you can’t use real estate to slaughter the results of a 401k beginning with only 50% of your 401k’s current balance, something’s wrong. Our guy above, with a $350-500,000 401k balance at 52 years old? He can generate a retirement income from real estate using just $175-250,000 — 2-5 times what he’ll end up with if he remains in his 401k with twice the money. In fact, given that range of beginning investable capital, he’ll be able to generate a retirement income anywhere in the range of $55-74,000 a year — using real estate as his vehicle. Note: I’m using half the balance of the typical 401k not only to make the point, but because that’s about what you’ll net after taxes and penalties if you opt to unsaddle that dead horse and get out. Using the 4% yield the advisors at most companies tell 401k owners to expect in retirement, the average American worker would need to retire with a minimum 401k balance of, give or take, $1,375,000. And for the record, that would generate only the $55,000 at the bottom of the real estate income range. Not to worry though, 99.9% of Americans with 401k’s are never come within shoutin’ distance of a seven figure 401k. Not gonna happen. “Not freakin’ likely,” says our friend, Captain Obvious. Don’t be discouraged. You can turn things around. But ’til you stop bettin’ on a dead horse, your retirement is less likely to become reality each passing year. Give serious thought to switching horses. Yeah, in the middle of the stream. Get back in the race. Your dead horse ain’t goin’ anywhere. Well, that’s not entirely true. Your 401k is quickly turning you into a statistic. You’ll be one of the millions of BabyBoomers either workin’ ’til they can’t any longer, or hoping their kids can help ’em. The moral of the story? Dead horses don’t win races.