The long answer...
This topic deserves much more than a short description can provide.
The retirement system utilized by many in the United States today is inefficient and not very effective. It is set up to benefit big financial institutions and banks much more than you and I. Many have the choice of participating in a 401k, 403b, 457, TSP, IRA or another employer-sponsored retirement account.
The account is presented to you to save and invest into retirement with a “Match”, from your employer. It looks good from the outside, but if you dig a little deeper you will be disappointed. These plans limit most investing to high fee mutual funds and annuities.
The average 401k has only 30 mutual funds to choose from and the industry says that 85% of mutual funds underperform the stock market.
You are also limited from the freedom of using other financial vehicles such as stocks, options, futures, forex (foreign exchange market) and other financial instruments. These other vehicles can be used to not only profit with lower fees but limit your risk in each market.
One study published by Elliot Wave International showed that if you look at thirty-year blocks of time starting in 1900 with the last thirty-year period of time starting in 1986, 73% of the time the return of the broad stock market was less than 7% per year.
When you adjust for inflation, fees, taxes, commissions, and other transaction costs it can lower the return to 2.4% per year. Congress has heard testimony that some 401k plans can eat up 50% of the income into some plans.
Today, the average Baby Boomer in or nearing retirement has only $164,000 put away in all household retirement plans as a median. To make things worse, managing risk in these plans is very difficult as the assets in the mutual funds in the account can change frequently.
The financial markets industry teaches that you should never have more money invested than you can afford to lose. At the same time, they teach that cash in an account is bad. Today the amount of money in cash in retirement accounts is at an all-time low.
At the same time, the markets are in documented bubble territory. What would another 30-50% corrective move in the markets do to your current 401K account balance?
If your accounts are in company-sponsored plans, it is essential to learn how to use self-directed Roth or traditional IRAs to reach your retirement goals and at the same time protect the money you have in your company plan.