Whatever Happened To The American Dream?

Family sitting on sailboat on the ocean

The American Dream used to be about a comfortable retirement after your career. Unfortunately, that has become less and less realistic for many people. In fact, even reaching the middle class doesn’t convey the kind of financial security that it once did.

Why? There are many reasons. The cost of healthcare continues to rise. College tuition is now all but out of reach for all but the wealthiest of families. All too often, buying a home is also unaffordable.

On top of it all, the American retirement system is in shambles. People don’t know how much to save, and those that do often aren’t saving enough. The fact is, 401(k)s haven’t turned out to replace pensions in the ways that many had hoped they would.

While it has gotten harder for Americans to save for a nice retirement, there are still ways to achieve this goal. But they maybe aren’t what you’d think.


One of the first things that most people jump to when thinking about retirement is a 401(k). While there’s no doubt that they can be useful, many retirement advisors agree that a single 401(k) plan is no longer enough to guarantee a comfortable retirement. 

One issue is the limited amount of money that you can put into a 401(k) in any given year. The maximum contribution limits are actually quite low, with the government capping contributions at $20,500 in 2022. If you’re making anywhere over $150,000 a year, that’s still the maximum amount that you can add to your account. This is only about 13.67% of your annual income, which is well below the recommended amount that most people will need to retire comfortably. 

In other words, unless your employer is contributing heavily to the 401(k), it probably shouldn’t be the only retirement device in your tool belt.

Further, inflation and taxes will eat away roughly 30% of the value of your 401(k) in retirement. This is a direct effect of taxes and inflation.

Inflation impacts everyone in the economy. A sound investment that matches and even exceeds inflation is really the only way to come out on top. This is the main reason that Americans need to invest fairly aggressively, keeping their 401(k) growing to beat rising costs. 

401(k)s are also tax-deferred, but that doesn’t mean that the government doesn’t get its cut. Although the money you put into a 401(k) isn’t immediately taxed, it will be taxed when you begin to make withdrawals. This is another fundamental problem with the 401(k). People tend to end up in a higher tax bracket when they are withdrawing money from their retirement program than when they put it in. If you plan to be making more money near the end of your life, then your 401(k) will be taxed at a higher rate than the rate you were locked into when you put the money in.


John C. Bogle, the founder of wealth management giant Vanguard, once famously made the case against 401(k) investing. He claimed that the tax-deferred system was never designed to be used the way people have started to rely on it now. He believed that the 401(k) system was too flexible to work with many Americans and that there wasn’t a significant amount of evidence that it would support a majority of users throughout their retirement. 

“At first, the 401(k) was designed to be a thrift plan, an extra, a savings plan,” said Bogle. “It was never designed to be a retirement plan. You can see it in its very structure. There’s no requirement to put money in, no requirement to pull it out.”

In other words, Bogle joined other experts in saying that most people don’t have the financial savvy to properly make a 401(k) work for them.

The fact is, successful investing isn’t based on any kind of standard rate of return. Instead, it all depends on how you invest the money you’ve decided to put away. There’s a tendency for people to think of a 401(k) as a one-and-done solution for retirement saving, but this doesn’t always work out so well. Expert decision-making and good investment choices are what make 401(k)s viable at all.

Some people planning for retirement try to manage their 401(k) by themselves, or in a standardized fashion. But this takes a lot of time, research, and financial decision-making skills to execute properly.

The COVID-19 pandemic offers us a perfect example of the dangers of traditional retirement plans. During the pandemic, 20% of Americans with retirement savings accounts dipped into their funds, and a full 51% have raided their funds at some point since their creation.

This represents a failure of the retirement system as a whole. While it makes sense to give people a choice in the matter, many people are forced to make hard choices because of events out of their control. These plans operate on an assumption that the world market will continue to grow at a similar rate to its historical growth. The past few decades have shown us that this assumption may be unwise. 


Planning for retirement is inherently tricky. There are a huge number of plans and options available to Americans who may not be able to use them to their fullest potential. While some Americans may believe that they are capable of making these difficult decisions throughout the lifetime of their retirement funds, the amount of knowledge required to successfully navigate this process is extensive. 

But there are investing experts out there who are capable of matching and even beating the system. Instead of trying to self-diagnose and potentially introduce mistakes, sometimes the best option is to go straight to the source of the best information. If you’re unsure of your ability to correctly manage this wide range of choices, it makes sense to tap into a strategy of informed investing to plan for retirement. 

In our increasingly interconnected world, this might not be as hard or as expensive as you might think. 

By connecting everyday investors with some of the most experienced traders in the world, Echo Trade is revolutionizing the way that we view investing and access to financial experts. Instead of wrestling with the complexities of a failing retirement system, investors are placing their trust in firms and people who have dedicated their lives to the pursuit of the market. 

Retirement may be complicated, but you can be sure you’re not in it alone.