Should you really stop contributing to your 401(k) in 2026? Here’s the real truth financial ‘experts’ try to hide

<h1>Should you really stop contributing to your 401(k) in 2026? Here’s the real truth financial ‘experts’ try to hide</h1>
<p>According to the loudest voices on social media, the traditional 401(k) is a trap designed by the government and big bad corporations to steal your money.</p>
<p>Grant Cardone, for instance, has referred to 401(k)s as “the biggest scam on the American public, perpetuated by our banks” (1). The solution, they say, is to abandon traditional retirement accounts and pile into real estate, crypt, or whatever happens to be trending.</p>
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<p>That framing is entertaining. It is also mostly nonsense. The 401(k) plan may not be perfect, but it is an integral part of millions of Americans’ retirement strategy.</p>
<p>In fact, a growing number of investors have managed to hit seven figures in their 401(k)s. As of the third quarter of 2025, the number of 401(k) millionaires reached a record high of 654,000 individuals, according to Fidelity (2).</p>
<p>Simply put, the 401(k) is a robust tool for wealth building. That being said, there are legitimate (non-conspiratorial) reasons to suspend or reduce your contributions. Under certain circumstances, the math suggests it’s more efficient to place your money in alternative accounts rather than in your 401(k).</p>
<p>Here are three potential reasons why you may want to consider pulling back on your 401(k) contributions.</p>
<h2>1. Your RMDs are ballooning</h2>
<p>For high-income and wealthy individuals, the biggest risk isn’t running out of money. It’s taxes.</p>
<p>Saving too much in a 401(k) plan, especially as you approach your 70s, could put you at risk of large Required Minimum Distributions (RMDs). These are government-mandated withdrawals from your tax-deferred accounts starting at age 73 for most individuals under current law (3).</p>
<p>If your 401(k) balance is relatively modest, these mandated withdrawals may not impact you much. But if you have multiple millions locked into this account, you could face huge withdrawals in your 70s that push you into a higher tax bracket and trigger additional charges such as Medicare’s Income-Related Monthly Adjustment Amount (IRMAA).</p>
<p>With this in mind, take some time to forecast how big your RMDs could be given your current financial plan and consider adjusting your plans and reducing or suspending 401(k) contributions if these withdrawals are projected to be unusually large relative to your income needs.</p>