What RICH PEOPLE Know About 401k’s That YOU DON’T 🚨

🎥 Jun 29, 2022 📺 7 Figure Squad ⏱ 0m 👁 5338922 views

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About Michael Hobbs

Michael Hobbs, President and Chief Operating Officer at Independent, has been active across multiple sectors, including financial technology, environmental advocacy, and industry leadership. In a 2022 interview, Hobbs advised against contributing to a 401(k) beyond the employer match, arguing that future tax increases could make such accounts disadvantageous. He stated that "401ks made sense when tax rates were coming down" but that "taxes are going to have to go up," and recommended instead putting additional savings into cash value life insurance for tax-free income in retirement. He described 401(k)s and IRAs as "going to be like chains around people's necks." Hobbs has also spoken about his experience as a former chairman of the AIM/R board, where he served 12 years, calling it "a rewarding experience" and an opportunity to "give back and to hopefully drive the industry forward." In a 2018 presentation, he introduced his venture Flow Fintech, which aimed to reduce payment processing costs for retailers by linking payments to loyalty schemes, with a goal of building a virtual bank. Earlier, in a 2013 TEDx talk, Hobbs discussed his transition from environmental protester to stakeholder, advocating for engagement across sectors to address sustainability challenges. He said, "I'm not saying of course that we should stop protesting, but I am saying that at the same time and maybe more of a measure, we need to be engaging as well."

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Transcript (1 segments)

Michael Hobbs0:00

401ks made sense when tax rates were coming down. You get a tax deduction up here, it grows tax deferred, and you retire and you pay tax down here. But we know taxes are going to have to go up, so how much sense does it make to take money out of your check today, defer that baby, though taxes go up to 50, 60, then I'm gonna take it out and pay? That doesn't make any sense. So what I tell people is, does your company have a 401k? Yes. Does it have a match? Yes. Explain the match. Well, if I put in four percent, they match with four percent. Okay, good. I do that, that's 100% rate of return. But above the match, I wouldn't put in my 401k anymore. I would put that into cash value life insurance because I want to be in control. I want to have tax-free income in retirement. And that 401k and that IRA, those are going to be like chains around people's necks. They're going to regret that they put as much money in those products as they did.