Should I Max Out My 401k?

It’s one of the most common questions in personal finance.
And on the surface, it sounds like a smart, responsible move:

“Max it out.”
“Defer the taxes.”
“Grow the money.”

That’s the script most Americans have followed for decades. But if you're reading this, chances are you’re starting to wonder:

Is that really the whole story? Is there a better way forward, especially for the next chapter of life?

At Woolman Financial Group, we believe there is.

We’ve worked with hundreds of individuals and families who don’t just want to “retire.” They want to repurpose their time, their energy, and their resources into something that matters—even more than it did in their working years.

Most of the world calls it retirement.
We call it repurposement—the intentional shift from working for a paycheck to living with greater purpose.

We believe:

“Retirement is the end of work. Repurposement is the beginning of a new purpose.”

Repurposement isn’t about slowing down. It’s about stepping into legacy, leadership, contribution, and joy. It’s about using your accumulated wisdom, wealth, and life experience to bless your family, community, church, and world.

So, no—this article isn’t here to bash the 401(k).
It’s here to show you how it fits into something far more meaningful.

Let’s get started.

401(k) Is Just One Ingredient—Don’t Mistake It for the Cake

Let’s say you want to bake a cake.

You start by going to the store and buying the ingredients: flour, eggs, sugar, baking soda, and oil. You lay them out on the counter and take a little taste of each one.

Not exactly delicious, right?

Raw flour? Bleh. Raw eggs? No thanks. Even sugar on its own can be a bit much. But mix those ingredients together, and something starts to form. The batter kind of tastes good. It’s not a cake yet—but it has potential.

Now, what happens if you get impatient?

What if someone promises a shortcut? A get-rich-quick oven that bakes the cake in half the time?

You crank up the heat. And what comes out? A burnt mess.

However, if you follow the recipe, set the oven to the right temperature, and let it do its job, time and patience work in your favor. The cake rises. It smells amazing. You take it out and let it cool. Then you add the frosting, step back, and admire what you’ve created.

And here’s the thing:

You still haven’t enjoyed it yet.

The cake is just sitting on the counter. That’s potential. But it’s not purpose.

So, what does it take, actually, to enjoy the cake?

You cut the cake. You serve the cake. You invite people over, gather around the table, and you enjoy the moment together. The joy isn’t just in what you built—but in how it’s shared, experienced, and celebrated.

That’s exactly how repurposement is meant to feel.

Too many people create financial recipes that end up gathering dust on the counter. All accumulation, no activation. They follow the recipe (or at least the one they were sold)—but no one ever showed them how to enjoy the outcome or how to avoid burning it.

And the 401(k)? It’s just one ingredient.

It’s not the cake. It’s not the oven. It’s not the frosting. It’s one ingredient in a much bigger recipe, a recipe designed to support a repurposed life.

What Most People Aren’t Told About 401(k)’s

For years, 401(k)’s have been praised as the gold standard of retirement planning. But most people have never heard the whole story.

They’ve been sold the brochure, the color pictures, the sunshine, the promise of a secure tomorrow—but not the small print of real-life limitations. It’s not that 401(k)’s are inherently evil. But when it becomes the only ingredient in your financial recipe—like a spoonful of baking soda on its own—it can leave a bad taste and create major problems.

When 401(k) plans were introduced, the logic was simple: defer taxes while earning, and withdraw your balance as a retirement income stream when you retire into a lower bracket.

Employers sweetened the deal with matching contributions, making it feel like a no-brainer.

Let’s unpack what rarely gets discussed:

1. Limited Access Can Derail Life’s Real Needs

Sure, the 401(k) is built for “someday,” but life happens today.

Because you can’t access your funds freely before age 59½ without penalties, you may find yourself locked out of your own money when you need it most. That includes:

• Paying off your mortgage early and living with peace of mind

• Helping a child—or grandchild—through college

• Buying a car without taking on unnecessary debt

• Starting a business, seizing an opportunity, or supporting a loved one

• Managing unexpected medical or family emergencies

Instead, your dollars are sitting on the sidelines. You’ve saved them—but you can’t use them.

The 401(k) was designed for long-term accumulation—but too often it restricts your ability to respond to short-term, real-world needs.

2. The Tax Surprise That Catches Many Off Guard

Every dollar that comes out of a 401(k) is taxed as ordinary income. That’s not necessarily bad—but it’s something many people aren’t fully prepared for.

The assumption is simple: defer taxes now, and pay them later when your income is lower. But here’s what’s often overlooked:

• You may still have substantial income later. Retirement isn’t always a step down—especially for those with pensions, rental income, business income, or spousal earnings.

• Tax rates could change over time. No one knows what future tax policy will look like, but today’s brackets aren’t guaranteed forever.

• Required Minimum Distributions (RMDs) may force withdrawals. Whether you need the income or not, RMDs begin at age 73 and could increase your taxable income.

• Other ripple effects may follow. A higher reported income can affect Medicare premiums, taxation of Social Security, or eligibility for certain deductions.

Tax deferral doesn’t eliminate taxes. It simply delays them—and that delay can lead to surprises if not planned for intentionally.

3. What Happens If You Aren’t Allowed to Contribute?

Life doesn’t always go as planned. An unexpected illness or disability can interrupt your ability to work—and with it, your ability to keep contributing to retirement accounts. Because you’re no longer considered an active employee in that situation, neither you nor your employer is allowed to continue contributions to a 401(k). Even a few missed years can have long-term negative ripple effects:

• No personal contributions (because you’re not actively employed)

• No employer match (since you’re no longer eligible as an inactive employee)

• No new compounding on those missing contributions

• Lost time that can’t easily be made up later

For many families, this creates a gap right when they’re counting on steady progress toward their goals. That’s why it’s essential to think beyond a single account. Just as a cake needs more than one ingredient, a sound financial strategy may include other tools or safeguards designed to keep your strategy moving forward—even if life throws a curveball.

4. Forced Withdrawals, Whether You Need Them or Not

At age 73, the IRS says you must start withdrawing from your pre-tax retirement accounts.

This Required Minimum Distribution (RMD) rule means:

• You could be taxed during a bear market

• You might not need the income

• You might already be dealing with health challenges

• You could be pushed into a higher tax bracket

• Your Medicare premiums may spike

It’s a forced system with minimal regard for your actual needs or plans.

And if you have to take withdrawals during a year when you’re recovering from illness or trying to remain under a particular tax threshold, it could throw everything off.

5. Zero Control Over Timing—The IRS Holds the Clock

Here’s the kicker: the IRS tells you when to save, when to wait, when to withdraw—and how much.

And what do they require you to take?
Not the maximum.
Not what serves you best.
They make you take the minimum.

It’s almost backwards.

You spent your entire life working, contributing, delaying gratification—and now you’re told how little to enjoy, and how slowly you can access what’s yours.

And perhaps more troubling: many financial institutions are quietly aligned with this thinking.
They aim to retain your assets, manage them, and delay their use.

But repurposement isn’t about delay.
It’s about activation—putting your wealth to work in ways that matter most, while you still can.

So, Is the 401(k) Bad?

Not at all.
But after reading this, you might feel like it is.

That’s not the message.
The message is: don’t stop at the 401(k).

Used strategically, the 401(k) can be a valuable tool.
But used blindly, it can become a financial cage—limiting your freedom, your timing, and your impact.

What We Do at Woolman Financial Group

We don’t just help people plan for retirement.
We help people repurpose their lives—financially, spiritually, and relationally.

That means:

• Choosing the right financial ingredients

• Putting them in the proper sequence

• Baking them into a strategy that supports your freedom, flexibility, and faith

We believe your next season should be the most fulfilling one yet.

Let’s make sure your plan supports that mission.

Your Next Step

You asked a wise question:
“Should I max out my 401(k)?”

Let’s build a smarter answer—one that helps you live on purpose in your next chapter.

Download the Cash Flow Strategy Framework and discover how a more tax-efficient strategy today could lead to more spendable income in retirement tomorrow.

It’s not just about building a bigger cake.
It’s about sharing it with the people who matter most.

This material is for informational and educational purposes only and is not intended as individualized financial advice. Please consult a qualified advisor before making financial decisions