BiggerPockets Money Podcast · Friday, July 31, 2026
Adriene Adams discusses the common FIRE mistake of maxing out 401(k)s, which can lead to illiquidity at retirement age. Scott Trench adds that this creates a 'middle class trap' where individuals have sufficient funds on paper but cannot access them without significant penalties. Mindy Jensen shares a personal experience of this, having a large portion of her net worth in her 401(k) and now facing challenges accessing it before retirement age.
“Getting locked out of your own retirement. So, a lot of times people will max out their 401k, like that's the best saving vehicle, you know, tax deferral today. And then all of a sudden you're completely illiquid at 45, but on paper, it looks like you have enough money. So, you can't tap into it. And you're going to pay extra taxes and extra penalties.”
“The middle class liquidity first optionality framework. I don't want to call it the middle class trap anymore.”
“Yeah, we call it the middle class trap because like you said, you've done everything right, you're maxing out your 401k and doing such great things and your fire on paper. But once you get there, you're like, "Oh, I can't actually access that."”
“And now I have a rather large amount of my net worth in my 401k. How do I get at it? I can do a 72T, which is great if you're, I'm 53. So, the 72T you can you have to take for at least five years or until you turn 59 and a half. If you're 40, a 72T doesn't look like such a great idea.”