Here’s a question that rarely gets asked: Is it possible to have too much of your money locked inside retirement accounts? It sounds like a "good problem" to have, but over-funding your traditional retirement accounts can actually lead to a massive tax bill later in life and may prevent you from accessing cash to do things you love. Today, we break down how to balance your accounts now so you can better manage your hard-earned money later.

Here’s what we’re covering in today’s Clark Smart Investing newsletter:

If you’re someone who has diligently maxed out your 401(k) and IRA for years, congratulations. You’ve done what most financial experts recommend, and you’re likely on track for a secure retirement.

But here’s a question that rarely gets asked: Is it possible to have too much of your money locked inside retirement accounts?

For most people, the answer is no. But for disciplined savers and high earners, the answer can sometimes be yes.

If nearly all of your savings (beyond an emergency fund) sit in tax-advantaged accounts like 401(k)s and traditional IRAs, you might feel financially secure — yet struggle to access your own money before age 59½ without penalties.

In other words, you can become “rich on paper” but cash-poor in real life.

In the full article, we break down situations when over-funding traditional retirement accounts can be an issue and the account strategy you should consider instead.

Every week, we'll ask a new question to get your take on the latest financial trends and topics.

Last Week’s Poll Results

We asked: “What age did you or are you planning to take Social Security?” Here’s how you answered:

In this recurring Q&A, we share questions that have been answered by Clark Howard or Wes Moss on the podcast. Submit your question today!

Ken in North Carolina asks: If I follow the 4% rule for retirement withdrawal, but my average growth per year is 5%, it looks like I will never use the principle money, thus never getting to enjoy all the money I saved over my lifetime of work. What am I missing?

Wes Moss says: While the financial world is full of "loud voices" debating whether you should stick to a conservative 2.8% or an aggressive 8%, the 4% rule is the most realistic middle ground for maximizing your lifestyle without running out of money. Because we can't predict your lifespan or how the market will behave the moment you stop working, I view this as a dynamic guideline rather than something etched in stone; it’s a target that ensures your money lasts while remaining flexible. If you follow this path and find yourself "ahead of schedule" because the markets performed well, you can adjust your plan to spend that extra principal.

The Team Clark Consumer Action Center is a free helpline that can help you navigate your money questions. Call 636-492-5275. Visit clark.com/cac for more information.

This information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations. Investing involves risk, including the possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Any company names shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. The views and opinions expressed are for educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.