Unexpected legal expenses, medical expenses, family emergencies, all with money locked away behind 401(k) rules and penalties. As I mentioned in another commen

Unexpected legal expenses, medical expenses, family emergencies, all with money locked away behind 401(k) rules and penalties. As I mentioned in another comment, my grandparents had gone to some retail financial planner like Edward Jones or something, small town, some guy whose family they knew, and he just turned out to be deeply incompetent. Imagine being elderly and not personally competent to understand ideas like the relative risk of equity or bond portfolios, and your children are equally as incompetent and can’t really help you, and the local options for financial planners are also equally as incompetent. That’s the picture for the vast majority of people counting on using 401(k) for retirement. They don’t know if they’re in high fee equity portfolios or low fee index replication or bonds etc. They don’t understand any of that very well. They just take what the employer gives them, unwittingly own a bunch of random crap, and hope they got lucky and everything went up enough, or that someone with decent financial skill gave them sound advice. Note that this is also a big part of how unicorn companies externalize losses to the public. Jack up the price of Uber or Spotify or something, and a while after it has gone public, nearing the time when employee lockup periods are over, random retirees and teachers and firefighters or whatever all unwittingly end up owning shares of this stuff from broad funds they don’t understand via their retirement plan. Then the unicorn undergoes a massive correction in valuation, but investors and choice employees were allowed to sell at the known inflated prices, meanwhile the buy and hold people unwittingly owning it via a 401(k) just eat the losses.