55% of Americans save in a 401(k). But it may not be the best retirement account for you.

You can’t expect Social Security to provide you with enough income to cover all of your retirement expenses. That’s where personal savings come in. And in that regard, you have options.

If your employer offers a 401(k) plan, you may be inclined to participate. This especially holds true if that plan comes with a generous employer match.

In a recent New York Life survey, 55% of respondents say they house their retirement savings in a 401(k). But while these plans have their benefits, they also have their drawbacks. And so you may want to consider another home for your money.

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The problem with 401(k)s

Let’s get one thing out of the way. Some 401(k) plans are better than others, so while your neighbor’s plan might leave much to be desired, your plan might be fantastic. But generally speaking, there are certain disadvantages you might encounter when you save for retirement in a 401(k).

First, let’s talk fees. You’ll commonly pay hefty administrative fees with a 401(k), and those generally aren’t negotiable.

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Then there are investment fees to consider. Some 401(k)s offer more choices than others, but if your options are limited, you could get stuck having to load up on mutual funds with high fees, or expense ratios, that eat away at your returns.

Now to be fair, most 401(k) plans do offer a combination of actively managed mutual funds and low-cost index funds, which are passively managed and therefore a lot less expensive fee-wise. But while index funds may be a cost-effective choice, they don’t give you a lot of say over your investments.

In fact, one major flaw of 401(k)s is that they don’t let you buy individual stocks. To do that, you’ll need to look at opening an IRA.

Why is it important to choose your own stocks? Index funds do a great job of tracking and matching the performance of major indexes like the S&P 500. But if your goal is to beat the broad market, you won’t get there by loading up on index funds. Instead, you’ll need to assemble a mix of stocks that do well enough to outperform the market, which you generally can’t do in an employer-sponsored 401(k).

Weatherproof stocks: Here are the ones to buy as the market falls and inflation rises.

Should you ditch your 401(k)?

If your employer offers any sort of 401(k) matching incentive, then it pays to contribute enough from your paychecks to claim that free money in full. But beyond there, you may want to look at saving for retirement outside of a 401(k).

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If you choose an IRA, you might pay fewer fees and get more flexibility with the investments you choose. Furthermore, you may want to put some of your retirement savings into a regular brokerage account, even though those don’t offer any tax benefits like 401(k)s and IRAs.

Both 401(k) plans and IRAs require you to leave your money alone until age 59 1/2 or otherwise face costly penalties (though there are some exceptions). With a traditional brokerage account, you can withdraw funds whenever you please. And if you invest well, to the point where you’re able to retire in your early 50s, you won’t have to worry about not having access to the money you’ve worked hard to sock away.

Don’t miss out on free money: 3 reasons to contribute to your company’s 401(k) plan.

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