This show was just an attempt to depict the 401K in a poor light.
HiltonSmith, the 31 year old "economist" who can't seem to understand why his 401K does not go up: "ROBERT HILTONSMITH, Economist: I have a 401(k). I save in it. It hasn’t seemed to go up. It’s awful. I kept checking the statement and I’d be, like, “Why does this thing never go up? This is weird.” I mean, the stock market I knew was up and down but I was, like, “I still should be seeing some returns.”"
This 401K was, "like", started SINCE 2008. Now, if he invested in MM or stable value funds, I can see how this could happen, but there is no way a diversified portfolio would have lost money between 2008 and 2013.
Crystal Mendez, 32 year old school teacher with savings of $115K. In reality, she is doing pretty well. She says she is worried and stressed.
Mark and Laura Featherston, 54 and 48. He is unemployed. The article says their portfolio went down in 2008. Who's portfolio did not go down in 2008? They must have made some gross mistake like investing in the wrong things, or selling at the bottom. Then they bought an annuity. Then Mark lost his job and when they tried to cash out of the annuity, they learned about the surrender charges.
Quotes from the Featherstons: "LAURA FEATHERSTON: —not only have you now lost half of your 401(k), but your house is not worth anything anymore, either. So anything that you thought you were going to have there is gone. And now half of your 401(k) is gone.
MARK FEATHERSTON: You know, if it took 13 years to accumulate $80,000 and one year to lose half of that, and then try to get that back in another 13 years, and only be at the $80,000 that you were 13 years ago?"
Are there any 401K success stories? I think there are a lot of those right here. Why didn't Frontline present any of those? They are trying to show how
dangerous the 401K is. This is a
thinly veiled attempt to convince us that we are too stupid to manage our 401K's and this money should be
managed by the government.
Here is a link to a transcript of the broadcast:
Transcript | The Retirement Gamble | FRONTLINE | PBS
Teresa Ghilarducci, who was on the show, advocates converting the 401K to a
government run program administered by the
Social Security Administration. From wikipedia
Teresa Ghilarducci - Wikipedia, the free encyclopedia
"In her book When I'm Sixty-Four: The Plot against Pensions and the Plan to Save Them, Ghilarducci proposed mandatory participation in a government-run savings plan to which each worker and his employer would supplement his Social Security pension by contributing 2.5 percent each of her or his salary.[4][5][8][9][10][11] The plan would be administered by the Social Security Administration, but would be separate from Social Security records. In turn, a refundable tax credit of $600 would go to each participant, regardless of his contributions. The account would have a guaranteed interest rate equal to the government's official inflation rate plus three percent.[2]
Videos of lectures given by her and interviews with her can be found on YouTube."
This is even better. Listen to her describe how this would work:
401(k) Foe Teresa Ghilarducci, the Most Dangerous Woman in America - Capital Commerce (usnews.com)
Shame, shame, shame on Frontline.