What starts with "f," ends with "k," and means "screw your workers"? That's right—401(k).
Since Bismarck's pensions kicked in at 70, and the average life expectancy in Germany at the time was under 45...
I think a couple of generations were lulled into a false sense of security. In the era before SS and pensions, retirement was always a "roll your own" concept (save it, invest it well or inherit it). I believe we've recently completed an unprecedented economic boom and age of plenty that may not be seen again in our lifetimes. I'm not pessimistic enough to say "never," but the combination of demographic trends, resource competition and globalization of the economy make repeating the 1950s to the 1990s very unlikely in the near future.Oh my, he does have quite sense of entitlement combined with ignorance and a dash of victimitis....yikes, it's your money - who cares what the guy on the phone says. However, as you read his article, you can see he really didn't plan -he just floated along expecting a "safety net" without checking on whether or not the net was there or safe. Assumptions will get one all the time....
Yes, this author had no money to invest due to the unprecedented challenges of having a child and a house. Poor guy. If only someone had TOLD him he should save!I PERSONALLY took part in the 401(k) revolution, though not by choice. Through the 1960s and '70s, I worked at The New Republic and a couple of small publications I cofounded. By this time I understood a little more about how finance capitalism worked, having read the footnotes to Marx's Capital—but since I also now had a house and a son and no money to spare, I never faced any moral dilemmas over whether or not to invest for the future via the corrupt free market.
IMO, Bogle's comment has been taken out of context by some folks. I think what he was saying is: if losing any more money will bust your goal, whether retirement, college fund or something else -- if losing any more money will change your situation from bruised but not beaten to bruised AND beaten -- then get out.I guess at the age of 52, I can expect to be around another 20 years, so I am going to stay put. However, Bogle did sound very discouraged, and I found that a bit alarming.
I wonder if this was taken out of context? Maybe not since many pundits were saying this back in that same time frame."If you can't afford to lose another red cent," Bogle told me when I interviewed him again at the end of January, "you must get out of the stock market."
For what it's worth, I think what Bogle said is ALWAYS true -- if you absolutely, positively can't afford to lose any more wealth because of a declining market, you should not be in stocks. Period.
If 401k plans have low-fee index funds, and encourage diversification, then they are hard to beat, especially if there's a match involved. Based on horror stories I've seen, many 401k plans are none of the above...
I'm quite fortunate; I think I probably have a 401K plan in the top 5% of all of them. We don't pay any quarterly/annual fees in the plan directly. (Maybe the employer pays them, and maybe Fidelity is reimbursed by the expenses in the mutual funds.) But I have quite a good array of funds available -- highly rated, consistent performers, either index funds or low-fee institutional versions of long-time solid performing funds. I get a dollar for dollar match on the first 5% of pay with no ceiling on the match.If 401k plans have low-fee index funds, and encourage diversification, then they are hard to beat, especially if there's a match involved. Based on horror stories I've seen, many 401k plans are none of the above...
Wow it sounds in the like in the good old days most of us had pensions. Ah but here is the actual statistic as quoted in the LA Times.In 1983, 62 percent of workers relied on a defined- benefit plan; by 2007, only 17 percent did, while 63 percent only had a 401(k) or similar defined-contribution plan. Assets in 401(k)s had jumped from $92 billion in 1984 to $3 trillion.
The obvious question is so how many people have employer-sponsored retirement plans? Well surprisingly few. According to a 1999 study done by Pension Benefit Guarantee Corp. Who presumably have the incentive and resources to do a good study.The transition to the new system occurred largely over the last two decades, with relatively little public debate. In 1983, 62% of workers with employer-sponsored retirement plans had a defined-benefit plan, according to Boston College’s Center for Retirement Research. By 2004, only 20% of such workers had defined-benefit pensions. And the proportion of workers who relied solely on 401(k) plans rose to 63% from 12%.
In fact back in the early 80s one of the main reasons for the government encouraging the use 401k was because so many company offered no retirement plans. This means that probably far less than 1/2 the companies back in 1983 offer any retirement plans.About half of all workers have no employment-based pension coverage. In businesses with fewer than 100 employees, only about 20 percent of workers are covered by any retirement plan. Traditional pension plans, i.e., defined benefit plans, provide a predictable lifetime benefit,
guaranteed by the PBGC. Yet the defined benefit system is stagnating.
More myth building of the wonderful era of pension plans that never was, and a great example of how liars use statistics to make their point.
As I have posted in the past from my research no more than 1/3 to 40% of American private sector workers were every covered by defined pension plans, for the simple reason that they were too expensive for medium much less small business to set up.