Big_Hitter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
The Champions of the 401(k) Lament the Revolution They Started - WSJ
good article - title is snippet
good article - title is snippet
Some early 401(k) supporters are learning about its shortcomings firsthand. Mr. Whitehouse, the former Johnson & Johnson human-resources executive, says his 401(k) took a hit after 2008. He could retire if he had to, but if he wants to maintain his standard of living for several more decades, he must continue to work, he says.
The 65-year-old currently lives in Orlando and is in-house counsel for ABC Fine Wine & Spirits, a Florida chain with about 140 stores. He plans to work into his mid-70s.
It would be appealing, he says, to have an old-fashioned pension. “A pension is pretty valuable,” he says.
I guess for me the tough question is how much we need to protect people from their own lack of discipline. I'm sure if you changed it so savings was mandatory there would be a lot of complaining (like we see with SS), and probably most by those who would ultimately most benefit. Strange world.
I wonder if the "experiment" is not finished playing out. In other words, it is only after observing (many of) these catastrophes that folks will pay attention to their own well-being. It is still early in this scenario, I think.
As my father used to say, "People will not change until it is too painful NOT to change."
I guess for me the tough question is how much we need to protect people from their own lack of discipline.
Replacing defined benefit plans with defined contribution plans like the 401k shifted risk and expense from the employer to the employee. ...
I wonder if the "experiment" is not finished playing out. In other words, it is only after observing (many of) these catastrophes that folks will pay attention to their own well-being. It is still early in this scenario, I think.
As my father used to say, "People will not change until it is too painful NOT to change."
I believe an equally tough question is how much we need to protect people from the excesses of Wall Street speculation that was largely responsible for the last economic meltdown. ...
Others just don't have the ability/sense to wait on the marshmellow... But were they, on average, better off in the defined plan era, given the vesting requirements, payouts also tied to income, and risk of employer bankruptcy?
Specifically what speculation are you referring to? and by whom? We want names.
In the narrow sense that is true, but not in the 'big picture'. What if the employer goes belly up? Well, there is the PBGC fund, that is insurance that was paid for by the employer, but could actually be considered as part of employee compensation, so therefore came out of the employee's (virtual) pocket.
The benefit is capped. And what if the PBGC runs out of money? Maybe the taxpayers will chip in? And we are right back to the taxpayers (the employees), funding their own retirement. Either way, it is our money.
Risk is never really shifted - somebody takes it on, and they don't do it for free.
-ERD50
Every single one of those 30 million U.S. workers have access to an Individual Retirement Arrangement (IRA) which is a retirement plan. That is $5,500 they could contribute every year. That would allow workers with incomes up to $55,000 a year to contribute at least 10% to their retirement plan. If they were married, then they could contribute more (though their spouse could be working and make a contribution to their own IRA themselves).More than 30 million U.S. workers don’t have access to any retirement plan because many small businesses don’t provide one.
Not to mention that anyone can save and invest outside of a "retirement plan" as well. I am regularly surprised when coworkers lament that they cannot save any more because they have maxed out their IRA. Not so, you don't have to limit saving for retirement inside retirement plans.This sentence bothered me in the article:
Every single one of those 30 million U.S. workers have access to an Individual Retirement Arrangement (IRA) which is a retirement plan.Quote:
More than 30 million U.S. workers don’t have access to any retirement plan because many small businesses don’t provide one.
Should it come to pass that several high-profile pension plans collapse or have benefits cut, the 401k will suddenly look more appealing.
The Central States Teamsters pension plan, covering more than 400,000 participants, expects to receive permission shortly from the Treasury Department to cut benefits to those participants, possibly by as much as 30 percent.
Replacing defined benefit plans with defined contribution plans like the 401k shifted risk and expense from the employer to the employee. The marketing material about portability and control of your money was used to obscure the massive reduction in the size of benefit it caused for employees.
I'm sure the people on here have done well with their 401ks, IRAs 403bs etc, but they would probably have done better with a well managed DB plan and the larger employer contributions that often came with those old plans.