401(K)s Are A Sham - Salon

[WillyT]

401(k)s are a sham
Duped by a DIY retirement dream, the elderly now face staggeringly low living standards
By Helaine Olen - Salon
Tuesday, Aug 6, 2013 05:25 AM PDT

<snip>

“For retirement, the answer is 4-0-1-k,” proclaimed Tyler Mathisen, then editor of Money magazine in 1996. “I feel sure that someday, like a financial Little-Engine-That-Could, it will pull me over the million-dollar mountain all by itself.” For this sentiment, and others like it, Mathisen was soon rewarded with an on-air position at financial news network CNBC, where he remains to this day. As for the rest of us? We were had.

The United States is on the verge of a retirement crisis. For the first time in living memory, it seems likely that living standards for those over the age of 65 will begin to decline as compared to those who came before them—and that’s without taking into account the possibility that Social Security benefits will be cut at some point in the future.

The culprit? That same thing Mathisen celebrated: the 401(k), along with the other instruments of do-it-yourself retirement. Not only did they not make us millionaires as self-appointed pundits like Mathisen promised, they left very many of us with very little at all.

You might be tempted to ask “what went wrong,” but a better question might be “why did we ever expect this to work at all?” It’s not, after all, like we weren’t warned. As early as 1986, only a few years after the widespread debut of the 401(k) and the idea that American workers should self-fund their own retirement accounts based on savings and stock market gains, Karen Ferguson who was then, as she is now, the head of the Pension Rights Institute, warned in an op-ed published in the New York Times, “Rank-and-file workers have nothing to spare from their paychecks to put into a voluntary plan.”

But her voice, and that of other critics like economist Teresa Ghilarducci, who is now at the New School and described our upcoming retirement crisis as “an abyss” in 1994 congressional hearings, were drowned out by the money and power of the financial services industry, combined with their enablers in the personal finance media who proclaim even today that if we don’t have enough money set aside for retirement, it is all our own fault.

It’s not...

<snip>

More: http://www.salon.com/2013/08/06/big_finance_lied_401ks_will_not_save_aging_americans_partner/

[Bennyboy]

1. A Million bucks and 30 years of retirement

not gonna make it.

[Major Nikon]

14. At age 66, a million bucks will buy a $70K annuity

Plus social security. I can't imagine anyone not making it on that.

[jtuck004]

23. How about one $130,000 hospital bill that's not quite covered by insurance?

Or the gas people decide to frack on the property that was allotted to them a long time ago, in your yard. And you have to sell your now worth less than it was property and buy into this newly created bubble marker?

And that annuity - the money comes from what? Returns from our housing market? What happens when the banks dump the 7 million homes they are holding off the market to manipulate it, or we turn off the $85 billion a month that taxpayers are subsidizing the new landlord class with?

Not arguing, but I can see dozens of hazards and scenarios out there where that $70K will start to look terribly insufficient...

Or lets say you have a defined benefit plan. Would that be like the one Detroit workers have?

Lots of hazards...

[avaistheone1]

28. One of my friends is a tax accountant and he says that annuities are a very, very bad investment.

[jtuck004]

33. Having lived mostly in this country for most of 60 years, about the

only thing I have ever seen that I would trust is ownership of assets that create something that people want, and preferably across more than one industry.

We have sold lots of people on the idea that they can just drop some money into an activity and just sit back in the lazy boy and run their remote with one hand, and collect the checks with the other. I'm over simplifying, but more than a hundred million people have now found that to have been a really bad strategy.

We need to encourage cooperative ownership and management, and make some attempt to extend education and/or training into the entirety of a person's life.

Way too many people have been led to believe they can stay static and get by, and that is increasingly proving to be untrue, imo.

[Major Nikon]

35. I wouldn't say that

I would just say they are a bad investment for most people.

Better to invest the principal yourself and live off the returns exclusively. It's not necessarily going to pay you as much per month, but you get to retain the principal for however you decide to bequeath it.

[maui902]

54. Many are very fee heavy

Annuities are pushed very hard by some financial institutions because they generate significant up front fees, which means less of your "investment" is actually being invested, requiring a greater return to make up for the amount not invested due to the up front fees. Lots of options, all of them with risk, but generally speaking you should be very careful and do your homework before investing in an annuity as a retirement vehicle.

[Major Nikon]

34. That's what Medicare supplemental catastrophic plans are for

You can purchase a plan that limits your OOP maximum to a few thousand dollars per year.

And that annuity - the money comes from what? Returns from our housing market? What happens when the banks dump the 7 million homes they are holding off the market to manipulate it, or we turn off the $85 billion a month that taxpayers are subsidizing the new landlord class with?

The government insures qualified annuity accounts for up to $100K each, so you just split up your accounts into $100K annuities.

[jtuck004]

38. The government insures the return? If the underlying assets go to crap?

I know of no insurance against that. Against fraud and theft, sure, or if the company goes belly up through mismanagement . But if the assets crater, that's not insured.

And there are a variety of other calamities that can't be foreseen.

I know one can insure against darn near anything, but every bit of that is one more dollar that you won't have for housing, food, utilities, etc, on the off-chance that you have insured against the things that you are most at risk from.

And we have a whole country full of people who live their whole lives being wrong about what they are most at risk from.

None of that helps the 30+ percent of people (and growing) who hit 65 with less than $10K in assets (According to Social Security) after being exploited by others for those years.

And I am not sure how insulated one is in a country where they might be doing ok, but increasingly their neighbors are living in more and more desperate straits.

[Major Nikon]

40. Every state has a guarantee association (SGA) which insures qualified annuities

For most states the guarantee is $100K for each account, but for some states it's more.

http://annuitynerds.com/documents/blog.php?entry_id=1309479347

[jtuck004]

41. So if the company fails, there is no federal guarantee, but I could depend on the State of Texas?

Or an insurance company. Neither of those options would make me feel all that secure, to tell you the truth.

But yeah, for some it might be appropriate. Still doesn't help an increasing number of people.

[Major Nikon]

42. No state SGA would ever be allowed to fail

For one thing, there are several layers of protection that insurance companies must have to meet state regulatory requirements. But let's say those failed AND the SGA couldn't cover those losses (highly improbable all by itself), even then the federal government would undoubtedly bail them out or suffer a complete meltdown of the entire insurance industry.

So yes, I would put my trust in that.

[jtuck004]

43. Sounds like a sales pitch. Good luck. n/t

[Major Nikon]

44. Except for this part...

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=3430007

Buy gold and bury it in mason jars in your backyard for all I care. I'm just dispelling the notion that annuities are some kind of underhanded ponzi scheme. They aren't. They are one of the safest investment vehicles you can get, which is their biggest attraction and also the biggest reason why they pay such poor returns compared to equity funds.

[jtuck004]

46. AIG. Remember them? Texas company, thousands of annuities and life insurnace holders screwed

and at risk when their scheme, along with the rest of the thieving bankers and insurance companies and mortgage brokers collapsed.

Texas insurance commissioner was about to close their sorry asses and Texas had nowhere NEAR the assets to even approximate their losses.

If the feds hadn't stepped in with their continuing bailout, all those annuities and life insurance policies wouldn't have been worth spit, all the self-serving sales nonsense notwithstanding.

Actually the line about burying gold barely rises to the level of being stupid. I would rather bury soap and canned food, because at least you can eat and trade with it.

The best asset is a performing one that you and a lot of other people own. And even that is not secure. But it beats handing your money to people who only want to figure out ways to take more of it, imo. ymmv.

[Major Nikon]

49. Not even one policy holder was screwed and none were ever at risk at any time

AIG is a perfect example of the protections in which I referred. The subsidiaries of AIG which issued policies like annuities were never in doubt. Not only were they never insolvent or in danger of being insolvent, they always had reserve assets to pay their policyholders at all times as is required by law. The part of AIG that was in doubt was their mortgage securities division. In fact, AIG sold some of it's insurance subsidiaries (which still had plenty of value) to pay back the government loans they were issued. Furthermore Texas had no more power to "close their sorry asses" than any other insurance commissioner in any other state. The very worst the Texas Dept. of Insurance could have done to AIG was to prevent them from selling policies just in Texas. The state of Texas has absolutely no control over what business an insurance company does with another state.

Since you want to keep being disingenuous and keep claiming I'm making some sort of sales pitch even after I clearly showed you I wasn't, I really have no more interest in discussing this matter with you further. I have no interest in providing information to someone who clearly just wants an argument and doesn't even want to do that in good faith. You're going to have to find someone else to play those half-fast games with.

Cheers!

[jtuck004]

50. The fucking insurance commissioner was about to place them in receivership, unless you want to

rewrite some mythical history.

"Going into the financial crisis, the overarching AIG holding company was regulated by the Office
of Thrift Supervision (OTS), but most of its U.S. operating subsidiaries were regulated by various
states. Because AIG was primarily an insurer, it was largely outside of the normal Federal
Reserve facilities that lend to thrifts facing liquidity difficulties and it was also outside of the
normal Federal Deposit Insurance Corporation (FDIC) receivership provisions that apply to
banking institutions. September 2008 saw a panic in financial markets marked by the failure of
large financial institutions, such as Fannie Mae, Freddie Mac, and Lehman Brothers. In addition
to suffering from the general market downturn, AIG faced extraordinary losses resulting largely
from two sources: (1) the AIG Financial Products subsidiary, which specialized in financial
derivatives and was primarily the regulatory responsibility of the OTS; and (2) a securities
lending program, which used securities originating in the state-regulated insurance subsidiaries.
In the panic conditions prevailing at the time, the Federal Reserve determined that “a disorderly
failure of AIG could add to already significant levels of financial market fragility” and stepped in
to support the company. Had AIG not been given assistance by the government, bankruptcy
seemed a near certainty. The Federal Reserve support was later supplemented and ultimately
replaced by assistance from the U.S. Treasury’s Troubled Asset Relief Program (TARP). "

http://www.fas.org/sgp/crs/misc/R42953.pdf

I have no interest in hearing any more fairy stories either.

[doc03]

2. I have done quite well with my 401k. But I still have a Defined Benefit Pension for most of my

income. The 401k is a nice suppliment though.

[spanone]

3. me too...

[doc03]

8. My 401k (now IRA) would give me about 60% of my DB pension

if I invested in an annuity. The market could crash tomorrow and wipe it out either way though.

[Incitatus]

56. My parents have 401Ks and have also done very well.

I have a coworker in his 50s who is about to hit 7 figures after 30 years of work, and there are many others like him in this company. In the absence of any catastrophic medical situation, I don't think any of them will have a problem. Maybe it's my age/ignorance, but I have heard reports of people getting screwed out of pensions by the company going bk while the executives are well compensated, or by getting thrown out of the company before they meet the requirements for pension. Even government jobs are in Danger. IIRC the pensions of Detroit city workers are now in danger. For a pension you would have to work for the same company for decades. Many people no longer do that. 401ks can be transferred. It is your money. I'm sure both 401ks and pensions can have negative consequences and it appears something needs to be done. What that is, I have no clue.

[TheMastersNemesis]

4. The New Low Wage Part Time Economy By The GOP Won't Fund LIfe Let Alone A 401K

It has been the biggest lie of the last 113 years.

[zipplewrath]

5. I shook my head

Back in the '90s I couldn't believe how easily folks gave up defined benefit retirement plans for 401K's. It was absurd to think that most of them would ever save enough to compare to a defined benefit plan. It's not that it can't be done, it is that most people won't succeed. They'll invest poorly. They'll save too little, too late. They'll dump more in their house than their 401K.

We're talking about people who pay people to clean their pools and change their oil. We're talking about the folks that "rent to own". And these people were suppose to develop strong investment portfolios for their retirement? Absurd.

I've got my defined benefit retirement plan, and I'm keeping it. I just wish I could find a way to insure it.

[doc03]

6. If you have a Defined Benifit Pension Plan it is insured

by the PBGC. There is no guarantee our politicians will live up to their obligation though. The Republicans will let it
go under for sure if they get thechance.

[zipplewrath]

7. For 40 cents on the dollar

It isn't guaranteed to pay me what I am expecting. Typically, any sufficiently generous retirement plan will end up getting about 40 cents on the dollar if it goes under.

[doc03]

10. You must have one hellofa pension the maximum benifit is like

$5000 or 6000 a month. I lost one small DB plan and get 100% from the PBGC?



on edit: $4789.77 per month for 2013.

[zipplewrath]

12. Health care

It comes with a healthcare benefit that starts at 55 years old.

[MindPilot]

17. Umm, we didn't "give it up easily"

We came to work one day and our pensions were transformed into "401Ks". But it was awesome because thanks to Saint Ronnie we were now free from the cruel bondage of heavy regulation and someone in the financial sector having a legally-bound fiduciary duty to properly manage that money.

It's not like there was much of a choice.

Dump it into my house? Hell yes! My house is appreciating at about 15% a year or roughly $10,000 per month, way better rate of return than my 401k. In fact my local Indian casino is probably a better rate of return than my 401k. (At least I know the money I lose at the casino stays in the local community)

[zipplewrath]

19. Yeah, it was a broad brush

But I was surprised by the new hires that paid little attention to the early adopters of 401K only employment had not difficulty getting employees. From my earliest days, one always checked out the retirement plans. Suddenly they only cared about stock options.

[geckosfeet]

9. Combined with stagnated wages, rising expenses and an anemic stock market failure is assured.

The truth is this: the concept of a do-it-yourself retirement was a fraud. It was a fraud because to expect people to save up enough money to see themselves through a 20- or 30-year retirement was a dubious proposition in the best of circumstances. It was a fraud because it allowed hustlers in the financial sector to prey on ordinary people with little knowledge of sophisticated financial instruments and schemes. And it was a fraud because the mainstream media, which increasingly relies on the advertising dollars of the personal finance industry, sold expensive lies to an unsuspecting public. When combined with stagnating salaries, rising expenses and a stock market that did not perform like Rumpelstilskin and spin straw into gold, do-it-yourself retirement was all but guaranteed to lead future generations of Americans to a financially insecure old age. And so it has.

401(k)s are a sham

One scam that was not mentioned.

If you are fortunate enough to have enough money in a 401k to worry about, make sure that your dividends are put into your holding account and not re-invested in the fund. When new shares are purchased through re-investing dividends the fund is subject to the minimum holding period fee. Usually 30, 60 or 90 days depending on the fund.

That means that when you go to sell you very like be slammed with a hefty fee for selling within the minimum holding time window.

Call them and ask them to change the way your dividends are distributed.

[Recursion]

11. 401(k): peace of mind for people who don't understand math

It's actually a good thing from the larger economic standpoint that most 401(k)s are underfunded, because the kind of movements in securities and equities markets that the entire baby boom retiring on them would create would be devastating. (What do people think happens when 40 million retirees sell stocks and buy bonds all at once?)

[zipplewrath]

13. All at once?

You've got an entire generation spanning 13 years or so that will retire over a 15 year period and you want to call that "all at once"? My early boomer wife is already retired (7 years) and she is only about 40% bonds.

[Recursion]

15. One way or another, we have to transfer $2.5 trillion from workers to retirees over the next 20 yrs

Whether that's through sale and purchase of securities and equities or taxation, the money still has to get from A to B. Private accounts just seem like pretty much the worst way to do that.

[philosslayer]

36. Where do you think pension funds put their money?

They invest it in the stock market too. That money is going from A to B one way or the other.

[Recursion]

39. They're almost as bad. SS is the only sensible way to do it

Or so it seems to me

[SoCalDem]

16. Just a shell game to fund the wallstreet gamblers with money so they could play with it

Retirement income USED to be considered a 3-legged stool.

Defined benefit Pension (usually WITH health care)
Personal Savings
Social Security

401-k REPLACED pension
LOW interest & low wages KILLED savings growth
Social security stands alone (for now)

There was a time when the ONLY mention of anything Wall Streetish was relegated to the back pages of the newspapers, and was only read by those-in-the-know.

Ordinary folks had savings accounts and the occasional certificate of deposit
Some people occasionally bought stock in a particular company if they had a few extra bucks
They took LESS wages at review time to BOLSTER their retirement pension

401-ks were a con game from the get-go, and at the time they were created the media was awash with all the wunderkind stock broker-ish people who became millionaires.. there was "Dallas" & "Falcon Crest" & the movie "Wall Street".. Credit cards flooded the market & everyone thought riches were just around the corner for them too.. It was the era of Mad-Crazy Instant Wealth, and who wanted a stodgy old fashioned pension like Grandpa had, if your could invest like the big-guys and become rich?

It was just another bubble..and it's popped..

[brooklynite]

18. Mine are doing nicely, thank you

Plenty of blame to go around about companies charging excessive fees (and customers who don't research them), and you're welcome to demand defined benefit rather than defined contribution approaches to pensions (question: where does your pension fund invest its funds?) but a blanket indictment of 401(k)s is something of a stretch.

[jeff47]

27. uh....what choice?

Your choice is the one 401k plan offered by your company. That's it. You can't say "I don't like the T. Row Price 401k, I want the Vanguard 401k instead".

You may or may not have choices of investments within the 401k, but you can't pick a better 401k.

As for where the pension invests, that's kinda the point: I don't have to know. I don't have to pretend I'm a stockbroker and guess what investments will pay off. That's up to the pension fund manager. Will he invest in stocks? Probably. Bonds? Probably. But most importantly, an experienced professional will be doing the investing instead of me.

ETA:

and you're welcome to demand defined benefit rather than defined contribution approaches to pensions

You mean the plans that no employer has offered during my entire working life? Boy, that's gonna be very successful.

[thetonka]

20. 401K works for me

I have a pension, a 401K, a Roth IRA, and a couple other IRAs as well as some real estate investments. My wife and I have lived ok, but not extravagantly. When we retire we will move somewhere that is cheap to live, and enjoy retirement.

The people I know, including many in my family counting on inheritance that will not be there, with no retirement all have a lifestyle they can barely afford. If they bought fewer or less expensive cars, less expensive houses, less expensive furniture, fewer TVs, took fewer expensive trips, etc. they would have more for the future.

If you really think you can trust our government to provide for you in the future you will be disappointed. Plan to support yourself.

[MindPilot]

21. "trust our government to provide for you"?!

Excuse me, but most of us have been paying into SS for all our working lives. Collecting what we are owed is not "the government providing for us".

[KansDem]

31. I've been paying into SS since 1969

Collecting what we are owed is not "the government providing for us".

A couple of years ago I attended a demonstration outside my "representative's" office, Kevin Yoder (3rd--Kansas). There were about 50 of us protesting the GOP's plan for cutting government spending when a handful Teabaggers showed up.

http://watchdog.org/36955/ks-raise-my-taxes-at-noontime-yoder-rally/

I got into an argument with one Teabagger who kept declaring SS was "welfare." I told him no, it is an insurance plan. He insisted it was welfare. I asked him if he thought his home-owner's insurance, auto insurance, health insurance or life insurance were"welfare." He said no, they're not. I said SS is the same thing: it's an insurance plan. We pay premiums and it's there for when we need it. He said no, SS is "welfare."

I gave up...

[maui902]

55. I interpreted thetonka's post as a piece of advice

not to rely solely on social security payments for your retirement; one, because they're at risk of being cut, and two, the payments are just not enough to support most people according to the lifestyle they've enjoyed prior to retirement. As tough as the Great Recession was for everyone, I used the shock to take stock of where I was and what I was spending. I've made a commitment to spend less and pay down debt and with the recovery in the stock market (which has positively affected my 401k), I won't need to rely entirely on SS payments to fund my retirement. I think that's all thetonka was suggesting, not that SS beneficiaries were somehow receiving something they didn't deserve.

[thetonka]

61. Exactly

And honestly, as our federal government swings from support to cut to support to cut depending on which party or politician is in charge of SS there is no way to know what SS will look like next year, or next decade.

The biggest problem I see with our government is the lack of stability and consistency on the laws they pass and the actions they take. I'd rather see laws and legislation I don't like in place and stay in place then laws that are passed, changed, reformed, changed, repealed, replaced, changed, reformed ........

I have no faith that SS will be there when I retire. If it is I will be thankful to get the benefit from the money I have paid into it, if it is not there I will be prepared.

[mn9driver]

22. There's a reason this is finally being reported openly.

It no longer matters how the elderly vote.

The safety net is being actively undermined by the leadership of both parties. The plutocrats are now more or less free to plunder those programs for their own benefit; the elderly vote, but they have no one left to vote for. No matter how bad it gets, the elderly will not lead a revolution, which is all that now matters to those in control of our government.

All they need to do is keep the misery index at the barely tolerable level for the younger and stronger part of the population. The elderly can now be robbed openly and with impunity.

[toby jo]

24. Stumbled upon tax liens recently, as an investment tool.

Simply put: you buy the lien, keep it a year or two depending on county law, the property goes into foreclosure if owners cannot pay, and your dime is the first one paid back after sale, with interest, @ 1%/month. That's 12/year. Guaranteed. If nobody bids on the property, you get it for tax price.

Don't know that I have the stomach for it, but may try. They say alot of these properties are from divorces or deaths.

401k's too risky, always looking for the safe investment. First choice is land.

[abelenkpe]

25. K&R

[One_Life_To_Give]

26. In the days of Retirement with 50yrs seniority, that is true

In you were employed in Silicon Valley in the 80's it was just what the Dr. ordered, Portability. Gave an option other than you and your employer contributing to a defined benefit plan for up to 9yrs only to be terminated and have that money revert to company coffers.

Both a defined benefit and a 401k is paid for by the employee. We don't always lump our total compensation into a single figure but when you do it becomes obvious that the employee bears the cost. The only question is the employee forced to contribute or not. Which should tell us upfront that any defined benefit program for a minimum wage employee is going to be crap. The employer is not going to Pay $15,000/yr wages plus $15,000 contribution toward your retirement and another $6,000 for you health insurance. Those kind of bennies change a $7.50/hr job to an $18.00/hr job.

I think it's really wishfull thinking to assume that magically everything would be OK had we all relied on Defined benefit instead of 401k plans. It would have helped some, hurt others but mostly low wage earners were never going to benefit from either program.

[arcane1]

29. Kicking for later!

[tinrobot]

30. Yes, let's give all our money to Wall Street for safekeeping.

The thing that bugs me most about 401Ks is not that people don't contribute, but where they have to contribute.

Almost always, they have to put the money in various stock and bond funds that are managed by the same people who brought us the 2008 collapse (and many others). Many 401K plans restrict investments to only these sorts of funds.

I find it rather disconcerting that, in order to get a break on my taxes to save for retirement, I have to hand my hard earned money over to the crooks on Wall St for a few decades before I can get it back.

[SleeplessinSoCal]

32. Thanks for posting! This is another reason I hate Snowden

Wall Street must be thrilled to death over our debate as it overrides practically everything else that is newsworthy and vital to actually living. Today I heard a discussion on our NPR affiliate KPCC's "Air Talk" about living to the age of 120 with the aid of scientific breakthroughs. This might be possible for the tip top of the 1%, but a ridiculous thought for the rest of us given we'd have no way to support ourselves.

[Rex]

37. Trickle down economics destroyed American pensions.

Now we have half the population working two part time jobs and getting NO benefits. If you have to pay out of pocket for surgery, one million dollars might not be enough. They did away with pensions and they will do away with 401ks one day for something far less beneficial to the owner.

America is all about fucking over someone else, so that you can make an extra buck or two off their sad ass.

[onethatcares]

45. For some strange reason,

I agree with your final sentence.

It's cradle to grave fucking anymore and now that the cost of education is going through the roof the peons will be in worse shape than ever.

[Rex]

47. They get ya coming in and going out.

I know as a young person, I thought it was only going out.

[Enthusiast]

59. Me too.

Cradle to grave fucking! Well said!

[Fla_Democrat]

48. That's why I prefer the ROTH

that, and my company doesn't offer a 401(k).

[duffyduff]

51. I was saying that over 30 years ago they were junk

I have been proven right.

The ONLY reason companies ditched pensions in favor of something that was NEVER intended to be used as a retirement vehicle is to save money on pensions. Period.

[duffyduff]

52. A pension that lasts as long as a person lives is FAR, FAR better

than some stupid account that lasts only as long as there is money in the account.

People were stupid sheep and fell for a con, and they allowed companies to ditch pensions.

Now many of these people are whining in jealousy against those who still have pensions, especially against those in public employment.

[HiPointDem]

53. kr

[Swede Atlanta]

57. The article is full of inaccuracies....

It is not the idea of a 401K plan that creates the issues described in the article...it is the uncertainty of the market.

Yes, a 401K can milk the participants in the form of fees and other charges...scum bags out to milk the future of someday seniors.

But investing in a 401K, especially one that provides a broad range of investment options, is not a bad idea.

It gives tax-deferred status to the investments and often these programs drag along companies that have no defined benefit plan.

I would not favor bashing 401K plans universally. The plans vary and of course participants need to understand they are investing in a portfolio of securities, bonds, etc. and that those are volatile and not guaranteed.

imagine if we had SS as open securities investment. We would see mass starvation in this country.

[jeff47]

58. Here's how they all suck.

The plans vary and of course participants need to understand they are investing in a portfolio of securities, bonds, etc. and that those are volatile and not guaranteed.

And that's why all 401ks suck compared to pensions. Those pensions have a professional 'understanding' such things.

Instead of me trying to 'understand' it between working, caring for the kids and all the other day-to-day crap we all have to do.

[DCBob]

60. There are several problems with 401ks.

The biggest problem is that they are risky and can be easily depleted leaving one broke and homeless. I had to drain mine a few years ago after I got divorced and lost my job. I am slowly building one back up but it wont be near enough when I retire. I plan to move to the Philippines to be able to survive in my old age.

[cprise]

62. K&R