401(K)s Are A Sham - Salon

[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.