Pension Theft: Class War Goes to the Next Stage - Dean Baker

[badtoworse]

54. I agree with you about creating more opportunity in this country.

The inequality in how income is distributed and the lack of opportunity are serious problems that need to be fixed. We'll probably disagree, but I don't believe sending more money to Washington is the way to do it. I've actually gotten pretty uncomfortable with the size and reach of the federal government. I'll spare you the dissertation, but things like NSA, TSA, loss of liberties, government monitoring of cell phones and email, etc. concern me greatly. More taxes, even on high income people would only make the government bigger and more intrusive. In any case, I'm not convinced the government would spend the extra money in ways that truly created more opportuntity for people. I think it's likely the money would be spent in ways that make people more dependent on the government. I'd favor policies that grow more and better private sector jobs, but that is a discussion for another thread.

There is one big advantage to a 401K that you didn't mention - the money is in your account and it can't be raided like a pension fund. Yes, there are risks to investing the money, but if you do it steadily over an entire working career, you should "dollar cost average" a lot of that risk away. If you don't understand investing, you can and should get qualified advice. Contrast that with the situation in Detroit - those unfortunate pensioners will be lucky to get 20 cents on the dollar. You would almost have to work at it to lose 80% of your investment in a 401K. You also have flexibility with the money when you retire. You can convert part of the principal to income and leave part of it invested as a hedge against inflation. You can't do that with a defined benefit plan.