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Somebody who peddled the virtues of those ripoff 401(k)s now feels he can NEVER retire.
Well, he's lucky he has a job so that he can't retire. Some of us were retired YEARS before we could afford it and can't get jobs.
What, then, will people do when they retire? I asked Ghilarducci. “Their retirement plan is faith based,” she replied. “They have faith that it will somehow work out.”
I laughed, but it’s not funny. “The 401(k),” she concluded, “is a failed experiment. It is time to rethink it.”
In truth, I’m one of the lucky ones. I do work that I love, which requires no heavy lifting and has no mandatory retirement age. If I become incapacitated, I will have assisted-living insurance. Otherwise, I can keep writing till I drop.
But, for the millions of others who have discovered, as I have, that their original enthusiasm for investing was unwarranted, their faith-based retirement plan is all they’ve got left.
Thank God for my dinky-assed pension. 401(k)s can never be as good as pensions and weren't designed to be retirement plans in the first place.
A couple of good comments following the piece:
My goodness, I love this article. Love it!!! I've been saying for years that the 401k idea that was foisted upon the American public was a sham; 401s were never meant to finance a retirement, as pensions were , but just to supplement retirements, just an additional amount in a portfolio which includes (or at least used to include) defined-benefit pensions, Social Security, and Medicare. As soon as the corporations found this little jewel of a way they could shed pension plans, and then when they realized that a significant number of folks would be naive enough to go along with 401s, which maybe should have been renamed "Madoffs" once Wall Street, Madison Avenue and corporations sunk their hooks into them, it was off to the races for the small investor to actually believe that he could actually "save" enough at the Wall Street casinos to get through retirement.
I'd be willing to vote for any politician who has the guts to tell the American public how much they have been duped by 401s over the past 30 years, especially if that same politician would also say that it's high time that American workers (and unions) started advocating and agitating for Wall Street and the corporate world to loosen up with that $3 trillion they have in their coffers right now and establish pensions for retirees, and for those companies that still do offer pensions, be required to fully fund them. Pensions should be part and parcel of the cost of doing business, the same as getting a paycheck.
A tall order for sure, but the pension system needs to return. It is the best deal for workers.
Another comment:
About four years ago, a friend (then age 58) lost his job and shortly thereafter his spouse decided to seek a divorce, forcing them to sell their home of 20 years. In the interim, he has lived month to month in short term stay, furnished hotels, with the bulk of his possessions in a storage locker. (By the way, during the recession, these storage facilities are enjoying incredible occupancy growth).
After his unemployment compensation ran out, he began to dip into his share of the proceeds from the house sale, which was his primary revenue stream for what has now been 2.5 years. About 50% went for rent, another 35% for health insurance. When the house sale proceeds ran out, he reluctantly stopped paying for health insurance, which was costing him over $800 per month, despite the fact that other than annual checkups and med checks, he has not made a claim in over ten years.
Now he is looking at his retirement plan, and beginning to siphon off a few thousand as infrequently as possible. While also hoping that the market continues to climb, so that he is in essence "profit taking."
Hard to believe that after decades of hard work, he has to begin considering a significant decrease in an already frugal lifestyle.
Welcome to the New America.
Another:
401K/403B's were meant to be the third leg in the retirement stool. They were meant to close the income gap between the last year of earnings, and pension and social security benefits. Wall Street loved them because they were automatic commission/fee machines, employees loved them because they maintained their pre-retirement living standard, and employers loved them because they provided a way to differentiate themselves to the workforce. Employers changed, however, and now love them because they released them from their pension obligations. Now everyone could successfully fend for themselves.
Unfortunately, that's not true. People don't fend for themselves, they live on a hope and a prayer, or decide to substantially lower their standard of living to retire. My partner and I will have approximately $1.5 million saved when we retire at 63 and 67. That's not enough for us to live on for the 15-30 years we'll still be around after we retire. Fortunately, both of us are in public pension systems. They are NOT free. We both pay into our pensions. I pay nearly $900 a month into my pension. I'm not funding it completely, but it's definitely not the public assistance handout pension-gutters want us to believe it is.
With our pension, our savings, and our reduced Social Security (public pensioners' SS is reduced), we will be OK in retirement, but it takes all three legs to make the retirement stool sturdy. Everyone needs, and deserves, a sturdy retirement stool.
I hope the poster realizes he or she must be in a very, very high income bracket to save that much money, unless he or she has substantial equity in real estate. I suspect the "savings" people supposedly have is actually equity in a house. It is almost impossible for the average person or family to save much for retirement because of job losses, medical bills, etc.
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