3 ms·

The point about individuals needing to guard against the "worst case" of long life, vs an pension de-risking it via large numbers is very interesting, and it's

• wnissen 8y ago
  Yes, it is easier to screw with a pension than a 401(k), for sure. Countries that have national pension schemes certainly have their share of problems. But the median 401(k) balance for a senior is $65K. That's maybe 2 years living expenses at a median wage of $35K. And half the population doesn't have one at all, so the typical person has saved about 1 year's salary. (I'm not using averages because they are so skewed by the rich people who sock away most of the money.) That typical person would almost certainly be much better off having even a corrupt, inadequate pension plan. A quick calculation shows that you'd have to save roughly 2.5% of your salary during your working life, earning only 3% over inflation, to accumulate the median 401(k) balance.