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I think a lot of people assume that pension systems ought to or actually do work as savings/investment systems, like private 401(k)s do. So you pay into the sy
by aetherson 4y ago
I think a lot of people assume that pension systems ought to or actually do work as savings/investment systems, like private 401(k)s do. So you pay into the system when you're working age, your money is saved, then it is paid out to you later.
- Izikiel43 4y agoAfter seeing the pensioners in my home country living in poverty because of economic crisis destroying their pensions, the government using pension money as if it was its own, and being actively hostile to pensioners by delaying trials to pay the pension money fairly waiting for them to die, I will take a 401(k) over that always, my money is mine and no one else's.
- yazantapuz 4y agoArgentinian? The government theft of the private funds was outrageous. Although the AFJPs were far from being a 401(k) system.
- Izikiel43 4y ago> Argentinian Takes one to know one
- eniotna 4y agoMoney is never truly yours if you are not the issuer. That's why we need more "hard" money (gold, bitcoin).
- oblio 4y agoBitcoin is hard money? If it is, so is silly putty :-)))
- olddustytrail 4y agoI have some bad news for you then: many of the companies that provide 401(k) were on the verge of collapse in 2008. The only reason people didn't lose their pensions entirely was because the government bailed them out... You can always lose your money. Best to accept that and not worry too much.
- jobs_throwaway 4y agoHow does that work? The 401(k) providers are lending out the securities that their customers own?
- lotsofpulp 4y agoNo, 401k admins do not own the securities, the employees do. The comment is incorrect in implying the government bailed out the administrators, but the government did backstop the price the securities (the stock market) itself. Hence why I think an SP500 investment is risk free on a >3 year timeline.
- deleted 4y ago[deleted]
- pkaye 4y agoThe 401(k) money is held separately from the company funds.
- Izikiel43 4y ago> many of the companies that provide 401(k) were on the verge of collapse in 2008. The stock market went to shit, not the providers. The 401k appeal is that it's an account you *own* and the government can't touch for money, it would be the same as expropriating a bank account, which to be fair, the Argentinian goverment kind of did in 2001, hence why since then, people there save money in usd cash or in a foreign account, not in the local financial system. If the US government has to expropriate or do weird stuff in general with 401k accounts, we are in a situation where shit hit the fan long ago.
- mywittyname 4y agoI'm not sure about every pension system, but there are many that invest in government bonds. The problem what that approach is the sustainability of the system depends entirely upon interest rates, which have been at all time lows for the past 15 years. Some private pensions invest in the broader market. All investment systems suffer from this exact problem: returns aren't guaranteed. Even people with 401ks might experience this same issue if investment returns fall below the conventional wisdom rate of ~7% (or 4% real). But even if that rate holds up over the long-term, there's still to risk of a "lost decade" of no-returns or losses for and extended period, followed by a sudden market pop. Pensions are hard.
- datavirtue 4y agoThey were working great until the looting started.
- chmod600 4y ago"there are many that invest in government bonds" If a government "invests" in its own bonds, that's not an investment.
- toast0 4y agoMany government pensions invest in other governments' bonds.
- yamtaddle 4y agoWhose labor is giving those investments value? Who's doing the labor that gives those IOUs (dollars) value even if you just stick them in a savings account and don't invest them? It's not retirees.
- globalreset 4y agoAll financial savings are an illusion. They are just claims on productivity of other people in the future. Boomer generation globally accumulated a lot of claims and considered them their "wealth" but forgot to produce enough people that are going to be willing to put an effort to satisfy these claims. Now is the time when boomers will want to use their savings and discover their error.
- nonethewiser 4y ago> I think a lot of people assume that pension systems ought to or actually do work as savings/investment systems, like private 401(k)s do. It works more like a Ponzi scheme.