4 ms·

Was the 401(k) a Mistake?

14 points by gmays 3y ago

RestlessMind 3y ago
Good article, if a bit too long. When it comes to retirement savings, I grapple with the same dilemma I have with other areas like drugs or gambling. What is the sweet spot on the spectrum where one end is a draconian nanny state dictating everything with minimal personal freedoms, and the other end is complete personal freedom to do anything one wants to themselves and live with the consequences. Like many things in life, the correct balance seems to be somewhere in the middle - a basic amount of mandatory retirement saving, incentives to save more if one wants to while capping those incentives so that ultra-rich don't game it, a minimal safety net for the unluckiest among us funded via taxes, freedom for one to invest in what they want, strict rules and regulations on providers of retirement plans & vehicles to prevent fraud. American system seems to have a lot of basic components in place and may need only some small tweaks, relatively speaking, to find the right balance.
- ghaff 3y ago
  Right. And one of the realities that the comments on the NYT article largely ignore is that defined benefits didn’t come from a magic money tree. Like other benefits they reduced other comp by some amount. So employees never got defined benefits for free. They got some predictable payout upon retirement which they probably didn’t even think about when younger—mostly provided they had decade+ tenure at a large company.
Paul-Craft 3y ago
Paywall bypass: https://archive.ph/0UDq9 https://archive.ph/0UDq9
deleted 3y ago
[deleted]
fargle 3y ago
"Ghilarducci proposed replacing 401(k)s with “guaranteed retirement accounts,” a program that would combine mandatory individual and employer contributions with tax credits and that would guarantee at least a 3 percent annual return" good god! 3%? shoot me. even if it's "inflation adjusted 3%". the whole problem is this: - 401(k)s suck if you can't trust the individual contributor to contribute. oh, and sometimes the market falls over and takes a nap for a decade or so ¯\_(ツ)_/¯ there's luck involved. - private pensions suck if you can't trust the employer to invest wisely and not "raid the pension fund". ask an ex-Delta pilot about that one. they got zero. - government retirement plans suck if you can't trust the bureaucracy to not "raid the pension fund". ask a social-"security" recipient about that one. my latest statement says i'll be getting what is the inflation adjusted equivalent to $36 a week if i can wait to 67. /s there's no plan that magically helps low-income, at risk, seniors or doesn't lead to the richer, smarter, and more well-off benefiting more than the rest. two of those three have no way out, no fix. one of those three at least has a hope of working if you are smart and disciplined enough to contribute and not "raid your own retirement fund"

14 points by gmays 3y ago

Good article, if a bit too long. When it comes to retirement savings, I grapple with the same dilemma I have with other areas like drugs or gambling. What is the sweet spot on the spectrum where one end is a draconian nanny state dictating everything with minimal personal freedoms, and the other end is complete personal freedom to do anything one wants to themselves and live with the consequences. Like many things in life, the correct balance seems to be somewhere in the middle - a basic amount of mandatory retirement saving, incentives to save more if one wants to while capping those incentives so that ultra-rich don't game it, a minimal safety net for the unluckiest among us funded via taxes, freedom for one to invest in what they want, strict rules and regulations on providers of retirement plans & vehicles to prevent fraud. American system seems to have a lot of basic components in place and may need only some small tweaks, relatively speaking, to find the right balance.

ghaff 3y ago
Right. And one of the realities that the comments on the NYT article largely ignore is that defined benefits didn’t come from a magic money tree. Like other benefits they reduced other comp by some amount. So employees never got defined benefits for free. They got some predictable payout upon retirement which they probably didn’t even think about when younger—mostly provided they had decade+ tenure at a large company.

Paul-Craft 3y ago

Paywall bypass: https://archive.ph/0UDq9 https://archive.ph/0UDq9

deleted 3y ago

[deleted]

fargle 3y ago

"Ghilarducci proposed replacing 401(k)s with “guaranteed retirement accounts,” a program that would combine mandatory individual and employer contributions with tax credits and that would guarantee at least a 3 percent annual return" good god! 3%? shoot me. even if it's "inflation adjusted 3%". the whole problem is this: - 401(k)s suck if you can't trust the individual contributor to contribute. oh, and sometimes the market falls over and takes a nap for a decade or so ¯\_(ツ)_/¯ there's luck involved. - private pensions suck if you can't trust the employer to invest wisely and not "raid the pension fund". ask an ex-Delta pilot about that one. they got zero. - government retirement plans suck if you can't trust the bureaucracy to not "raid the pension fund". ask a social-"security" recipient about that one. my latest statement says i'll be getting what is the inflation adjusted equivalent to $36 a week if i can wait to 67. /s there's no plan that magically helps low-income, at risk, seniors or doesn't lead to the richer, smarter, and more well-off benefiting more than the rest. two of those three have no way out, no fix. one of those three at least has a hope of working if you are smart and disciplined enough to contribute and not "raid your own retirement fund"