4 ms·

>Remember human life before the 401(k)? I guess this is well before my time, but was the effect of having a 401k really that profound? Your post suggests 401k'

>Remember human life before the 401(k)? I guess this is well before my time, but was the effect of having a 401k really that profound? Your post suggests 401k's was (or at least one of) the cause of large corporations.

m52go 12y ago
I didn't mean to suggest the 401(k) causes large corporations to exist. It doesn't. It does, however, create a mentality of dependence on relying on companies for employment and livelihood. In this new environment, that's a toxic mentality to have...continued employment is not as good of a bet as it once was. But yeah, in general, I think having a 401(k) was a profound idea. At no other time in history could you rely on the markets to subsidize the latter third of your life. And at the rate markets are going now, I don't think we'll see that time again for a while (i.e., rapid booms + busts).
- CountSessine 12y ago
  Prior to the 401(k) (late 1970s), we all had lifetime employment and solid company pensions. So I don't think that your 401(k) created this 'mentality of dependence' on companies - that was something that had been around for a while. The nature of 'having a job' changed a lot in the '80s, and the market-driven and sometimes indiscriminate culture of layoffs in the corporate world had a much bigger effect than any tax-shelter retirement plan did. As a non-American, it does seem a bit odd that you can't have a 401(k) or some equivalent outside of your job - or can you? In Canada you can have an RRSP through your employer, where your contribution is made automatically through your paycheck, pre-tax. Or you can make contributions yourself to a private RRSP, and then claim the contribution on your taxes and get a refund.
  - xrange 12y ago
    >As a non-American, it does seem a bit odd that you can't have a 401(k) or some equivalent outside of your job - or can you? That's call an IRA: http://en.wikipedia.org/wiki/Traditional_IRA http://en.wikipedia.org/wiki/Traditional_IRA
- xrange 12y ago
  I guess "coming full-circle" isn't quite the term I want to use, but I'm old enough to remember when 401(k)'s were branded as the corporation's way of throwing their employees to the wind to fend for themselves. Compared to the defined benefit pension that was commonplace. >At no other time in history could you rely on the markets to subsidize the latter third of your life. So now saving for retirement is an act of benevolence on the part of the companies who receive the investment? Since that doesn't make sense, are you maybe referring to the small tax deferral provided by section 401(k) of the Internal Revenue Code? Here's a link to describe what 401(k) is all about, for those who are curious. http://en.wikipedia.org/wiki/401%28k%29 http://en.wikipedia.org/wiki/401%28k%29
- dragonwriter 12y ago
  > It does, however, create a mentality of dependence on relying on companies for employment and livelihood. The 401k and similar defined-contribution arrangements largely -- and by design -- replaced the defined-benefit benefit pensions. So I don't think that historically this argument makes much sense, even if we accept the premise that having some connection between an employer and a retirement savings fosters a "mentality of dependence for employment and livelihood". (Argue, I'd say that capitalism and the wage labor structure themselves do that, by design, and that any effect of the particular details of the common retirement programs are minor compared to the basic structure of the employee-employee relationship itself.) > But yeah, in general, I think having a 401(k) was a profound idea. The idea of the 401(k) was to provide a taxpayer subsidy to the financial services industry while allowing employers to appear to be providing for employees retirements, without actually incurring any obligations to retirees. > But yeah, in general, I think having a 401(k) was a profound idea. At no other time in history could you rely on the markets to subsidize the latter third of your life. You can't rely on that with the 401k system (as many people have discovered the hard way as a result of the market collapses since the 401k became the major retirement vehicle), either. I mean, you can, but not, generally, justifiably. Its just a capital investment, not a "subsidy" from the "markets" any more than any other capital holding is.

m52go 12y ago

I didn't mean to suggest the 401(k) causes large corporations to exist. It doesn't. It does, however, create a mentality of dependence on relying on companies for employment and livelihood. In this new environment, that's a toxic mentality to have...continued employment is not as good of a bet as it once was. But yeah, in general, I think having a 401(k) was a profound idea. At no other time in history could you rely on the markets to subsidize the latter third of your life. And at the rate markets are going now, I don't think we'll see that time again for a while (i.e., rapid booms + busts).

CountSessine 12y ago
Prior to the 401(k) (late 1970s), we all had lifetime employment and solid company pensions. So I don't think that your 401(k) created this 'mentality of dependence' on companies - that was something that had been around for a while. The nature of 'having a job' changed a lot in the '80s, and the market-driven and sometimes indiscriminate culture of layoffs in the corporate world had a much bigger effect than any tax-shelter retirement plan did. As a non-American, it does seem a bit odd that you can't have a 401(k) or some equivalent outside of your job - or can you? In Canada you can have an RRSP through your employer, where your contribution is made automatically through your paycheck, pre-tax. Or you can make contributions yourself to a private RRSP, and then claim the contribution on your taxes and get a refund.
- xrange 12y ago
  >As a non-American, it does seem a bit odd that you can't have a 401(k) or some equivalent outside of your job - or can you? That's call an IRA: http://en.wikipedia.org/wiki/Traditional_IRA http://en.wikipedia.org/wiki/Traditional_IRA
xrange 12y ago
I guess "coming full-circle" isn't quite the term I want to use, but I'm old enough to remember when 401(k)'s were branded as the corporation's way of throwing their employees to the wind to fend for themselves. Compared to the defined benefit pension that was commonplace. >At no other time in history could you rely on the markets to subsidize the latter third of your life. So now saving for retirement is an act of benevolence on the part of the companies who receive the investment? Since that doesn't make sense, are you maybe referring to the small tax deferral provided by section 401(k) of the Internal Revenue Code? Here's a link to describe what 401(k) is all about, for those who are curious. http://en.wikipedia.org/wiki/401%28k%29 http://en.wikipedia.org/wiki/401%28k%29
dragonwriter 12y ago
> It does, however, create a mentality of dependence on relying on companies for employment and livelihood. The 401k and similar defined-contribution arrangements largely -- and by design -- replaced the defined-benefit benefit pensions. So I don't think that historically this argument makes much sense, even if we accept the premise that having some connection between an employer and a retirement savings fosters a "mentality of dependence for employment and livelihood". (Argue, I'd say that capitalism and the wage labor structure themselves do that, by design, and that any effect of the particular details of the common retirement programs are minor compared to the basic structure of the employee-employee relationship itself.) > But yeah, in general, I think having a 401(k) was a profound idea. The idea of the 401(k) was to provide a taxpayer subsidy to the financial services industry while allowing employers to appear to be providing for employees retirements, without actually incurring any obligations to retirees. > But yeah, in general, I think having a 401(k) was a profound idea. At no other time in history could you rely on the markets to subsidize the latter third of your life. You can't rely on that with the 401k system (as many people have discovered the hard way as a result of the market collapses since the 401k became the major retirement vehicle), either. I mean, you can, but not, generally, justifiably. Its just a capital investment, not a "subsidy" from the "markets" any more than any other capital holding is.