and the wealthy.
Just call it a hunch.

And guess who will be paying for those tax breaks?

and contract out government functions.

Does it apply to legislators and their staff?

Just wondering.

How stupid.

Because with artificially low interest rates from the Fed, there isn't anywhere else to get a decent return that will outdo inflation.

I've seen the investment options in a bunch of different 401Ks, and although all of them offered some kind of stock market option, every one also offered a bond option and a cash equivalent option, with the option of distributing the assets of the 401K between the different options. You choose your risk level and your potential reward level.

Of course, most people need to take some stock market risk in order to have a chance of funding a retirement at a reasonable age.

And of course, you should reduce your stock market exposure as you near retirement and you have limited earning years left to recover from a stock market drop.

Before I get jumped: Of course a generous pension is better than a 401K for the worker, because with a pension the risk of a poor-return environment or of poor investment decisions belongs to the pension plan (and whoever funds it). With a 401K, the worker bears the risk of a poor-return environment and is responsible for making good investment decisions.

The fact that we allowed our economy to evolve in this manner is pure fascism. If the market drops, someone legally steals all your money. Defined pension benefits coupled with social security were the only safe way to guarantee a good retirement. Unfortunately, voters in this country F'd all that up along with greedy boards of directors of large companies.

Last edited Fri Oct 20, 2017, 10:18 AM - Edit history (2)

The days of people working their entire career for one employer are long gone. I have worked for several employers for 2-4 yrs before moving on to something better; with a 401K, I was able to contribute during those years and roll it over to my next job. With a traditional pension, I would have received zero towards my retirement as I wasn't there long enough to become vested. That would have been over half of my working life with zero being credited towards my retirement.

In addition, any 401k assets after I pass will automatically be transferred to my spouse.

While there is risk associated with my investments, that doesn't mean a pension is risk free. Many have been reduced due to bankruptcy. Ask the salaried retirees of Delphi, the city employees of Detroit, or some of the Teamsters Multi Employer pension plans that had their benefits reduced, how "guaranteed" their pensions really were.

If pension plans had been left alone and properly regulated, they wouldn't be subject to bankruptcies. As far as risk goes, unless you keep everything in the safest bonds you can find, you can lose everything you put into it - the stock market allows that to happen by design.

My retirement would be very bleak if you were managing my 401k. You would have me hiding cash in my mattress.

I didn't see your reply to the first part of my post

1.Pension accounts have traditionally been mostly in long term bonds with some stocks. With 30 year bonds paying 4 % interest there's no way they could not be in trouble. Most of their projections are assuming 7 % (I've even seen 9 %) returns per year. That's not realistic at the current low interest rates.

2. If you put your money in a stock mutual fund, you may own 200 different stocks. In order for you to lose "all that you put in" all 200 of them would have to go broke at the same time. If that happened you'd have bigger things to worry about than your 401k.''

3. Pensions are better for workers but they don't make any sense to employers.

That is spectacularly unlikey. Even in 2008, the market drop didn't wipe out peoples' 401K. Mine took about a 25% hit. I rode it out, kept investing, and I'm doing better than ever today.

401k's can't be spent by your company. It's your money in your account.

I had friends who worked for a company and they were all bragging about their pension. Then the company went bankrupt and was bought. In the proceedings, the employees got a pension "lump sum" buyout with $0.10 on the dollar of the lump sum value of their pension.

So don't tell me about the safety of pensions.

this happens:

"I had friends who worked for a company and they were all bragging about their pension. Then the company went bankrupt and was bought. In the proceedings, the employees got a pension "lump sum" buyout with $0.10 on the dollar of the lump sum value of their pension.

So don't tell me about the safety of pensions."

That was my original point. I don't hope for 401k's to fail, it's all we have now but you'll never convince me it was the better way to go, only that you have no choices left, which sucks. You should be able to save incrementally, with modest interest without risk - but you can't and as far as your wonderful 401k's go, some of the protections didn't exist until Enron bellied up on a whole bunch of employees who lost everything. Any way, won't belabor the point any longer.