Tuesday, April 21, 2009

60 Minutes' story on the 401k industry will not restore faith in the system

This just depressed the shit out of me, but it's a story that needs to be told...


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Posted by The Cajun Boy at 3:11 PM

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3 comments:

Jared said...

That David Ray guy deserves to be water-boarded while his testicles are slowly clamped in a burning hot vice grip

5:21 PM
loganC said...

My heart goes out to these people as I have seen my own parents deal with a similar situation. However, what is the solution? This piece just states the blatantly obvious and cold hard truth that those who had large exposure to equities in their 401k were killed over the last 18 months.

However, it can not be overstated that pension plans are not sustainable for business. Look no further than the US auto industry for a concrete example. While the balances of a vast majority of 401ks have been eviscerated, I don't think any sort of blame should be placed on the 401k plan per se. Further, the statement that "401k is the best retirement plan" is partially correct considering the inevitable insolvency of social security and the blatant insolvency of pensions.

Unfortunately, it looks as though the vision of coasting into your "golden years" after 60 is an absolute mirage. It pains me to say these things, but the reality of the situation is that as life expectancy increases the model of retirement at year x (i.e. age 59.5 at the current time) must increase.

11:45 PM
Spencer said...

That story was like a punch in the gut. The worst part is that everyone who should be responsible, runs to their corner and ducks that responsibility. The government blames the mutual fund operators, the mutual funds blame the people, and the people - well it doesn't matter who they blame because they're left holding the bag.

I feel somewhat lucky. Last year I took a job that paid me substantially more than my last job. I decided not to join the 401K plan. Instead I funneled the extra money to reducing debt. On top of not losing money, I end up further ahead because I'm not paying as much in interest. A lot of people should do the same.

The scary thing is that it's hard to fathom a way to plan for retirement without relying on some entity that we've all grown to realize, shouldn't be trusted with our money. Financial corporations, the government, your employer?

What should the common person do?

11:49 AM

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