401ks no substitue for actual pensions
The 401(k) generation is beginning to retire, and it isn't a pretty sight.
It's a great time to raise the retirement age for social security! And force public employees to give up their pensions!
And i don't think the answer is to dump more money into that sinkhole.
Vanguard Group, one of the biggest providers of 401 (k) plans, has changed its advice on how much people should save. Vanguard long advised people to put 9% to 12% of their salaries--including the employer contribution--in their 401(k) plans. The current median amount that people contribute is 9%, counting the employer contribution, Vanguard says.
Some 401ks don't even offer a guaranteed return option, so you're basically stuck with stocks and bonds, hoping that you don't retire during a downturn. And it seems like more companies are dropping the matching employer contribution, leaving the program with nothing but a tax deferral. I think you're better off stuffing money in your mattress.
Someone likes 401ks, though:
Initially envisioned as a way for management-level people to put aside extra retirement money, the 401(k) was embraced by big companies in the 1980s as a replacement for costly pension funds. Suddenly, they were able to transfer the burden of funding employees' retirement to the employees themselves....
By fnord12 | February 21, 2011, 7:46 AM | Liberal Outrage