Comments on: Why 401(k) Can Spell “Lousy Retirement Plan”

By: Anonymous

Anonymous — Wed, 25 Mar 2009 04:27:22 +0000

So many employees cash out on layoff for a stupidly simple reason. America has a poor unemployment benefits system – and those checks are taxed. So, the 401(k) ends up being a glorified severance package! What we need is a Swedish style unemployment and retirement system and throw the 401(k) under the high speed train.

By: Roger

Roger — Wed, 18 Mar 2009 00:10:50 +0000

Not a bad plan, overall. I like My Journey’s suggestions; it seems a lot of the problems with 401(k)s (which I think has a bit of a ring to it, even if it’s just a random section of the tax code) could be solved by simply a) increasing the limits on IRAs, b) making it easier for corporations and small business to set up arrangements with fund families to host their retirement plans, and c) make it harder for people to avoid contributing to the plan. I’d also think that setting up some tax advantages for companies to put 10% of the employee’s compensation directly into the IRAs would make it more likely for the companies to participate.

I’d like to hear more about your thoughts regarding how to change our current retirement system. Frankly, the cobbled together mix of pensions, Social Security, IRAs and 401(k)s that we call a national retirement system needs to be replaced by something, and I’m sure you’ve got a better view than I do of what that something should be.

By: Mr. ToughMoneyLove

Mr. ToughMoneyLove — Sun, 08 Mar 2009 05:34:47 +0000

Under normal circumstances I am opposed to government intervention in our financial lives. On the other hand, if people are allowed to ignore their obligations to save for their own retirement, the taxpayers will end up paying the tab to provide extra services and support for seniors. I would prefer to force people to make those preparations with their own money.

By: Andrea

Andrea — Sat, 07 Mar 2009 16:40:56 +0000

You see it every day, huh? You’re an inquisitive bloke, hanging out at the checkout counter at Best Buy and asking people who buy an XBox if they’re contributing to their 401k. ;

They don’t have to sign the form, MP. 401ks are opt out now. Truly lazy people would be saving for retirement.

By: MasterPo

MasterPo — Sat, 07 Mar 2009 04:33:42 +0000

Andrea – You can lead a horse to water but…

If people don’t educate THEMSELVES then all the legislation in the universe won’t help.

And the fact still remains that a great many people (I see it every day) would rather spend money on Xbox and Starbucks then put into a 401k even 1%.

You can’t protect people for being stupid.

But tell you what, if you think it’s so heartless then YOU put 5% of YOUR pay into someone else’s 401k for them because they are too lazy to sign the form!

By: Andrea

Andrea — Thu, 05 Mar 2009 13:33:05 +0000

@MP – What a ridiculously cold attitude.

Part of the same legislation that allowed corporations to switch to an “opt-out” default also required personal finance education for employees. That, however, is still lacking.

By: MasterPo

MasterPo — Thu, 05 Mar 2009 04:22:27 +0000

The fact that only 65% of people participate isn’t the plan’s fault. People have the choice and if they choose not to, dumb as it is it’s still up to them. Same with cashing out instead of rolling over.

Let people fail. It will be a good lesson.