The part where it’s defined-contribution instead of defined-benefit.
To be perfectly honest, I personally am better served with a 401(k): I’m in an above-average earning career (engineering), have lived well below my means, and am financially literate.
But most people are not like me. Frankly, the average worker in the US is either not competent or not disciplined enough to both actually contribute enough and invest it properly, and so as a nation we’re careening towards a disaster of geriatric poverty the likes of which hasn’t been seen since before Social Security was invented.
So yeah, the American working class was definitely scammed when pensions were replaced with 401(k)s. But hell, even if you don’t understand the actual differences and implications, you could also tell it’s fishy even just by the fact that the execs were so eager to switch over!
Y’know there’s this thing called Target Retirement Date ETFs right? Also, aren’t most 401ks either managed or extremely restricted towards very safe investment options?
Y’know there’s this thing called Target Retirement Date ETFs right?
Of course I do.
But a surprisingly large number of people either don’t, or don’t understand it and are terrified of making a mistake, so they end up making the much worse mistake of leaving their 401k contributions in the cash sweep account. (I think in recent years 401ks have started putting contributions in target-date funds by default instead of making people affirmatively choose it, but still, a lot of people lost a lot of years of growth to that issue alone.)
And again, that’s not even talking about the people who simply don’t [think they] make enough money to contribute at all, but would have had money going to their retirement if it had been in the form of a pension that they never had the option to decline and get in their paycheck instead. I have never heard of a 401k that forces you to put money away in order to ensure that your retirement is actually adequately funded, the way that pension plans used to handle automatically.
Perhaps but my years working for various companies that offered pensions with substantial vestment periods but which I didn’t stay at for long enough to get are wasted, because pensions usually take 10+ years to earn, whereas if I’d had 401k contributions with vestment periods usually around 1.5-5 years I’d have a decent little bit of money from those that could have grown.
Now I have the best of both worlds where I get a defined contribution of 10% on top of whatever I earn added to my 401k with just a few years to vest.
Pensions only pay out if both company and employee are a type of loyal that is simply not common anymore.
Bruh, it’s pretax dollars in an account that 9 times out of 10 out performs interest rates. Even in huge downturns, it will bounce back thanks to stock market goes brrrrrrrrr
If you’re saying you’re that 1 out of 10, then you made it sound like you lost money. Now you say your 401k is doing great? I’m sorry, I don’t understand the point you’re trying to make.
And yes, 09 was a shit show for 401ks/market value.
Ya you were scammed or we’re not getting the full story. If it was a real 401k it’s composed of diverse stocks and bonds and stuff and if it hit 0 the US wouldn’t really exist. Unless you were self managing and put it all into a company that stopped existing or something.
You’re math here isn’t working out. Were you putting less than a dollar a paycheck? Did you have one employer the entire time.
Assuming you did not, when you changed job did you roll over the previous 401k into a Ira or spend it? Even if you ignored the paperwork, the money should still be out there somewhere.
I learned the hard way that 401k is a scam.
Just put money in a savings account, people.
losing 5-8% buying power every year sounds great!
deleted by creator
Ah yes, love me some 0.01% interest. Surely my savings will grow.
What part of a 401k do you think is a scam lmao
The part where it’s defined-contribution instead of defined-benefit.
To be perfectly honest, I personally am better served with a 401(k): I’m in an above-average earning career (engineering), have lived well below my means, and am financially literate.
But most people are not like me. Frankly, the average worker in the US is either not competent or not disciplined enough to both actually contribute enough and invest it properly, and so as a nation we’re careening towards a disaster of geriatric poverty the likes of which hasn’t been seen since before Social Security was invented.
So yeah, the American working class was definitely scammed when pensions were replaced with 401(k)s. But hell, even if you don’t understand the actual differences and implications, you could also tell it’s fishy even just by the fact that the execs were so eager to switch over!
Y’know there’s this thing called Target Retirement Date ETFs right? Also, aren’t most 401ks either managed or extremely restricted towards very safe investment options?
Of course I do.
But a surprisingly large number of people either don’t, or don’t understand it and are terrified of making a mistake, so they end up making the much worse mistake of leaving their 401k contributions in the cash sweep account. (I think in recent years 401ks have started putting contributions in target-date funds by default instead of making people affirmatively choose it, but still, a lot of people lost a lot of years of growth to that issue alone.)
And again, that’s not even talking about the people who simply don’t [think they] make enough money to contribute at all, but would have had money going to their retirement if it had been in the form of a pension that they never had the option to decline and get in their paycheck instead. I have never heard of a 401k that forces you to put money away in order to ensure that your retirement is actually adequately funded, the way that pension plans used to handle automatically.
Perhaps but my years working for various companies that offered pensions with substantial vestment periods but which I didn’t stay at for long enough to get are wasted, because pensions usually take 10+ years to earn, whereas if I’d had 401k contributions with vestment periods usually around 1.5-5 years I’d have a decent little bit of money from those that could have grown.
Now I have the best of both worlds where I get a defined contribution of 10% on top of whatever I earn added to my 401k with just a few years to vest.
Pensions only pay out if both company and employee are a type of loyal that is simply not common anymore.
guessing vestment
Definitely some form of financial illiteracy which is certainly unfortunate but not to the detriment of all 401ks
it kinda is in that 401ks should not allow that pro job / anti worker bullshit
it’s crazy how we as a society allow all that obvious gatcha type rules just to help rich fucks get richer
Sure, but be mad at vestment, not all 401ks have that.
oh for sure I agree with you and it is likely his own fault but I do sympathize with his frustration
How is adding money every paycheck to an account with the promise of it being there later my fault?
depends on what part you are upset with
stock selection, interest, market fluctuation, vestment dates or withdrawal age
you’re being so purposely obtuse no one has any idea what you are complaining over
Shit, you probably don’t believe in direct deposit either.
The assumption that you’re going to live to a ripe old age and still remember your own name.
“Don’t plan for tomorrow because you might not live through today” is a great way to die horribly tomorrow.
That’s cute but guaranteed if you’re under 30. If you’re under 40, you’re going to lose any and everything you save.
I’m excited to hear you clean up on Short bets with that crystal ball of yours
Bruh, it’s pretax dollars in an account that 9 times out of 10 out performs interest rates. Even in huge downturns, it will bounce back thanks to stock market goes brrrrrrrrr
I must have hit that 1 out of 10 shot. Bro.
If you tried to use it in like 2009 then ya. But if you kept it until now it would be doing great.
Obviously it’s doing “great”. That’s why I’m saying what im saying… Seriously? 2009?
If you’re saying you’re that 1 out of 10, then you made it sound like you lost money. Now you say your 401k is doing great? I’m sorry, I don’t understand the point you’re trying to make.
And yes, 09 was a shit show for 401ks/market value.
What are you talking about? I never said it was doing great. I airqouted it, man. I’m done with all of this.
What if you only invested at market peaks
Story time!
There’s nothing in the account.
Fun story
Did you not add money? Invest in a single stock that went bankrupt? Get scammed?
Added money every paycheck.
Ya you were scammed or we’re not getting the full story. If it was a real 401k it’s composed of diverse stocks and bonds and stuff and if it hit 0 the US wouldn’t really exist. Unless you were self managing and put it all into a company that stopped existing or something.
Every job for 34+ years, put money in every paycheck. Become disabled. Look in 401k, there’s not enough for even one months rent.
I call that bullshit. I don’t care what everyone here thinks. You’re all smart asses until you find out.
You might get two months rent after 65 years! Whoooo
You’re math here isn’t working out. Were you putting less than a dollar a paycheck? Did you have one employer the entire time.
Assuming you did not, when you changed job did you roll over the previous 401k into a Ira or spend it? Even if you ignored the paperwork, the money should still be out there somewhere.
Yeah dude. What job let’s you put less than a dollar in? Id love to hear that. The money is not there. I suggest you look at yours.
At minimum throw it into SNP500. Return on that over 10 years will always go up.
What if you only invested at market peaks