on 401k


401k accounts are the greatest things to happen to corporations since corporate personhood. A 401k was never intended to be an individual's entire retirement savings; rather it was intended to help supplement an employer's pension plan and encourage individual saving towards retirement. But like most things corporate, and most things Wall Street, it was prostituted into subverting the defined benefits plan which used to be commonplace among businesses. Now, millions of Americans who would have otherwise been safely covered under defined pension plans are having to work longer or do without in their older years because the Reaganites and the corporatists managed to hoodwink them into believing that the market would safeguard them better in their retirements through 401k accounts. Hey, anybody out there still want to put Social security in the hands of the investment class, maybe Jim Cramer or Larry Kudlow? After our most recent economic debacle, any corporation, whether domestic or foreign, doing business in the U.S. and employing American workers, should be required by law to offer at least a base defined benefit pension plan and make the proper contributions to that plan very visibly every year. If the workers want to supplement it with a 401k, so much the better. But a 401k should never be primary, only supplemental. If a business doesn't have enough money to set aside for current and future retirees, then maybe it shouldn't be in business in the first place. Providing a pension should be part of the cost of doing business, no option.

Kate Madison
Depoe Bay, Oregon

How about those of us who have already retired, and find that our 401 Ks have been reduced by more than 25%--more like 40%! Add to that the impending reduction in social security and rising healthcare costs (yes, we get higher and higher premiums on our Medicare Advantage coverage every year)! That leaves those of us who are truly "middle income" up the proverbial creek!!!! It is easy to think about going back to work if you are 60 or even 65--but how about over 70 and partially disabled? We are caught in the middle of this dilemma, and there seem to be no answers--especially since the healthcare CEOs insist on taking home such extravagant pay--along with the rest of the psychopathic corporation executives! What a sick healthcare/financial system we have in America--the newest and most famous Third World Country~!


Half my 401(k) was in "conservative" mutual funds, half in very low paying CDs. Have not lost a cent on the CDs. Have lost a lot on the supposedly "conservative" mutual funds, which changed their rules so they could invest in CDOs.

What bothers me deeply is that safe investments pay much less than they should, which forces people into the stock market, where their savings can either be nickle-and-dimed away through fees, or further depleted via big investors and their speed-trading programs. The game is rigged. Savers need a better option. The conventional wisdom about stocks being the best long term investment just isn't true any longer when the game is stacked so heavily against the small investor.


i have been contributing the maximum allowed (either as % of income or investment limit) on my 401k since i started working 13 years ago. following conventional wisdom, i invested in stock mutual funds: small & some large caps & international. then the dot com boom came and wiped out the gains and more, but i kept contributing, but this time into more conservative SP500 index funds. i was only just feeling good about my 401k when this latest stock market drop occurred. now i feel not even at square one because my 401k value is lower than my contributions and my employers' match. how discouraging... if 401k funds lose value with stock market drops and bond funds / savings accounts don't give enough gains to build a retirement on, and social security won't be around when i retire, what's a person to do?

j. johnson

Anyone investing in American equities or debt, whether or not in a 401K, is a gambler, not an investor. All of the rules started to change last year. The losers were rewarded while the conservative investors were left to pay the bills. The President has set precedent in taking away the rights of secured bondholders. The only rule, now, is that the politically connected will be protected at taxpayer expense.

If you really expect things to get back to the 2005 version of " normal " , and for the rules on your 401K to remain stable, and for the American dollar to retain its value; you are living in pure fantasy or escapism.

Clyde Wynant
Pittsburgh, PA

The problem with 401K plans, indeed with any plan that puts the onus on the individual, is that they assume that all people are smart enough or motivated enough to make the right financial choices. Many are not. Many simply don't have the knowledge to invest wisely. Personally, I don't think we should punish them for that. They may be perfectly good fathers and mothers and workers, but perfectly horrid investors.

The loss of defined benefit plans has decimated an entire generation, my generation. When people ask my "when are you going to retire?" I have only one answer; never. I realize that's actually untrue, however, because I will, quite likely, be fired or downsized at some point. It will be cast as a "corporate decision," but I'll know it for what it really is, ageism.

And my now depleted 401K is low because I haven't been saving. The "real world" too often intercedes, by way of job losses and, as we've seen, the collapse of the Market. No one really saw it coming, but the truth is; what other choice did we have?

New York

PLEASE READ Alex Berenson's story in today's New York Times entitled, "Arrest Over Software Illuminates Wall Street Secret."

Goldman Sachs is making gazillions of dollars adding nothing to the world. It is simply gaming the system, trading milliseconds faster than others.

This is what the brilliance of private enterprise's most creative minds produces when allowed to function independent of morality.

We must acknowledge that at the heart of corporate greed is the fundamental nature of the corporation: ownership separated from management. Management has a license to behave immorally -- "We're duty bound to do what is in the best interests of our shareholders." Shareholders have a license to behave immorally -- "We're not running the show, we're just passive investors."


I used to be editor of a business newspaper. The sole purpose of the 401(k)is to transfer money from your pockets to corporate pockets. The great stock market rise in the 1990s was due entirely to 401(k) funds floating the market. If you had looked at the P&E ratios, you'd would have seen none of the corporations were doing well. Studies in the '90s showed that you would have a better chance of raising retirement capital playing the craps table in Vegas than investing in a 401(k).


I have always been suspicious of the concept of a 401k although I contributed the max. The game is rigged by the Wall Street asset strippers. $01k savings was a huge pile of assets to strip. It is unclear how munch money pours into market every day, like an open faucet sourced from these automatic savings deduction plans. The market doesn't budge, analysts talk about this company or that company which would simply affect the distribution of money, not the total. Then Goldman reports another 100 million dollar trading DAY from shooting fish in a barrel.

There were old economists that felt that you can't save money, that money was temporary, that it decayed in worth and must be invested. Wall Street responded with instruments that we can invest in, but these instruments were not the investing considered by the old economists.

We have recently learned that value of a house is as permanent as a bushel of wheat. We are learning that the only money not perishable, buys, sells, and holds assets no longer than milliseconds. We have found that not all electrons are created equal, some arriving at targets faster than others; for a fee, of course.

No comments:

Blog Archive