'Father of 401k' disowns it

There are 70 people who have given this a THUMBS UP and 5 a THUMBS DOWN.  This is all factual information.  Who are these 5 uninformed people?  I will bet you none of these people prepare their own tax return as I do; or know the laws about retirement accounts as I do.  I challange them to respond!

I went to work out of college in 1973 for a company that had what they described as a (Cadillac Pension).  In 1990, the company decided to dissolve the plan and go to a 401K.  For my 17 years of accrued benefits, I received $15,836 which I rolled over into the new 401K plan.   I was 39 and therefore received this small paltry sum, as the older people ended up with the bulk of the money.   The company kept over $500K of money in the plan and did not distribute it to the employees.  Instead the money was shown as income that year to falsify the real earnings of the company. 

I contributed every year the IRA was available starting in 1975 when you could put in a maximum of $1,500 per year. 

The Tax Reform Act of 1986,  changed the deductibility of an IRA  if you were a participant in  a defined benefit plan.  You could not deduct a traditional IRA before tax but after tax if you were single and earned more than $35K and $50K for married a year.  The problem with this scenario was it was assumed you would be at your employer for a long period of time and have this defined benefit "Pension" at retirement.  From 1987 until this law was revamped I did not contribute to an IRA because it was not deductible.  Roth IRA's were started in 1998 and I then started putting money in Roth IRAs.

The problem was the assumption by our legislators that if you were in a defined benefit plan (Pension), you would receive this monthly income.  Corporate America took this benefit away and now give this money to Corporate Heads in big salaries, stock options and grants and bonuses.

This was the greatest "RIP OFF" allowed by the Washington, D.C. Politian.  Of course they still have their lavish pension that allows them to draw $55K per year after 20 years of service at age 55.  This needs to change to a 401K.  They would then be in the same boat the rest of us are in with the market swings!

The real problem is never mentioned in this article.  A 401k plan alone will never fund an indiviuals retirement.  Very few people have ever made enough money in a 401k plan to actually retire on a 401k plan alone.  The average employee, over a 30 year career, has 200,000 dollars in their 401k plan.  Thats using numbers from history.  With the stock market hits of the past decade I'd say most 401k plans are less than 200,000 over a 30 year career.  So the real crime is that Ted Benna's 401k plan was sold to workers as their savior and companies got rid of their defined benefit pension plans.  Today workers now realize that if all they have is a 401k plan then they will never retire.  However it's late in the game.  Companies have taken away defined pensions, the only real retirement plan, and workers now realize they will likely never retire.  At best a 401k plan supplements a defined pension.  It should have never been seen as or implemented as a replacement for a defined pension.  The American dream is dead!  The Idea of putting in a good 20, or 30 years of hard work and having it rewarded with a modest retirement is dead!  The dream of owning your own home, free and clear of a mortgage, is dead!  Politicians on the right want to destroy retirements further but in fact retirements started being destroyed decades ago.  What we have seen over the years and are seeing today is the killing of the american dream.  It's a good title for a book:  The Killing Of The American Dream!.  Good Day, Joe.

People will never get their house in order.  Young people don't think they need healthcare then it's to late.  People want more so they take risk, then it's to late.  People say it's not my fault that other people don't have their house in order,  but then the economy falls apart because people didn't have their house in order, then it's to late.  Wake up people you are your brother keeper because if you are not the house will fall in on you, then it's to late.  Let the government do its job and oversee unfair practice and provide security for all, not promote  con men that prey on the innocent and naive, so it will not be to late.  Get rid of bums in congress and elect people that believe in government and work to make it work.

Many folks seem to think that pensions are better than 401K’s and that isn’t entirely true.  When pensions were at their peak only about 20% of retirees ever received payouts from a pension plan because most did not work at any one job long enough to qualify for the benefit.

Every week couple billion dollars from 401k accounts feed into stock markets. Move these monies around from one joint to another to get commission alone giving these bankers plenty of bonus each year. We have many billionairs  and millionairs today because of that steady stream of monies are coming in regularly and predictably.

If you want to take advantage of this 401k think like bankers or traders do. Contribute to Roth IRA first. Max that out. That's only money that will make you rich.  But you have to trade regularly...riding the wave of stock market up and down. Stock market is not an investment. You don't buy a stock and sit back and sell it when you about to retire. It is a gambling house but the outcome is better than a casino if you follow news and read what these traders are doing.

The 401k if you chose to contribute put it all in bond fund. Bonds are much stable for something you can not move in and out quickly. It will give you benefit of tax deduction and company match if they match yours.

If everybody do this with their 401k account no way that bankers and financial institutions can pick our pockets so deeply.