Time To Retire The 401(k)!
October 24th, 2011During the past few years, the 401(k) system for retired American employees has suffered through recent criticisms– and justifiably so. The tax deferred 401(k) plan has unfortunately become the go-to retirement piggy bank in the United States. From the end of 2007- to the beginning of 2009, the average 401(k) balance fell 31%, which greatly hurt those who retired during the recession. Americans of ages 60-62 with a 401(k) account have less than one-quarter of what is needed to maintain its standard living during retirement.
If future generations continue putting their money in the 401(k), I feel that they will be made aware of the severe consequences this financial trap has the potential of creating. It is simply unpredictable how the economy will react but the uncertainty concerning this retirement system should spark the attention of many upcoming American retirees to reconsider where they place their money in the future. I feel that this is just another detrimental issue in America’s suffering economy. Only by retiring the flawed American retirement system will the majority of American citizens be able to enjoy their retired lives.
November 6th, 2011 at 1:35 pm
Great post Jeremy! From any standpoint, certain statistics and the downfall of the American economy continues to ratify the fact that a majority of US citizens aren’t situated for a safe retirement. For the past decades, US saving rates have been gradually decreasing and as the economy struggles to recover, companies are being put in a tough position, giving employers less incentive to match employee 401(k) contributions. In much sense, I too believe that the 401(k) retirement plan is faulted; while the aim of the plan is to encourage ordinary workers to save, it also requires them to be stock analysts to ensure their retirement goals are on track. This may be too much of a burden for those without prior knowledge on investing and unwilling to spend more on a broker. As for how the 401(k) is constituted currently, lowering the high-fees is a must in making the plan a more beneficial retirement option. Another way to ensure that future generations won’t run into the same problem is to have mandatory enrollment in the 401(k) if the company offers it. This would allow employees to start saving early and gain enough interest to prepare for their retirement.