Study: 401(k) Retirement Plans Failing Most Workers

CBS MoneyWatch ^ | Sep 6, 2013 | Constantine von Hoffman

[Toddsterpatriot]

According to a new study, the 401(k) savings account isn't adequately providing for people's retirement and is adding to the nation's growing wealth inequality.

The report from the Economic Policy Institute, a liberal-leaning public policy think-tank, illustrates how the shift from pensions to individual savings accounts has affected retirees. The authors find that it is the wealthiest workers who are benefiting the most because they can actually contribute enough to make 401(k) plans work for retirement.

"401(k)s were never designed to replace pensions for most workers. They serve primarily as a tax shelter for high earners," said economist Monique Morrissey, the report's co-author, in a statement. "The 401(k) revolution has been a disaster, yet some policymakers are calling for cuts to Social Security, which will be the only significant source of retirement income for most Americans--if they are able to retire in the first place."

Snip...

According to the report:

Retirement-income inequality has grown in part because most 401(k) participants are required to contribute to these plans in order to participate, whereas workers are automatically enrolled in defined-benefit pensions and, in the private sector, are not required to contribute to these plans. Thus, higher-income workers are much more likely to participate in defined-contribution plans. In addition, higher-income workers have more disposable income and a higher investment-risk tolerance, receive larger tax breaks, and are more likely to work for employers that provide generous matches.

[dfwgator]

Yes, some would but I would bet that those in the lower classes would not invest that SS money; they would spend it.

Go to any casino at the end of the month and you will know that's true.

[eyedigress]

I agree with you on this. Thankfully I am mostly a bull in the market. 99% high growth pulling in over 24 points average over the last 4 years.

[expat_panama]

bet that those in the lower classes would not invest that SS money; they would spend it.

Go to any casino at the end of the month and you will know that's true.

We need to first decide who's in charge of running a person's life, is it the person or the state?  I say people run their own lives, and I say most people do a better job than the power hungry thugs at Central Command can (see post #50).   When there's a rare case where someone lacks the capacity to feed himself, then that's a situation where the state steps in and forces the invalid into protective custody. 

That kind of situation has to be the exception, but America's become a place where Obamacare and Social Security is forced on everyone by the StateControl thugs.

[SoFloFreeper]

Hey, look, a new excuse for the Clown to stop you from investing your money the way you see fit.

Got fascism?

[Sir Napsalot]

Pelosi et al. will need to take over all your 401’s IRA, etc to see what’s in it.

And that is no joke, no empty threat, either.