Should The 401k Be Killed?

[matcom]

Interesting

<snip>

Teresa Ghilarducci has always had more interesting — and controversial — things to say than your average retirement-policy wonk. An economist who moved this year from the University of Notre Dame to the New School for Social Research in New York City, she has railed for years against the decline of the traditional pension. She recently wrote a book subtitled The Plot Against Pensions and the Plan to Save Them; the less contentious main title is When I'm Sixty-Four.

Still, as she sat at the witness table on Oct. 7 at a hearing of the House Committee on Education and Labor, running through the litany of what's wrong with the 401(k) and other defined-contribution retirement plans — they have high fees, for one — Ghilarducci didn't think she was courting controversy. "I was saying things that seemed completely milquetoast," she recalls. Ghilarducci did bring up a bold proposal to replace the 401(k) with a mandatory, government-run pension plan and suggested that Congress immediately allow retirees to swap 401(k)s battered by the stock market's collapse for monthly payouts from the government. But she had floated both ideas before, to little effect. (See pictures of the global financial crisis.)

This time, all hell broke loose. Her proposal caught the attention of talk-radio juggernaut Rush Limbaugh, and over the next few weeks Limbaugh hammered on Ghilarducci's idea as a Democratic plot to kill the 401(k). "McCain has gotta tie Obama to these people," he said on the air. Republican presidential candidate John McCain did try, but only perfunctorily. It didn't help him much on Election Day.

Limbaugh has since dropped the subject, but it is far from dead. In fact, it's evolving. While Limbaugh took care to describe Ghilarducci's proposals correctly even as he castigated them, word has since spread, and warped, in some conservative circles of a purported Democratic plan to confiscate 401(k)s. Ghilarducci, who thinks existing accounts should be grandfathered under any new scheme, says she's still being swamped with email from people berating her for trying to steal their money. (That's Wall Street's job, isn't it?)

http://www.time.com/time/printout/0,8816,1864139,00.html

[av8rdave]

1. Mine already has been

Not sure it will ever recover!

[onehandle]

2. Mine's lost tens of thousands just this year.

I plan to use the remainder for a cup of coffee.

[ret5hd]

5. Save the cup to sell pencils from.

[deaniac21]

15. If you haven't sold you haven't lost a cent.

[ret5hd]

16. Yet.

[RebelOne]

3. Yes, mine was losing so much that I pulled

it and stuck it into a savings account for the time being. At least, the balance isn't going down.

[doc03]

4. I think Bush has done that n/t

[CottonBear]

6. Both of my IRAs are now worth half as much as they were 6-12 months ago.

which proves that "Social Security privatization" is a terrible idea.

I think some sort of mandatory government run pension plan in addition to Social Security is an excellent idea.

[gravity]

7. A 401k basically is a defined contribution pension

Maybe they should just be structured more conservatively with higher weight in fixed income, instead of more volatile equities.

[jmg257]

8. No. I prefer doing what I want with my money. I also enjoyed being able to borrow

out of the 401K to buy my house. Of course it went down in value, but it will go back up, and I can always adjust how much I put into it - pre-tax. I also like that my employer matches a percentage of my contributions.

[jwirr]

9. What would the difference be between a government run KO1(k) and

Social Security be?

[doc03]

10. It's back ! Another steal (my money) and

invest it in a mandatory government program that pays 3% thread.

[matcom]

11. I didn't write the article

i put it up for discussion which is what we DO on message boards.

[doc03]

12. I know it came up a month or so ago n/t

[librechik]

13. I killed mine yesterday

bleeding red all over my poor dim future--at least I can stop the bleeding

I've lost 20% of my retirement in the last few months.

[lumberjack_jeff]

14. No. A country needs its citizens to save. Our savings rate is less than zero.

The 401k is the only savings outlet that most people use.

I saved 20% of my pay my entire working life in my 401k. I'm glad I did.