[tripods68]

I think for those who have contributed regularly and committed towards successful retirement "nest eggs" should be congratulated. More specifically, those married couples who have stayed together and worked for their entire career benefit the most.

However, we all know many Americans end up in divorces where they end up splitting their assets significantly. One loses the house, or retirement account. What about single parents in this country who are trying to work while raising their kids. Do you think most of them live pay-to-paycheck? I think so too. I know quite a few people at work in this very situation or have gone through divorces and were just cleaned.

Here's some statistics I found very useful in this discussion and some of my thoughts as well.

The average (US workers) balance of 401(K) plans in 1998 was $47,004. For the sake of comparison, the 401K at the end of 2008 is $45,519. Americans have to work an extra 10 years just to make up the losses incurred in 2008. In 2007 the balance was around $65K. But c'mon do you really think anyone can retire at this level? Statistic show those who retire at age 65, 50% of them do comeback to work two years later due to lack of retirement savings.

But let's say, if you are age 55 and 64, you should have an average 401k balance at least $320K. Do you think American can live on $1200 a month comfortably @ 4% withdraw rate? If you are, I congratulate you!

The ugly truth is 401(k) is a lousy idea, a financial flop, a rotten repository for our retirement reserves. 401K plan was never intended to be American primary retirement system. Congress merely was trying to close a loop hole on executive bonuses when it created the 401k plan two decades ago.

With today's reality, many Americans still can afford to defer a portion of their paychecks or people simply just don't contribute as much as they should---essentially ignoring free money from company matches and tax relief. Additionally, to get the hypothetical higher returns over time and avoid investing disasters, you have to hold a diversified portfolio of stocks and bonds. Many of us don't---with few exceptions of course (and you know who you are if you are reading this). Some of you don't owe stocks, leading to weaker-than-average returns. On the opposite end, some are 100% stocks, exposing those accounts to big losses when the market dropped. Even if you draw 4% a year from your 401k and have ultraconservative portfolio of 80% bonds and 20% stocks you still have a chance of outliving your retirement account.

It's time to do away with 401K. Have some sort of Retirement Guaranteed Insurance Program instead whereas portion of your monthly retirement contributions anywhere from 5% or 10% goes directly towards this along with your normal social security contributions rate. Congress has to mandate this on everyone to make it successful. The best way to guarantee a replacement income for people's wages in retirement is by pooling risk and the way to do that is through insurance. In return, you get a lifetime pension after working 30 years even more after 40 years, anywhere from 30% of your final pay OR 30% of your total retirement account balance. This is on top of your social security benefit. Of course Defined benefit is nothing new in this country. If you currently work for the state like I do (I work for state of California), police department, or local school districts and governmental agency most likely you have a guaranteed pension.

For example a person average earning around $100K for the last 30 years would receive $30K a year of pension. This person also would qualify for social security benefit when minimum retirement age is reach.

This new pension (private or government run program) system is not the most popular because of the cost to run this program but it doesn't mean it isn't doable in the future. It should be part of national debate I think. And of course, consumer must demand for this type of program to exist and everyone must participate. I think there was poll done which finds; most people would be willing to drop their 401k flexibility for a guaranteed pension, only, if I can find the link.

Even if you don’t agree with me, continue to save more, rebalance your portfolio at least once a year, work longer, and be opportunistic. Most importantly, don’t give up not making your monthly contributions no matter what the market does.