Legislation authorizing 401ks first went into effect Jan 1, 1980 (I have had my 401k over 22 years -since APR 1987... ) They ought to start to be able to gather data from folks who signed up from the beginning to see how successful this has been...
I agree with many of the points that have been made.
1. DH and I both have a 401K - If you add the two, mine is about 54% of the total and DHs is 46% because mine is mostly govt bonds and didn't get "corrected". DH is 100% in a lifecycle fund of which a large part of it is stocks and his fund received a pretty good haircut.
(It has recovered somewhat--up 21% for the year). Our 401Ks are not expected to provide 100% of our retirement income because we have other retirement assets.
2. When I first signed up for my 401k, I saw it as a suppliment to other retirement funds. I think the 401k is a terrible replacement for a pension. But, it
is better than nothing.
DH is employed at a company that provided a pension and a 401K and a 401K match when he first started working there. This year they announced a freeze on the pension benefits. (I know-this is one of the arguments
against pensions). In order to make up what will be lost in pension benefits over the next 10 years of employment, I figure DH would have to make wise investments on the magnitude of about 30% of his income (this is in addition to what he is already saving)--in essense a de-facto pay cut. The company did increase the 401k match by 3% to "make up" for freezing the pension. One of the reasons the company cited for freezing the benefits is there was too much risk... Hello!? DH now assumes all of the risk (and nearly 100% of the funding) and he doesn't have smart financial guys (he just has me
) managing and investing the account. How convoluted is that? If the company had increase their match by another 10% of salary, it might have been a little easier to take... I guess that is my biggest beef is that the company hype is the 401K as being
better than defined benefit, but most don't really match to the level that would make this true.