saving 15%?

[LivingAlmostLarge]

Kork - I respect your viewpoint and I respectfully disagree.

Yes, people's financial situation improves by automatic enrolling someone for a 401(k) program, and this kind of policy has a number of problems.

1. Its hard to objectively determine what people's "best interests are". There is no objective standard for this, and the financial industry ha never offered one - the only rationale in the literature is "save more". What if contributing to a 401(k) isn't in someone's best interests? Maybe they'd be better served by paying off their credit cards? Or maybe they have family money and don't need a 401(k)?

2. "Nudging people" into 401(k) programs is a form of paternalism. Adults can, and should make their own decisions and take action on what they feel is best. Not what corporate executives or HR leaders feel is best for them. Having decisions made for you is appropriate for children, and slaves, but not for free intelligent adults.

3. Whats the practical difference between manipulating people's choices and eliminating them? Right?, so proponents of "nudging" basically say that wise decision-makers should tweak the options and information available so that the easiest choice is the right one - in this case, contributing to a 401(k) program. But, where is the practical difference between structuring someone's choices and taking them away? I'd challenge anyone on the board to explain the practical difference.

I sort of agree that I'm not sure about auto-enrollment. I do see the benefit of it. I do understand you can opt out. But at the same time, i think it's overreaching in someways. I feel like it shouldn't be a "matched" benefit, because some people can't afford to "match" the money. But if it's a benefit why not just deposit that 3% into the 401k and give it to people? Yes people don't save. It's hard but I still firmly believe that we haven't hit the retirement era of time where people are going to be mostly "self-funding" retirement with a 401k. I still feel like there are a lot of people older than myself (41) who have pensions or defined benefit plans. And that there are even people retiring from "mega corps" like IBM, Banks, Disney, Insurance, Boeing, etc who have these "defined" benefit/pension or savings the company did before. Maybe they froze it, like Boeing 5 or 10 years ago, but they still have a set amount they set aside for workers. Or a frozen pension that is not COLA and stopped increaseing 10 years ago.

I really haven't meet people around 40 who had that except state workers/federal workers. Everyone else knows they don't have anything but not necssarily are they saving either.

[disneysteve]

I still firmly believe that we haven't hit the retirement era of time where people are going to be mostly "self-funding" retirement with a 401k. I still feel like there are a lot of people older than myself (41) who have pensions or defined benefit plans.

I think that's true. The fully self-funded generation is just starting to retire. People like me and my peers who are in our late 50s and early 60s. I think in 10 years you'll see a significant number of retirees in that group. It will be interesting to see how they're all managing.