401 Ks helping create inequality

evince said:
http://www.washingtonpost.com/blogs...ng-inequality-worse/?wprss=rss_national&clsrd




401(k)s are replacing pensions. That’s making inequality worse.




The once-dominant defined benefit pension plan–which pays out a fixed amount after an employee retires–is on its way to becoming an historical artifact. More and more employers are offering 401(k) plans instead, which require employees to pay into their own accounts, sometimes with and sometimes without a matching contribution. And according to a new analysis from the labor-oriented Economic Policy Institute, the effect has been a stratification of retirement savings by education, income, and race–which could deepen inequality among the elderly as the population ages.

It’s actually possible to tell a positive story here, in which the average size of retirement accounts has grown overall in recent decades, and aggregate saving and household net worth as a percentage of income have started to bounce back since the recession first hit in 2008:

But the moral starts to change as you look underneath the numbers. Those benefits split among a smaller share of the population: Overall, the percentage of workers participating in all employer-based retirement plans declined over the past couple decades, across all age groups.
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What's wrong with inequality?
 
pisskop said:
Funny you keep calling it sociopathy. I guess the term racist or homophobe just don't apply here, so you have to blacklist the opposition somehow.

Why don't you want people to own their actions and financial decisions? Always messing with the social contract.
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because not everyone is a financial wizard you idiot.
 
cawacko said:
When did this become a right/left issue? If I'm not mistaken 401k's were created in 1978 with a Democratic Congress and Jimmy Carter as President. Why would they create something to harm the middle class?
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No response Desh?
 
Liberty said:
What's wrong with inequality?
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Inequality is important. It has been argued that its even necessary to encourage those with the talent to pursue more taxing jobs or jobs that require more specialization or sacrifice for training. Like Doctors. What if they paid the exact same as, say McDonald's? Or perhaps a CNA? Would many find it worthwhile to become a Doctor when the requirements to be a CNA are much, much simpler and the pay is the same?


evince said:
because not everyone is a financial wizard you idiot.
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Maybe you should be pushing of a finance class in the public schools?
 
Well the inequalities with 401K investments is that I know simply to many people who don't feel that they can invest in one. Particularly families with kids.

For those who can invest, $100,000 is the magic number. No, you can't retire on that. It's the magic number because that's when market gains over time become more and more magnified. If you can have $100,000 in a 401K, given the history of the US Market, and you continue to invest and recieve company matches till you reach retirement age, you have a very high probability of meeting the 80% of pre-retirement income goal. Even if you don't recieve a company match and you continue to invest at the same rate you still have a high probability of meeting that goal.
 
evince said:
because not everyone is a financial wizard you idiot.
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You don't need to be a financial wizard to handle a 401K

I don't have much use for them personally because I prefer income producing investments such as real estate.

But as I predicted this is the beginning of many articles in how 401Ks are only for the "rich" and we will hear sob story after sob story about some poor person who lost everything in their 401K.

All of it will be used to convince the mind numbed masses that the trillions in 401K assets need to be turned over to the gobblement so it can be shared equitably.

Let me ask you a question Desh since you are such a champion of fairness. How would you react to the gobblement coming in and forcing you to rent your rental properties for less than it costs you to run them? Would you smile and say "oh but the gobblement is only helping the poor"?

What gives you the moral authority to dictate how others spend their hard earned money
 
Mott the Hoople said:
Well the inequalities with 401K investments is that I know simply to many people who don't feel that they can invest in one. Particularly families with kids.

For those who can invest, $100,000 is the magic number. No, you can't retire on that. It's the magic number because that's when market gains over time become more and more magnified. If you can have $100,000 in a 401K, given the history of the US Market, and you continue to invest and recieve company matches till you reach retirement age, you have a very high probability of meeting the 80% of pre-retirement income goal. Even if you don't recieve a company match and you continue to invest at the same rate you still have a high probability of meeting that goal.
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Your first point is a good one because many people feel they are not in a position to save. Ultimately though with a tax free investment and the power of compounding interest like you said people can have a much larger nest egg at retirement than they ever thought possible when they first started working full-time in their early 20's (or whenever it may be) if they start investing from day one.
 
cawacko said:
Your first point is a good one because many people feel they are not in a position to save. Ultimately though with a tax free investment and the power of compounding interest like you said people can have a much larger nest egg at retirement than they ever thought possible when they first started working full-time in their early 20's (or whenever it may be) if they start investing from day one.
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People are very good at parroting the line sold to them by the mutual fund industry.

Don't forget buy and hold. Buy an hold. Never let it go. Keep buying.

The market makers need someone to sell to
 
cawacko said:
When did this become a right/left issue? If I'm not mistaken 401k's were created in 1978 with a Democratic Congress and Jimmy Carter as President. Why would they create something to harm the middle class?
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401K's were never intended to replace traditional pensions when they were originally created. They were intended to supplement them and to incentivize working class people to invest in their own retirements.
 
Mott the Hoople said:
401K's were never intended to replace traditional pensions when they were originally created. They were intended to supplement them and to incentivize working class people to invest in their own retirements.
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The nature of the work force around us is changing. Defined pensions worked great in an economy and time where we didn't face global competition like we do today and individuals tended to stay at companies far longer than they do today. For example, do you think any technology start up is going to offer workers a defined benefit plan, let alone any retirement plan?
 
cawacko said:
Your first point is a good one because many people feel they are not in a position to save. Ultimately though with a tax free investment and the power of compounding interest like you said people can have a much larger nest egg at retirement than they ever thought possible when they first started working full-time in their early 20's (or whenever it may be) if they start investing from day one.
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Well that's part of what creates some inequity. Large numbers of working class people are not in a position to make substantial 401K investments. Those that are in a position to stand to make considerable gains over those who don't.

But that's just a straw on the back of what the real cause of inequity in our nation is. Labor has lost huge amounts of power since Reagan. Since the 70's we've seen huge increases in worker productivity. GNP had nearly quadrupled since then. Virtually none of that increased wealth from increased productivity has gone to workers who do the lion share of creating that productivity and wealth. Virtually all of it has gone to the top 1%. In fact wages have been stagnant and when adjusted for inflation median household incomes have not risent since the 70's. Actually they've gone down by about 40% because many women have been forced to enter the work force in households that have traditionally been single earner households. They've had to to make up for the loss of income over time.

This sort of inequality gaps don't bode well for the future of our nation. The top 1% cannot continue to take the vast majority of the nations productivity and not expect political instabiity to occur.
 
pisskop said:
Inequality is important. It has been argued that its even necessary to encourage those with the talent to pursue more taxing jobs or jobs that require more specialization or sacrifice for training. Like Doctors. What if they paid the exact same as, say McDonald's? Or perhaps a CNA? Would many find it worthwhile to become a Doctor when the requirements to be a CNA are much, much simpler and the pay is the same?



Maybe you should be pushing of a finance class in the public schools?
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Some inequality, sure....but I suggest you read more into the history of the political consequences of gross economic inequality and what has historically been known to happen when that occurs.
 
Mott the Hoople said:
Then I suggest both you and Pisskop do some studying of history and what has happened to societies that permit gross socio-economic inequality to grow.
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I don't look at it from the eyes of a marxist. I look at it through the eyes of liberty, and the creation of opportunity.
 
cawacko said:
The nature of the work force around us is changing. Defined pensions worked great in an economy and time where we didn't face global competition like we do today and individuals tended to stay at companies far longer than they do today. For example, do you think any technology start up is going to offer workers a defined benefit plan, let alone any retirement plan?
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I agree, times have changed. Companies though have to offer comprehensive benefits if they are going to find and retain talent. For example, since I've been with my current employer I have been offered positions that would have paid a higher salary than what I currently earn but when total compensation is calculated, that is my current benefit package compared to what the other companies were offering, my total compensation with my current employer was higher. So I didn't accept those offers.

Education will be the key to most Americans retaining a viable middle class life style. However, the current gross inequalities that we are seeing in our nation cannot continue to grow. The people who are producing that wealth are going to expect the top 1% to share more of that increased wealth from increased productivity instead of taking virtually all of it. The current inequities just simply aren't tenable. One only has to study history to see what will happen.

Having said that, it won't be people like ILM and Piss who affect that change. Mouth breathing redneck trailer trash aren't the people doing the producing. It's the skilled trades and professional classes that will force those changes cause thier the ones responsible for most of the increased productivity and they're the ones being screwed the most.
 
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