Wednesday, February 06, 2013

You Bet They Are a Disaster

401(k)s are one of the biggest scams of all time, but you can thank Congress for allowing this mess by having loopholes in ERISA large enough to drive a semi through.

Hell, my pension, as small as it is, is a hell of a lot better than what the average household "account" is:

But none of these ideas will help people who are nearing retirement. Only the possibility of several decades of compound returns make the personal financing of retirement a realistic idea for most people; those with only a few working years left cannot benefit from this. Absent an unexpected windfall, such as lottery winnings or inheritances, most 60-year-olds lack any capacity to significantly increase their savings.

Even if we do find ways to improve the framework for self-funding retirement, how, exactly, do we expect younger workers, who might benefit from these improvements, to start saving significantly for their retirement? Soaring tuition and fees at universities, combined with the associated soaring student loan borrowing, have led many people to start their working lives already deeply in debt. According to the Project on Student Debt, the members of the class of 2011 with student loans had an average of $26,000 outstanding.

Pensions in fact should be brought back. Increasing Social Security benefits would also be a great help.

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