AskProfWolff: Pensions vs. 401K

[@Muller_Andr]

My growth of 401k is 2.74% in the past year. In this environment does investing under a brokerage with a custodian outperform a 401k? should I seek a pro to grow my funds on brokerage acct or still hold? I have 5 years to retirement. Happy to discuss.

[@Javier_Rodri]

Mine was 8.16%, I used to dca into etfs but I reconsidered the strategy since I am still way behind after the massive downturn since Jan last year

[@AanyaDarika_]

Be careful not to be lured into the market too soon, this current situation has really opened my eyes to the importance of a good mentor on KZbin or elsewhere knowing what he/she is doing.

[@IshaanArtharv]

the size of your retirement portfolio will overwhelmingly be a function of the performance of the stock and bond markets between now and when you start withdrawing from it.

[@benalfredo]

Private investing is the best way to go about the market right now, especially for near retirees, I've been in touch with a wealth manager for awhile now netted 370thousand this downturn, made it clear there's more to the markets than we average ones know.

[@westgibbs]

@@benalfredo who is this manager you use? I lost over 50000 already this year on Vanguard. Im in need of guidance from a financial-planner going forward.

[@haniyasu8236]

The other thing with 401(k)'s, it puts more workers' monetary interests in line with the capitalist class. Since that money is in the stock market instead of being earned through labor benefits, it means more people will be concerned with the growth of business and profits instead of the interests of labor.

[@darthsphaget146]

@Garrett it's the only viable way for millions of Americans to retire.

[@darthsphaget146]

@Garrett yes.

[@jamesnelson5759]

Well said. I never thought of it that way.

[@Oldscale]

I mean its the same with pensions if the company's finacial prefoemance is damaged then your pension is at risk. Admittadly its not as directly connected to the stock market but corporate profits do have a bearing on pension funding.

[@markhatch5546]

I disagree with 401k's putting things in line with capitalists. This feels like a bill of goods being sold to people by both investment companies and the publicly traded companies being funded. You are basically lending your 401k money to capitalist companies with minimal insight into the company or control. I'm willing to bet that 99% of 401k participants have no idea what they are investing in. A true capitalist is the business owner. The only true way of creating capitalist employees is through ESOPS, Employee Stock Ownership Plans or Worker Cooperatives where individuals are ACTIVELY engaged in the success and failure of the company. This aligns both employees, management, and ownership. Rather than one group, be it employees or owners trying outsmart and outmaneuver the other by extracting resources.

[@ryanwilliams989]

Small taxes can affect investment decisions such as whether to choose tax-free municipal bonds over taxable bonds or do a Roth IRA conversion. I’ve been sitting on over $745K equity from a home sale and I want to invest on the stock market, how do I achieve this without being taxed twice?

[@BiancaSherly-qt6sb]

There’s more benefit to holding fixed-income assets in tax-deferred retirement accounts as opposed to taxable accounts. If you're not who understands strategies to invest in the market, seek a Financial advisor to guide you.

[@maryHenokNft]

Having an investment adviser is the best way to go about the stock market right now, especially for near retirees, I've been in touch with a coach for awhile now mostly and I made over $800K within a short time

[@maggysterling33254]

@@maryHenokNft How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings

[@maryHenokNft]

My advisor is *Camille Alicia Garcia* she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. You can check her out online. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market

[@TheresaAnderson-kf5xw]

I am going to look her up, I have about $81k i want to start with, might be small but it's better than nothing though. Since the 08 crash is playing out again.

[@williamamely7038]

George W Bush wanted to do this with Social Security, by giving us a sum of money for us to invest, in lieu of receiving Social Security. I am glad this idea was rejected, then.

[@docmalthus]

True. And if Bush had his way Social Security would have been wiped out in 2008 and I, who have been collecting it since 2018, would have had nothing. We seniors may not do much, but we do VOTE.

[@aschu234]

That would have been nice to do away with Social security. I could keep more of my money and decide where to invest it myself. Instead I am FORCED to pay into a system that will likely be bankrupt when I go to collect. Plus, I could use the money now.

[@williamamely7038]

@@aschu234 Nonsense! Our politicians borrowed from the funds to pay for Korean and Vietnam Wars. Otherwise, the fund would continue for another one hundred plus years. Second, the fund was supposed to accrue interest, but they failed to do that. Our politicians continue to undermine us, then blame the very institution for all our ills. It's time to kick these bastards out of office and get money out of our politics. We can't allow a minority of powerful and rich individuals from undermining our Democracy.

[@aschu234]

@@williamamely7038 nonsense? What did I say that was wrong? They are gutting it and I wont receive the benefits despite paying into it. And it is the crooked politicians that are doing it. I don't want any system that gives elected reps more power over my choices and how I spend my money.

[@williamamely7038]

@@aschu234 I thought you didn't see what they were doing to it, and just supporting their narrative of FREE money, whether discussing Social Security and Unemployment Insurance, even though we have been paying taxes for those benefits. I now better understand your point of view.

[@edris47]

When I retired with pension about 10 years ago, right at that time same company canceled pension for new employees, and they have been trying to buy my pension with a lump sum money, so they don't care for well being of their employees after we retire, they use us when we are usable, after that, they would like to see us under the ground as soon as possible, especially if we have pension.

[@christopherhennessey8991]

Eddie,I lucked out too. I agree employers don’t care .I’m a retired RN from a Florida County teaching hospital . My pension is part of the state retirement system.Fortunately, I was grandfathered into the old system when changes came to the hospital pension program in 1998.My former employer left the state retirement plan and then changes came to the Florida Retirement System ,July 1,2011, by the then governor. The current state pension system enrolls a new employee into a 457B plan ( public 401 K) and one only has 8 weeks to notify the state they wish to be enrolled into the monthly defined benefit pension plan. When I stumble across a newbie who may be a newly hired Firefighter,Paramedic,Corrections OfficerI always advise them to take monthly pension. I also have two daughters who are nurses,advised them the same way. I retired from the bedside 7 yrs ago at 55, and have been receiving my monthly pension since. I claimed my Social Security benefits at 62, so I’m not rich but ok and mostly very fortunate that I went that path.

[@gungaginga9587]

Shame. They couldn't be able to do that with a 401k. Shoulda gone with that.

[@markgigiel2722]

I recently retired. I have a defined benefit pension, a 401K with some matching from the company, I had unlimited sick time, started with 2 weeks vacation that increased every 5 years, etc. I was a member of a STRONG UNION and my company still made a shit ton of money. Don't let them fool you. Also, learn as many skills as you can. You'll be valuable to any employer that way. College doesn't matter that much. Skills and experience does. Sometimes it's hard to get a start, but be patient and keep at it. Live below your means unless you're so poor that's impossible. Help those people too.

[@bellvnv2000]

Me and my coworkers just had a union meeting a couple of days ago regarding higher wages and our pension . One of the things our stewerd brought up was for us to continuously update our education and attend the classes at Union Hall for various subjects ! And he's right ! The more certifications I get underneath my belt the more I'm worth to any company and the more I have a right to ask for in My Pay !!!

[@vincemarquez1959]

He’s actually only talking about Pensions… not the 457b that is also a 401k … so we have two pensions from our contributions to our 457(401k) which we can max out every year and it’s invested just as a 401k

[@scottriggle8039]

Many construction workers still get pensions. I signed up for the electrician pension and its great I am promised a fixed amount of money no matter how badly the economy is doing. My employer contributes a minimum amount and I can choose to contribute more, if I go with the minimum employer contribution I could retire comfortably at 65 If I choose to contribute more I could retire at 55 or 60. I am alittle worried that the electrician pension will fail like so many other pensions so half my retirement contributions go into a Roth IRA. Social Securtiy + Pension + Roth IRA is alot of money and I am on track to retire a few years early. When the economy is bad I will live off social security/pension and not touch the Roth. Alot of people are afraid of unions they think unions are corrupt and its not fair that everyone in the union makes about the same wage. The union is alittle corrupt and even though we make similar wages our wages are higher than non-union workers, and we do have a say in negotiating wages/benefits. In my opinion the good outweighs the bad and most workers would be better off if they unionized.

[@kathaiti]

Social Security may not be around in 2034 so make sure you have a savings account too!

[@christopherhennessey8991]

Pensions are the best, I’m a retired RN and have been receiving mine the last 7 years

[@shaunrosenberg4568]

@@kathaiti It will be around unless we get a bunch of hard core Libertarians controlling the Senate and Presidency and decide to move fast to get rid of government programs. The likelihood of that happening is close to 0%.

[@Weathernerd27]

@@calliet You are an idiot to assume somone would take advantage of the system. If you look at actual statistics you will see most people don't try to game the system and taking away pensions because of a few bad apples isn't fair to the vast majority of workers. It is also harder to fool the union than you think and there big consequences so most workers would not be stupid enough to try. Electrican work involves getting up early, driving around alot, working it extreme heat/cold, breathing in toxic dust and risk of injury its not something I'm going to do electrician work longer than I have to my health and saftey is more important. My friend modified his DVD player to play DVD's from any region and he buys much cheaper Chinese copies of popular movies. He is the type to never break a rule in his life and didn't want to go around the system but when US DVD's cost $50 and you have to wait a year or a DVD to be avalible he said enough is enough. The point of my DVD rant is the harder you make it for someone to retire the more likely they are to cheat the system and if it becomes too hard to retire they almost have to cheat. Getting rid of pension would actually make more people take advantage of the system.

[@racewiththefalcons1]

And most 401ks are weighted to be extremely conservative by default and result in minimal gains. If you don't change your allocations out of bonds and nonsense that returns 2% in 5 years, you're not going to make very much. Put it all in the S&P 500 and you'll make about 10% a year. But they don't tell you that. They make it "safe" for you.

[@babasingh6606]

First time I've disagreed w prof Wolff. Pensions = no control over investments, can be gambled away by management. 401K = my account, I can move money among portfolio. How many pensions disappeared during 2007 downturn? TONS How many 401Ks disappeared? ZERO I'll take 401K anyday

[@michaelambrose5076]

Not true for all pensions. My state pension fund is over $400 BILLION. I am 70 have been retired for 7 years. There is little fear that in my lifetime my pension will disappear. All pensions are different.

[@lesliestenta3084]

I know Something was very wrong with the economy 2 years ago. I worked in a great hospital for 28 years in my last 1.5 the hospital lost millions. So, my hours were cut drastically, many staff were fired, even 7 doctors. Our politicians cut Medicaid and hospitals. The board of directors, mostly MBA’s cut our hospital to bare bones. So, I got the hell out dodge, I cashed out my pension and rolled over my 401 and got out of all stocks and retired early. I tried to tell my friends who are retirement age get out , if possible. I was very lucky

[@Dashoost]

I did the same thing at UPS in February of 2018 after 22 years. The Christmas season of 2017 was unusually hectic to the point where the company had pinchpoints that they had no way of handling, this was the first time I had ever seen anything remotely close to that in my time there. I had plenty of questions but got nothing, no answers, no leadership, only uncertainty and in the end the underlying message was... Be thankful you have a job that offers you healthcare and a pension. That January the stock price shot up sky high and I sold everything, made a quick retirement and rolled my 401k into a Roth IRA account. I was lucky since me and my wife have no kids or plan to in the future, plus she has a decent paying job and her employer offers healthcare to their spouses. Now I am 43 retired from UPS and working from home, no stress, I pay less now for better healthcare plans and I can move on to a better career at some point and work to my pension age doing something less stressful and not involved in such a rat race

[@christopherhennessey8991]

Me too.I have a state pension because I worked at a county hospital. I had the years ,so I could retire early and did so at 55.Now at 62 I am receiving my Social Security benefits.

[@petermusto3704]

I was blessed to have spent over 33 years working for the Federal Government. I receive a lifetime Pension and also full Social security benefits. Plus the Federal Government's version of a 401k, the Thrift Savings program. It wasn't easy working for the Federal Government, but now I see the pain was worth it as a Retiree.

[@silocell72]

Mmm so if a car company lets say can’t compete then the pension goes belly up and the workers are left holding the bag?

[@NotShowingOff]

To be honest. Size is everything a generous match on the 401k is better than the current 401k, and better than some pension, because a pension can be retracted. Unfortunately companies will not get more generous any time regardless.

[@danielboro2000]

1-american workers are skrud 2- moving from company pension to 401k dos not move the risk. is the company gose under the worker loses the pension but not the 401k. the 401k model is used in most countrys but insted of evry worker alone pension fundes pull all the moune from all workers

[@christopherhennessey8991]

I have both a pension and Social Security benefits,love it.

[@anthonysanlucas6437]

At the expense who? Way to leave future generations saddled with debt but as long as your living the high life so be it. I’m sure your all for sustainable environmental choices though….

[@christopherhennessey8991]

@@anthonysanlucas6437 I don’t live the “ High Life “ as you assume. I earned my pension and Social Security benefits,so fuck you pathetic millennial !

[@xmagic16]

Unfortunately, this guy is stuck in the 1970s. The stock market went back up(like it always does) and people are millionaires from investing in their 401k. With pensions the opportunity for growth is limited in so many ways. You will find many more millionaires who have have invested in the total stock market (%10 growth a year on average) than the Annuity folks who relied on their pension plan that underpaid them

[@fsca72]

Now the market has been in a slow decline since New Years, 401k’s are down 15-20%, fuel is darn near tripled, and inflation is nearing 10%. Best of luck to the people retiring right now, specially with this administration who thinks they can spend their way outta trouble like FDR 2.0

[@The.Ghost.of.Tom.Joad.]

He does not seem stuck. He has a broader perspective. You're the one who seems blinded by the propaganda over the past 50 years. Trust me. I went to business shool at Ohio State. I was blinded too. But ask yourself some honest questions. How many crashes and inflationary events have we experienced since 1970, when the new order arose? How many booms and busts? How many shocks which resulted in more and more monopolistic control over our local economies? Which leads to the real question: How is a capitalist system that unstable superior to the system we had before then, which is similar to the more stable outcomes still produced in countries that still employ the New Deal model of regulated capitalism and generous safety nets for the people? Places like Sweden and Denmark? Wolff is an informed critic... whose Ph.D. classmate was Fed Chair Janet Yellen. His logic is sound, and his perspective reaches back in history, to well before the neoliberal system that rules the world today. I'd say that, for perspective alone, that makes him valuable. That he uses an entirely different and well-reasoned set of tools to analyze economics makes him an interesting resource to follow. Better by far than traditional economics pundits, like Krugman, Friedman, etc. Again, there is no firm answer. But the question, if looked at honestly and critically, is important. The lives our children and grandchildren live will depend on such honest assessments we make NOW. I've come to the conclusion that FDR's New Deal at 50 provided a much better standard of living than 50 years of Supply-Side Reaganomics.

[@johnjohnson3450]

One thing Bankers and Capitalists did is tie everything to the stock market, including our retirement (401k). They did this because they wanted to fortify the system (Free Market Capitalism) in which they are favored.

[@anthonysanlucas6437]

Curious how the “professor” failed to mention the downside of pensions. California taxpayers owe, to date, $1.7T(that’s with twelve zeros) in unfunded public pension liabilities. That is a tax debt of $39K hanging around the neck of every Californian as of September 2022. I also thought it curious the so-called professor forgot to mention a majority of private employers match employee 401(k) contributions to some degree. With 401(k)s the employee has full control of their retirement investments and can transition to another employer and bring their 401(k) with them as opposed to pensions that do not. The only moral way forward for California is to end all pensions for new government employees and start them in 401(k)s. However, the mafia unions that control California and are primarily responsible for the massive debt will never allow this to happen. Completely immoral. The City of Stockton recently filed for Chapter 11 bankruptcy and completely eliminated all employee retirement medical coverage. Wolffe oddly left that inconvenient truth out in his defense of pensions. No, Wolffe is woefully ill informed and has an immoral position on pensions vs 401(k)s.

[@nathanpoloni6303]

Good thing I was always too poor to justify investing in any 401k programs, because it always seemed like a scam anyway. Trust your gut!

[@Rmacon4002]

it makes sense that youre poor

[@Rmacon4002]

Makes sense that youre poor. Hate to break it to you lifes not fair and noone is gonna take care of you because you are stupid

[@erastourdenvern1]

joyceann011 Real talk. So what are you guys doing with your money? I understand the concern in investing, like Garret says, in low fee diversified index funds, 401k, IRA, whatever, but if you don’t want to play the game, how do you plan on retiring? I’m actually looking into this stuff now bc I’m 35 and just cleared all my student debt and I realize I haven’t planned for my retirement at all and wtf am I supposed to do at 55-65 years of age? Keep working in a restaurant?

[@erastourdenvern1]

Garrett I don’t get shit through the restaurant. I’d have to open a Roth IRA on my own which I plan on doing. I’m worried about being responsible for where the money goes though. I don’t wanna screw this up lol. Where do I save money that exceeds the 6,000 a year I’m allowed to put in a Roth IRA? Some kinda cash value whole life insurance? 401k on my own? SnP 500 index fund on my own?

[@Rmacon4002]

Garrett and thats the difference i 22 came from trash and have only 12k invested in retirment while working in the military. Hypothetically if i make my 8% annualized return while working my ass off and growing my portfolio am i now the asshole? Am i now reponsible for taking care of the 35 year old who didnt think about their retirment. No. Im not. I planned. I worked. I didnt expect someone to take care of me.

[@ZOGGYDOGGY]

A similar program was established in Australia by the Labor Party--it's called Super.

[@CandycaneBeyond]

FedEx is giving us the opportunity to switch to a 401k from our current pension. I have 15 years left. I already have a good 401k. They are offering an extra% to go towards 401k. Because of virus, it is being put off until next year. People think I'm stupid for wanting to stick to pension. Take a look at your 401k today and figure out which is better

[@Oldscale]

Have you looked at your 401k since then? Lol theres volatility but in the very long term it will probably keep growing 9% annually

[@CandycaneBeyond]

@@Oldscale they have not given us a choice to switch yet

[@Oldscale]

Proff Wolf I disagree here. Pension plans are only as good as a companies finacial stability. Unless you work for the federal government I think its a mistake to choose a pension fund. Look at GE an amazing American company ruined by verity of reasons including poor managment and greed. Maybe they'll pull through but if they don't then all those people lose their pensions. Penions not 401k's are a very risky proposition. yes the value of a 401k changes but when you retire you don't suddenly withdraw the whole thing you live off the dividend payments and interest that the 401k generates. But even then you have the flexibility to withdraw your cash should you chose to do so. As to the managment fees thats also not really a problem you can find plenty of mutual funds that charge less much less than .1% of the principle amount to manage your money. Frequently they return 8-10 annually! Its a great way to get very rich. Although it does take patience.

[@Oldscale]

Perhapse more social security is a preferable solution

[@greenlampshade8909]

Which form of retirement income did Mad Max prefer?

[@maximuscomfort]

So many legal pension scams that just go unpunished makes for a very insecure society. No money coming in old age because you didn't know how the system works? This lock down showed how quickly the supermarket shelves were cleared by one thoughtful group. Going without may not be so easy the next time.

[@stevev3142]

Personally I believe you are much better off with a IRA or a 401K. Nothing is guaranteed in this world period. Only a small percentage of the population can work for a Union or the Federal / Local government and get a fairly large pension. According to the Pension Rights Center, the median private pension benefit for individuals 65 and older is $11,040 per year, and the median state or local government pension benefit is $24,980 per year. Either way most people can't survive on that little income in retirement. People must take responsibility for their own retirement, if you want a guaranteed retirement good luck. There is just the Pension Benefit Guaranty Corporation (PBGC) and Social Security.

[@Martin-og9zg]

The tiny bit of a pension I accrued over 6 months in 2000, just announced accrued interest dropped from ~2.1% to ~1%. At the same time. I'm hearing commercial buildings owned by many pensions are vacant and falling into disrepair.

[@barquerojuancarlos7253]

and the recent crisis cut 401(k) by 19%

[@dinnerwithfranklin2451]

If they are in power when this ends they will come after the social programs as well.

[@dinnerwithfranklin2451]

@Garrett I presume it is because some people are reminded of driving a new car off the lot. It loses value immediately. Obviously that is not the case. Rather it only means they can buy more accessories.

[@Oldscale]

And since its bounced back, you shouldn't zoom in to one data point. There probably will be crashes again but so far the market has continued to grow long term.

[@jgalt308]

Again, it's all been legislated by your "democratically elected" representatives........ vote early, vote often.....save "our democracy"!!!!!

[@skynet4496]

J GALT, voting doesn't matter when you have a choice between a turd sandwich and a total douche. Not voting sends a better message when it comes to those elections where both parties (and 3rd parties) are corporate lackeys.

[@jgalt308]

@@skynet4496 I am certainly not in disagreement.....and "to conquer, first divide" is still a cheap and effective strategy.....with the various factions, doing most of the work. But given the present reality and the number of those not voting + the "independent" voters.... a unified anti-incumbent voting strategy might be more effective.....especially if it also, excluded both democrats and republicans where ever an alternative choice was available.....I mean if we are going to do chaos as well as corruption, we might as well make it as expensive as possible......and rinse and repeat, as often as possible, because it can't get much worse....

[@skynet4496]

@@jgalt308/videos Good point... I think that's why people voted Trump as a f u to seriousness. What's next, a clown for head of hollywood? lol

[@shaunrosenberg4568]

The government isn't part of the picture here. The only thing they can do is to increase social security benefits and the taxes associated with it

[@jgalt308]

@@shaunrosenberg4568 Well if FDR hadn't confiscated the "real wealth" of "the people" in 1933, and discarded the "constitution" in 1939, while substituting a "de facto" fiat money system, which was finalized in 1971, and foisted on the rest of the world...then you would not be dealing with the consistent inflation that became a simultaneous effect...requiring constant adjustment due to "rising" costs while altering the "business cycle" from its normal inflation/deflation periodicity...which discouraged saving and encouraged debt, since it could be paid back with currency of decreasing value. And experiments with "fiat" money, even when "sound money" was in place, produced this inflation...but the basis of "sound money" limited these effects, and the currency slowly recovered its value...and this was true for every event in US history, starting in 1776...and continuing until 1939. For example, the war of 1860, introduced fiat money printing to finance it, and total inflation hit 95% in 1865, and then slowly recovered its value by 1896...the cycle began again in 1899, and peaked in 1926, with total inflation being 115%, and then recovering to 67% in 1939...and from this point the game was over. From 1939 to 1972, the inflation rate was 300%, and doubled again by 1982, to 600%, and then another 50% by 1990, to 900%, and from then to 2018, another 100%, totaling 1800%. ( and in this last period, the government began playing with all the "numbers" so real inflation has been grossly underestimated ) Now this is just the effects of government policy in one area, and everything you are experiencing is the result of government...and this singular event...whose results were taking the "largest creditor" nation, to the largest "debtor nation" by 1982, and the most productive economy, to one that produces very little, if anything, and whose "system" is one of non-productive "rent seeking" in the F.I.RE sector, and no matter what rhetoric is used...it has nothing to do with "capitalism" because "nothing" is being produced. So the government is not only part of the picture, it is all of the picture...and none of it is "constitutionally legitimate" a fact which has escaped all of the "talking heads" regardless of "profession" even though, everything they do "pontificate on"...are the "effects" of this "illegitimacy". "But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security." "Government is not reason, it is not eloquence, it is force; like fire, a troublesome servant and a fearful master. Never for a moment should it be left to irresponsible action." If you supposedly have the "right" to the redress of grievances, what are your options, when the arbiter of that fact and its resolution, is the actual cause of those grievances?

[@wendylady69]

Instead of 401k, employees should take that money & look after it themselves. Investing in corporate gamblers AND expecting a pension in return is called... STUPID!

[@eve36368]

Well, we could just pay more to our workers now, perhaps give buy them stables like housing etc upon retirement in order to help minimize costs incurred during retirement.

[@BoonTobias]

Defined contribution IS better than defined benefit. Defined benefit schemes force the employee to stick with that company since the schemes aren't portable. It's pretty much employee bondage. Defined benefit schemes also take away the ability of the employee to manage the fund forcing them to rely on their employer. 401Ks generally increase in value over time. Market declines are typically short-term. A temporal market decline is not evidence that 401ks are structurally losing money.

[@DiThi]

How about a system that doesn't force anyone to depend on greed?

[@dinnerwithfranklin2451]

Being reasonably close to retirement and finally working at a job with a pension I can tell you that this is BS. How will I plan my monthly bills without a regular pension payment? A two month drop in my income because some rich people have crashed the market "temporarily" does nothing to pay my medical bills, food or rent.

[@papilleon1957]

Pretty important to remember that both options are ultimately terrible but one at least guarantees some ability to pay for living expenses.

[@BoonTobias]

@@dinnerwithfranklin2451 I'm sincerely sorry for your situation. As someone close to retirement, your financial advisor or fund manager should've put almost all your money in low market risk assets such as government securities. This is the standard investment strategy for people in your position.

[@BoonTobias]

@@papilleon1957 the average lifespan of a company is now around 10 years. Down from very high numbers in the 50s. For many younger folk, security is actually much better with DC. I simply do not trust ANY company to be looking after people for +20 years as retirees.

[@williampowhida572]

Financial support in old age should be a purely government function. No businessman should be involved in retirement. By the same token no business people should be involved in health insurance. It should be done exclusively by a government agency. If this were done, business could do what it should do, business! It would make business more efficient too boot. 401 plans are a means of generating fees for wall street and its servants. The concept effectively "privatizes retirement and allows people to make money off the "internal colonials" that the average American now represents to the "imperials" of our capitalist system. The American population is seen as a colony to be exploited by our capitalistic lords.

[@absoluterefusal]

Too often I hear working people (my own "union siblings" even) parrot the bullshit that pensions were "unsustainable." And therefore they are content to risk gambling their future away in the casino. I can't convince them otherwise that we have been ripped off.

[@andrewsullivan3874]

Prof. Wolff, is it possible to invest 401k funds in something other than a mutual fund?

[@itzenormous]

You can direct your money managers to invest the money into whatever you want them to invest in. It's your money. I'd tell them to get all of your money out of stocks and to invest in US Government bonds.

[@harrymuhammad9835]

...and what is safe under total collapse?

[@gabrielrendon]

@@harrymuhammad9835 if the stock market was to have a entire collapse and no longer exist then you have much bigger problems to worry about than a retirement account.

[@christopherhennessey8991]

Rich ,do you realize you resemble Red Auerbach who coached and was then GM of the Boston Celtics.

[@earlviney5212]

401ks suck. Give me a good old fashioned pension anyday.

[@Oldscale]

401k are better than pensions be cause its more diversified what happens if your employer goes bankrubt? Not only will use lose your job but also lose all your retirement.

[@The.Ghost.of.Tom.Joad.]

The reality for this Gen-X worker: between 2008 and 2020, I now have a 200.5K. Doubt I'm different than most.

[@gnomechompsky8853]

I remember when GW Bush put this into practice. It has gotten continually worse since.

[@DanBurgaud]

Employer takes money from Employees and invest it back to Employer's business...

[@cdeluz]

The 401k is the poor man's attempt at gambling in the stock market.

[@linusmlgtips2123]

Lol wrong

[@msisles6278]

Why should an employer provide you for the rest of your life? A business is in competition every day to succeed and to stay in business and provide for today's employees. BTW, where do you think pensions invest, do you think it is put under a mattress?

[@ricosauve5]

I haven't invested in a 401k. I am in no way giving people money to go play Monopoly on the stock market.

[@ricosauve5]

@Garrett I'll save my own way. By the time I come to retirement, I doubt they'll give people a good return anyways. And SS will probably be gone. The system is rigged to have people work as long as one can with little to no benefits. Then we look at the fact 70% of Americans live paycheck to paycheck. Tell them to take some money out each week for retirement. To them that's not even an option.

[@ricosauve5]

@Garrett personal behavior doesn't put more money on the table for some people. 44% of Americans make under $20,000 a year. And that's before taxes. Which forces people to borrow to get by. Again by design. We live in a country where some people don't even have clean running water. In America. Are you gonna say them not having clean running water is a behavioral choice? It's great if you're doing well..But don't ever conflate that into well everyone can. That's not how the system is. If it were it wouldn't be called a system. There are people right in this country that have to make hard decisions in life. And giving Wall Street some more money to play with in hopes of having something down the road isn't one of them to many people.

[@ryanm.6207]

Holy hell thats awful. Eat the rich

[@frankvillarrealjr]

How many people are now millionaire's from pensions?

[@shaunrosenberg4568]

Being a millionaire doesn't really give you any benefit here other than bragging rights. For example, if you have $1 million and you believe you can safely pull out 3.5%/year that is $35k/year. That $35k/year is what matters. What is that compared to the pension?

[@Bfolks84]

@@shaunrosenberg4568 that the principle balance continues to grow.. money invested doubled every couple of years so that $1million becomes $2 million and then you when you take out 3.5% now you’re taking out $70k… and it only grows from there.

[@shaunrosenberg4568]

@@Bfolks84 Yeah. Some pension increase with inflation. And if you're taking out 3.5%-4% a year that's going to make it harder for your money to double. Don't forget it's never a guarantee in the stock market. If you retired with $1 million in 2000 and had your money in the S&P 500 and took out 3.5% a year you would have probably around $300k by 2013. The market was essentially flat for 13 years all while you were taking out 3.5% a year. So 401ks have more potential and pensions have more safety.

[@Bfolks84]

@@shaunrosenberg4568 yea but after that the market saw some of the highest returns. Even the correction after Covid we are still seeing some great returns. If you would’ve kept your money in till now you would’ve surely had more than a million !

[@shaunrosenberg4568]

@@Bfolks84 Yeah. Provided you weren't taking money out every month. Taking money out of your portfolio is going to really bring down your returns. The idea of the 4% rule is if you take out 4% and adjust for inflation your portfolio should last 30+ years in a portfolio diversified between stocks and bonds. Whether you have more or less money after those 30 years depends on what happened in the market during that time.

[@noble7461]

401k is a scam, better to build a hut and live out your days in a remote village somewhere.

[@ketogenesis1721]

And when markets crash, it’s an opportunity to double and triple your account! Fear mongering 101… look for fiduciaries not financial advisors for advice!

[@k.k.9011]

After watching this watch Dave Ramsey's bull about pensions.😂

[@orion3706]

I have a pension, 12 years with my employer, and 16 and change years to go. If my employer offered me a 401k, allowed me to roll my pension contributions into the 401k offered me a match of 5+%" I would take it in a second.

[@mrzack888]

Life insurance IUL is much better option than 401k

[@jaggynettles8382]

First 👍