Rhonda Said:

Did the 401k mark the end of ‘Golden Years’ for most Americans?

We Answered:

Wow, finally a well thought out argument against one of the pillars of our economy. I will start by mentioning a few companies, Bethlehem Steel, United Airlines, Pan Am, and Lucent. What do these companies have in common? They are either not in existence, filed bankruptcy or are on bankruptcy watch because of Defined Benefit Plans. Even the government got rid of the Defined Benefit plan they had for their employees because of the cost, they have gone to a 401K like plan called the TSP.

The problem with the 401k is that they don't allow for large enough contributions and people do not fund them enough. Furthermore, most people do not take enough risk in their plans leading to returns that don't outpace inflation. The problem with our father's Defined Benefit Plan is that it destroys the companies that offer it. This will ultimately wreck the economy.

The 401k has not marked the end of ‘Golden Years’ for most Americans. I think it is one of the greatest innovations of the last century. Since when is taking responsibility for your own retirement a bad thing. The days of being taking care of are over. Used properly the 401K is better than any Defined Benefit Plan and it is cheaper.