If you didn’t have a good understanding of the amount of “skim. scam and fraud” in the system, DIY retirement was a disaster.
intercst
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Defined benefit retirement plans were great for retirees. Your employer took the risk. Companies disliked them because pension assets went up and down with markets. Company could have surplus or deficit. It was an earnings component beyond control of company.
Also plan tied employee to company. Years of service determined benefit paid.
Defined contribution plans solved both problems. Company knew what its expense would be. Employee could continue plan with another employer.
But employee was responsible for performance. Many used experts for advice. Experts could charge high fees or recommend high commission investments. Employees could be fed to the wolves. And employee had to resist tapping funds for other reasons.
We shall how this works out. How many will retire on little more than Social Security. Who wont be able to afford Medicare expenses. The jury is out. The clock is ticking.
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The vast majority of Americans would be better off with a pension. The “401k winners” like you and me are relatively few.
intercst
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What they need to do it TEACH people about this stuff so that they see it coming. Saving your pennies is 90% of it. When you retire or heck even when you’re just starting out, take the money and buy an annuity. There are some good ones. It’s a pension. And it’s all yours, screw your company. Screw your job. Just save your money along the way. The real problem I think people are kind of side-eyeing here is: Working people are just stupid. Like Ralph Kramden. Can’t / won’t save money. Gotta blow it on today’s shiny thing or get-rich-quick scheme. I have relatives like that. Nobody ever knew where the money went. That’s why I’m a millionaire who lives in a trailer park and drives a 2010 Focus.
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I think it is standard TMF dialog to establish a regular savings program early in your career. Many begin with many wants and in the low end of the salary scales. But as you get raises and promotions make sure part of the gain goes to savings/investment. Make it a habit and stick with it.
Yes, pensions from employers is a better deal. Usually professionally managed. But employers see it as an expense with risks. Reinstating it would likely incentives. What could that be? We already have Pension Benefit Guarantee from the govt.
I don’t think that is true. At least not in recent decades. Back when people worked for one company for decades, it worked fine, after 25 or 30 years of service, they collected a decent pension. But today, because people switch jobs MUCH more often, they’d have 5 years at company 1, 7 years at company 2, 3 years at company 3, etc. And they’d end up collecting minuscule pensions from each one of them, assume they even vested in them (3 years, for example, wouldn’t vest in most places).
And with the rise of “gig” jobs, fewer people even have a formal employer, and instead work for their own businesses or as 1099 workers. They’d all have to set up their own pension anyway.
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