How 401(k)s created a class of suckers to be fleeced by the investor class


#1

Originally published at: https://boingboing.net/2018/03/06/pension-penury.html


#2

Would be pretty easy to let me buy a synthetic index fund SP500 minus Goldman Sachs and Monsanto but nobody offers it. I’m a hostage of my 401K choices.


#3

Mandatory gambling, p.s. the house always wins.


#4

What I seem to recall is that around the same time the “take control of your retirement/401K” business started was when the fascination with televised “high stakes poker” started. A number of “professional” gamblers wrote books that basically said “When a bunch of players that know how the game works play, nothing much happens. When you get fresh blood (ignorant players) mixed in, then the best players get the most money from them.” There seemed to me to be an obvious parallel.


#5

Institutionalised theft, by a few who don’t need it, from the many who can’t afford to lose it.

When the fuck are we busting out the damn guillotines?!


#6

I would never receive a pension because I’ve never worked long enough at one job. However, I do have 401k money from at least 4 different jobs.


#7

Also, interesting to note the article, earlier in the day, about people “woefully” unprepared for retirement. A lot of us just don’t want to play the game.


#8

Not so ironic. If you look at the median and low income earners recommended investment strategy. It’s aggressive funds/stocks that could potentially earn high but also lose big.

Compared to high earners portfolios in 401ks and non quail plans and other retirement vehicles it is all index funds and investments that are relatively safe and stand to lose very little.


#9

Yep–the “fresh blood” in this case being the nest eggs of hundreds of thousands of public sector employees and other folks who used to have defined benefit pension plans.


#10

@doctorow At this point I’m just waiting for the current government to partially or fully privatize the Social Security program. Only because at this point there’s not many other places to get more money for Wall Street. It’s one area I know the likes of Rand Paul and the “Tea Party” has been looking to sucker people into. I’m not planning on getting anything from Social Security because that unless by some happy accident half of Congress kicks the bucket because honestly there’s no way they’re going to leave that piggy bank alone.


#11

As the saying goes, if you look around the table after playing poker for half an hour and can’t spot the sucker, you’re the sucker.

This is the mentality that the American old-age retirement system is now built on.

The way things are going, conservatives are more likely to take the SS trust funds (along with the funding for every other social programme) and use it to fund a UBI designed to put more money in the pockets of the wealthy while propping up a sham consumer economy. A small amount of the use-it-or-lose-it monthly stipend will be allowed to be invested in the stock market, completely at the (often uneducated) individual’s discretion.


#12

Employer sponsored is not great either. Employers can go bankrupt, even governments. Look at Kodak and Detroit. Don’t think you’d want to depend on them.

I don’t have a problem with the the fact that my retirement funds have risk involved. They always have risk involved. At least this way, I control the risk - somewhat.

The problem with 401k’s is that the employer chooses the provider and the provider chooses the fund options. The employee should be able to choose the provider and the investments as we do with IRAs. We also need to improve shareholder governance. We should allow investors in ETFs and other funds to vote on issues for the stocks held by the funds.


#13

I congratulate you if you have the expertise to make “wise” investment decisions. Most of us don’t.


#14

I think that’s half of what they’ll do with UBI. But my take from it is that they’ll use UBI or equivalent programs as part of a PPP where the money is government financed but the administration of it will be totally private. So some jerk named Chet or Chad or Thad gets to take home six figures while I get barely grocery money (yay).


#15

Union-sponsored, on the other hand, can be much better. The best of them grip onto their pension funds like grim death, and often have in-house fund managers and institutional-investor clout.

There are crappy and incompetent unions, too, of course, but unions retirement funds are accountable to the beneficiaries in a way that neither corporate defined-benefit plans or 401ks are not.

Yes, they’ll partner with Diebold and a couple of similar companies to rent out the POS terminals that will be mandatory for any merchant who wants to accept payments from a UBI account. Taking into account the scale, it’ll make the current credit card processing industry look like a rinky-dink racket in comparison.


#16

Index funds that do not charge managerial fees are available for many retirement accounts, including 401K and 403B. When you leave a job that has a 401K, don’t just roll it into your next employer’s. investigate alternative retirement accounts like Roth IRAs. Your “Advisor” (aka. corporate flack) will start calling and emailing you vigorously, just delete as necessary. And instead of picking and choosing from a lot of different funds, take a look at Whole Market Index Funds. They’re hard to beat.


#17

As far as I can tell, in the current climate, any retirement planning is a sucker’s bet.

I’m, fortunately, privileged enough to look forward to having all three legs on the ‘three legged stool’ still attached in retirement, which is only a few years away: defined-benefit pension, plus a fair-sized 401(k) nest egg (and a house that’s paid for), plus having paid the Social Security ceiling all my working life.

Still, I fully expect that the Social Security system will be dismantled in my lifetime (with politicians on both sides of the aisle accusing me of ‘sponging off the government’), or at least be turned into a program for the ‘deserving poor’ whoever they are.

I fully expect that my defined-benefit pensions (from several former employers) will be worthless, as corporations sell off their profitable assets, pay the proceeds as dividends, and then declare bankruptcy out from under their obligations, causing government pension insurance to tank as well.

Presumably, those same dividends should appear in my 401(k), but I bet it isn’t going to happen. Moreover, I wouldn’t lay long odds that the plan administrator hasn’t filled it with counterfeit securities and made off (or is that Madoff?) with all its value. Have those ‘index funds’ actually invested in stocks in proportion to their representation on the indices? There appears to be very little recourse if they haven’t.

In short, I think there’s a fair chance that I’ll be no better off than anyone who hasn’t planned for retirement. I might even be worse off, if the angry Millennials think I’m rich and come for me with the torches and pitchforks. And angry they are - when I read the screeds on line, it seems that the same writers who moan that those my age are unfairly keeping jobs that rightly belong to the Millennials, also complain that those who are retired are sponging off society by not continuing to work and contribute to the economy. What’s the third alternative, just go ahead and die already?

Witness the Cleveland Iron Workers Local 17, where pensioners are getting about forty cents on the dollar, or Central States Pension Plan, which has been denied permission to give retirees a haircut but is funded at just 29 percent of what’s actuarially required to pay pensioners. Union defined-benefit pensions are in just as bad shape as corporate ones.


#18

The thing that I never liked with this set-up is that if you wanted to stay out of the market and just build your savings slowly in a bank - which is what they used to be for - you can’t make peanuts with that. Savings interest rates are just fractions of a percent. They (bankers, Wall Street hacks and sponsored pols) have set this system up so your only options are to toss your money back into the market. I hate the concept of handing my money to those bastards. There are very few places to go to invest money safely, with any type of return, especially for young people starting out.


#19

Next, we’ll all switch to a retirement lottery.


#20

Or, you know, just a lottery.