WSJ Article Reports on the State of the 401(k)

From the Wall Street Journal today: Big Slide in 401(k)s Spurs Calls for Change. Excerpt: Many 401(k) providers have long argued that participants just need more education to make appropriate investment decisions. Some in the industry are giving up on…

From the Wall Street Journal today: Big Slide in 401(k)s Spurs Calls for Change. Excerpt:

Many 401(k) providers have long argued that participants just need more education to make appropriate investment decisions. Some in the industry are giving up on that notion. “Let’s face it, participant education has been an abject failure,” says Mr. Bramlett of 401(k) record-keeping firm BenefitStreet. . .

Even if workers follow the golden rules of 401(k) investing — saving early and diligently, holding a broadly diversified investment mix, never tapping their savings until retirement — their success can still depend largely on the luck of the stock-market draw.

Boston College’s retirement-research center recently ran scenarios that assumed workers had contributed 6% of pay to a plan for 40 years, had invested in a target-date fund, had never touched their savings until retiring and had annuitized the assets at retirement. The chunk of preretirement income these savers could replace in retirement varied dramatically depending on when they retired. Those retiring in 1948 could replace just 19%; those retiring in 1999, 51%; and 2008 retirees, 28%.

Leave a Reply

Your email address will not be published. Required fields are marked *