401(k) Why do you advocate for them?
As a investment adviser, are you a fiduciary? This question occurs to me because of your column advocating 401(k) products. 401(k) products were not originally intended to replace pensions, but to supplement them. They are NOT what Congress provides for themselves. They are optional, often not elected, frequently borrowed from by workers, require expertise most workers don't have, and are terribly vulnerable to market volatility. Retiring in a low market locks in losses for a lifetime. This isn't in the interest of workers, so that's why I'm asking.
Terry Says
Well, 40l(k) plans might not be perfect -- but they are the only way most people have to save in a tax-deferred account for retirement! And I assume you would put IRAs in the same category, since they also must be invested. Look, let me start with my basic premise and one basic fact in order to convince you to start a retirement account and contribute regularly: Basic Premise: No one ever got rich betting against America! So you might as well invest in America for the long run, because if we are wrong about America's future, our retirement savings account will be the least of our worries! Basic Fact: According to the Ibbotson market historians (Division of Morningstar) there has never been a 20 year period -- going back to 1927 -- when you would have lost money in a diversified portfolio of large company stocks (S&P 500) with dividends reinvested -- even adjusted for inflation! So, if you will just start young, and continue investing regularly -- and never get scared out -- the long term winning bet is to participate in your 40l(k) plan. And since you're not going to take the money out all at once, at retirement, hopefully you can make it last your lifetime. But that's the story in my book The Savage Number! Read it for an explanation of how to do the kind of withdrawal planning to give you peace of mind in retirement. And, yes, I am a FIDUCIARY. I sell absolutely NOTHING, and take no commissions or fees for anything I recommend. I truly have your best interests at heart!
