Is the 401(k) a failed experiment?
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New York Times writer Joe Nocera recently penned an article decrying the 401(k) as a “failed experiment.” As he writes,
“…I’m not planning to retire. More accurately, I can’t retire. My 401(k) plan, which was supposed to take care of my retirement, is in tatters.
The bull market ended with the bursting of that bubble in 2000. My tech-laden portfolio was cut in half. A half-dozen years later, I got divorced, cutting my 401(k) in half again. A few years after that, I bought a house that needed some costly renovations. Since my retirement account was now hopelessly inadequate for actual retirement, I reasoned that I might as well get some use out of the money while I could. So I threw another chunk of my 401(k) at the renovation. That’s where I stand today.”
I’m curious: If you believe the 401(k) is a “failed experiment,” what would you do instead? Some of the comments on the above article are brutal. Let’s try a little nuance.
On one hand, investing forums are filled with Chicken Little kooks who insist the end is near…but when challenged on what they would do instead of long-term investing, they have few answers. “Uhh..” they say, “I would definitely go back to the gold standard. That’s why I want to elect Ron Paul!” You, sir, are a moron.
On the other hand, considering the “average savings for someone near retirement in America right now is $100,000,” something isn’t working. What would you change?
Leave your answer in the comments.