Thrown to the wolves
Odds are you felt pretty good about your 401(k) over the last 10 years or so, watching that monthly trickle swell into something fairly substantial through wise management by people who knew what they were doing when it came to making money grow. It was exciting to see prosperity bloom, and it was also comforting to know you were proactively doing something to ensure easy living in your golden years.
You needed a 401(k), everybody told you, because keeping your nest egg in something as troglodytic as a savings account was akin to keeping it stuffed in your mattress. Your money needs to be invested, everybody said, like in the stock market, which despite a few occasional corrections will always move north, just like the value of your house.
‘And now you can’t even bring yourself to look at your statements.’
You needed a 401(k)because, let’s face it, pensions are for our grandfathers. And government employees. Very few companies offer them these days, and chances are you would never work for any single organization long enough to earn one. Unless you’re in a union, which you’re probably not. You needed a 401(k) now more than ever, because the Baby Boomers refuse to die and are sucking up the dollars in the Social Security money pit faster than they come in. And you sure as hell can’t trust your government to take care of you in your old age. You signed up for the 401(k) plan at work and diligently set aside a little bit each month, which was sometimes matched by your company — which, by the way, doesn’t really “do” the pension thing anymore; your retirement is more or less in your own hands. And now you can’t even bring yourself to look at your statements. Most investors are looking at 30- to 40-percent hits in their long-term savings plans. It’s not so bad if you believe in the ultimate infallibility of the markets and aren’t planning to tap in for another 20 or 30 years — in fact, it’s a pretty good time to be dropping some money into that great big crapshoot. If you believe, that is. Still, it’s likely you won’t be putting as much into your retirement savings as you planned this year. More and more, companies are cutting their 401(k) matching plans to ease payroll constraints, including FedEx, Motorola and Resorts International. And if your retirement is imminent, if you’ve already got your eye on a little condo down in Wrightsville Beach from which to enjoy the glorious twilight of life, you’re probably thinking you need to make other plans. “We have had a 30-year experiment with requiring workers to be more responsible for saving and investing for their retirement,” Teresa Ghilarducci, professor of economics at the New School, told the New York Times in December. “It has been a grand experiment, and it has failed.” True, the 401(k) system looks to be in critical condition during this bear market. But who, exactly, has failed here? The people who people who diligently saved portions of their pay? The companies who participated in their employees’ futures? Or the people with whom the monies from all these investment plans were trusted?
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