The headline of a recent article didn’t pose that as a question. And that should make you think.
The article, penned
by a not-yet-30-year old, was mostly negative on the nation’s primary
private retirement savings vehicle, but to my read, that wasn’t her
fault. Rather, it was the net result of the feedback she got from a
number of what we might consider the “usual suspects” who garner
headlines that bash the 401(k), including (at least indirectly) the man
the mainstream media credits with being its “father” (trust me, there’s
more to it than that).
One of the folks she talked to was yours truly – and while I clearly
wasn’t persuasive enough to overturn (completely) the cynicism with
which I sensed she came to our conversation (at one point she went so
far as to say, “you’re a lot more positive about the 401(k) than anyone
else I’ve talked to”).
In the course of our conversation we covered a lot of ground – the
origins of the 401(k), why traditional pensions have faded in the
private sector, the notion
that they were widespread and provided full benefits to those who were
covered, the benefit of the employer match, and the innovations (like
automatic enrollment and target-date designs) that have helped the
401(k) become “better” since I began saving.
Not all of that made it into the article, and some of it was worded
differently than I would have explained it – but it was clear that she
was listening and trying to understand, even though her article
indicates she spent only two days doing her research.
That said, last week if you had Googled “401(k)”, her article came up
a lot higher than anything I had managed to write in the last month
(though, in fairness, I almost never use profanity in my titles, and
reserve use of the “f” word for things like fiduciary).
There is good news here. The author’s cynicism (and misunderstanding
of the U.K.’s pension system) notwithstanding, she’s (already) saving in
her 401(k), cognizant of issues like fees and investments, and willing
to press for continued improvements even as she continues to save. She
sees value in having access to the advice of an ERISA fiduciary (though,
perhaps since we didn’t discuss it, she doesn’t quite understand the
impact of the fiduciary rule, or that it’s currently in place), and is
desirous of steps that would make the 401(k) simpler and easier to use
Her 401(k) may still be “kinda bullshit.” But I’m pretty happy with mine. How about you?
- Nevin E. Adams, JD