tag:blogger.com,1999:blog-14224910.post7833263349083982781..comments2024-02-14T11:11:09.643-05:00Comments on Nevin's Data "Points": “Diss” IngenuousNevin E. Adams, JDhttp://www.blogger.com/profile/07162580850277740193noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-14224910.post-55680430383197673352008-07-09T12:26:00.000-04:002008-07-09T12:26:00.000-04:00When the majority of 401k-eligible employees are r...When the majority of 401k-eligible employees are retiring successfully – or on a path to do so – most critics of the plans will be silenced.<BR/><BR/>Yet seemingly every week there are reports that 50% to 80% of employees eligible for 401ks are projected to fail to have a financially successful retirement. <BR/><BR/>Ultimately, the success of 401k ‘retirement plans’ will be determined by how many eligible employees use them to achieve their retirement goals.<BR/><BR/>There’s a word for older 401k-eligible workers who don’t have enough money to retire but are unable to continue working or no longer want to work – voters. Politicians listen to voters. Politicians also control benefit and tax laws.<BR/><BR/>Some members of Congress get worked up if a DB plan covering a few thousand people is underfunded by 20%. What will Congress do when members learn that millions of workers (voters) who are eligible for 401ks are roughly 50% to 80% underfunded? <BR/><BR/>Dozens of recently retired workers who were in 401s for 20 years testifying to Congress about their tiny or depleted accounts won’t be good for the 401k industry.<BR/><BR/>Professionals involved with 401ks know that for people in their mid 60s, a $100,000 account can provide around $200 to $600 a month for life depending on the income approach used. Members of Congress and employees (voters) will figure this out soon. Sadly, if what is reported is correct, millions of 401k-eligible employees will retire with much smaller accounts – unless dramatic improvements are made soon.<BR/><BR/>If Congress accuses 401ks of failure, will the retirement industry’s best defense be that employees had ‘opportunities’ … that employers followed the highest fiduciary standards … and some automatic features have been recently added? Will this defense persuade Congress to give 401ks a pass and to tell voters ‘too bad, it’s your own darn fault’?<BR/><BR/>The 401k retirement industry controls its destiny. To shut up its critics and ensure the viability of 401k retirement plans, the industry needs to make sure these plans help the majority of employees succeed. If the industry doesn’t do this, unsuccessful 401k participants (voters) will assuredly expect government to fix the problem. Many older people with too little money will have no other choice.<BR/><BR/>For the record, for nearly 20 years I’ve been writing and speaking about the importance of improving 401k plans so they help as many employees as possible retire successful. I support the employer-sponsored approach because I believe any government-operated alternative won’t be a good one.<BR/><BR/>All the best,<BR/>Dennis AckleyAnonymousnoreply@blogger.com