Marie Cocco: Retirees Wake Up to a Swindle

[marmar]

from Truthdig:



Retirees Wake Up to a Swindle

Posted on Oct 13, 2008
By Marie Cocco



The essential fallacy of the 401(k) has been exposed.

It took a historic market collapse—one that threatens to impoverish workers already in retirement and those who are nearing it. But then, crushing hardship is often what’s required to usher out an era of ideological illogic and unconscionable greed.

The advent of the 401(k) in the late 1970s and early 1980s was a leading indicator of what became a political mania for shifting the risk and responsibility for life’s big challenges—health care, an adequate income in retirement—from employers and other broad-shouldered institutions to the narrower, weaker backs of individuals themselves.

It was never sold this way, of course. The pitch for the 401(k) was a contemporary version of the get-rich-quick scheme: The promise of strolling along a sun-dappled beach in retirement would be realized with ease, so long as workers regularly contributed modest amounts to the accounts, then let the compounding magic of the market work. To hear the mutual fund companies and the media tell it, only fuddy-duddies and dinosaur employers would be foolish enough to opt for the old-fashioned defined-benefit pension, the type employers paid for and professional managers oversaw, and which guaranteed monthly payments in old age. The type that gave the hard-boiled men and women of the industrial age security, but would never reward them with riches.

The offer seemed good to media observers, and to the politicians who nurtured the do-it-yourself retirement with successive legislative schemes. During the stock market boom of the 1990s, esteemed business publications published breathless articles featuring manufacturing workers who would use their lunch breaks to track their mutual fund balances and ponder the possibilities of the loan they would take out for a cabin on the lake or an anniversary trip to Hawaii.

But despite the hype, the data on 401(k)s have never—ever—shown that these accounts were creating a mass of workers who would be able to retire with security, let alone luxury. ......(more)

The complete piece is at: http://www.truthdig.com/report/item/20081013_retirees_wake_up_to_a_swindle/

[RUMMYisFROSTED]

1. Interesting.

For those who do have retirement accounts, the bottom line has long been grim. In 2004, the last year for which data are available, the median balance in IRA and 401(k) retirement accounts was $35,000, according to the Federal Reserve. For those nearest to retirement—households headed by someone between 55 and 64—the median balance in 2004 was $60,000. That’s enough to generate about $400 a month in retirement income, according to the research center.

It's OK, if you can keep your spending down to $3,000 a year.

[mrcheerful]

2. Yep, nothing like hearing the same people who brayed loudly about the rich's

their 401k's were reaping them for their old age are now screaming bloody murder on their losses. And of course a good share of them are laying the fualt right on the backs of the poor. It's not that they were scamed by Wall street and republicons, they knew their ship was coming in, until those evil democrats made banks give poor people loans on houses they couldn't afford.

I am so fed up with these self rightious assholes, they are the only ones that worked hard, yeah right tell that to the one armed guy or the guy with cerabal palsey who worked his ass off then when pink slips started being handed out they got the first ones, yet its their fault for not working hard enough. You know I find it very hard to stomach these assholes any longer.

How pray tell me, did government force banks to give loans to people that couldn't afford them? The ones who they should be pissed off at are the ones who got filthy rich off their greed and who are now getting bailed out of the mess they created and they lose nothing. But everyone else gets hit so they can keep their ill gooten gains. How many times were these idiots warned that the stock market was a gamble? Now, we are supposed to feel sorry for them because they bought a sows ear thinking it could be turned into a silk purse.

I'm not talking about the poor saps that had no choice, I'm talking about the ones who bought it and thought it was the greatest thing after sex.

[snappyturtle]

3. Companies offerring these 401K programs tout them as a benefit

to prospective employees, like whoopee do, our package includes a 401K option. What if the new employee doesn't opt in? Is that company going to set aside ANYTHING for that employee? It seems I never hear of straight pension programs anymore. The companies do not treat their employees as they were treated some decades ago. Insurance programs are often lacking in coverage too...and salaries haven't kept up. It's no wonder we're in such a mess out here in citizenland.

I have a question: What happens to a 401K when one's job is outsourced?

BTW: Thanks for the posting of this article. Another rude awakening.