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Retirement crisis looms as Americans struggle to save
(www.cnn.com)
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this post was submitted on 02 Apr 2024
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50% in 401k is about equal to the 50% that was in the pension plans. In the mid 1980s 401k was not common (it wasn't even an option until 1978 and took time to catch on). If you are lucky enough to have a 401k option you are better off than a defined benefit pension which had so many limits that you didn't want it - they were great if work for the same company for life but if you switch jobs they don't follow you. My dad started a job in 1975 that had a pension - when he was older he regretted not joining it until he did the math and discovered on retirement he would have got $.75/month from it - the company laid him off in 1985 so he had no option of contributed for 30 years where it might have been an okay deal - but only okay as the inflation of the years between joining and retiring wasn't factored in.
Pensions should be a better deal than they are, but they have so many limits in the real world that make them a terrible investment. Overall we are about the same. Though I agree 50% not having a good retirement plan in place (only SS is not a good plan) is not a good situation.
If the pensions were government-backed, those issues wouldn't exist.
Social security is government backed and here we are.
Pensions are government backed as well. Some of the reasons they are a bad idea is the government doesn't want to take them over when they lose all and so laws force overly conservative investments which means low return on investment. (do not confuse conservative investment with conservative politics) This was done because some companies made some really bad pension investments and so their retirees lost all (pension invested in company stock, company went bankrupt and people months away from retirement or already retired lost), but the end result is 401k has a much better return on investment.
If pensions were government backed, we'd probably see pension managers gambling the shit out of that money.