Ever wonder what happened to pensions? This week we cover the death of the pension system and how 401K accounts became so popular. Most importantly, we discuss the pros and cons of the 401K retirement system. The shift from Defined Benefit to Defined Contribution has good and bad aspects to it.
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Introduction
Overview of the drastic reduction in private sector pension availability from 1980 (83%) to 2018 (17%).
Discussion on the rise of 401(k)s as the predominant retirement funding option.
Examination of the shift from defined benefit to defined contribution retirement systems.
Impact of this shift on job stability and employee tenure.
Historical context: The passage of the Revenue Act of 1978 and the introduction of section 401(k).
Ted Benna's interpretation of the 401(k) provision and how it shaped the modern retirement savings landscape.
Discussion of the initial reception and eventual widespread adoption of 401(k) plans by U.S. companies.
Current statistics on 401(k) investments and contribution limits.
Analysis of the transformative effect of 401(k)s on retirement planning and employer-employee relationships.
Comparison between the traditional pension system and the 401(k) system in terms of employee flexibility and mobility.
Exploration of the implications of shifting financial planning responsibilities from employers to individuals.
Increased demand for financial literacy among individuals.
Ted Benna's criticism of the complexity and cost structure of post-401(k) retirement investments.
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The Death of the Pension System