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.
Watch the video or listen to the podcast. Below you will find show notes.
Video
Podcast
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.
The Rise of 401(k)s and the Death of Pensions
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.
The Present State of 401(k)s
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.
The Costs and Benefits of 401(k)s
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.
I have a love hate relationship. Pensions offered a better return in many cases because of the experts hired to care for them, but like you said 401k gives the labor freedom and ability to migrate. I wonder if there is a way to be able to do both.