Friday, January 8, 2010

Can Time be right?

Yesterday I took my wife to a dental appointment. While sitting in the waiting room I started going through some Time magazines catching up on items of interest. Now, because I'm in a waiting room I usually do not read articles closely as I don't like getting caught having to put down a magazine before I finished the article. So I may be guilty of not completely understanding the article I read.

The article concerned 401(k)'s and seemed to be saying that as an investment device they are not performing as intended. In addition the author(s) seemed to be saying that 401(k)'s were never meant to be a replacement for defined pension plans or to replace social security. In fact the article went on to suggest that the government should develop a system that pays a pension to every citizen at some predetermined age.

I guess we are seeing a flock of authors who seem to feel that U.S. citizens are entitled to retirement funds regardless of their contribution. It also purports 401(k)'s are not providing people with enough value because they are tied to market conditions and of course those have dropped severely in the last year.

Hmmm! I went through the initial start up of 401's and I do not ever recall anyone coming out and saying that these funds were meant to add to pension plans or were a replacement for pension plans. The article is correct to say that companies started using the funds originally set aside for pensions to fund operations. That is true. However, if 401(k)'s were meant as added perks for executives then don't you think the government would not have required the funds be available to all employees instead of a select few in the upper echelons. In addition, upper management was limited on how much they could contribute because of the tax deferment clause, and that there had to be some average savings rate across the board for all employees. I find it hard to imagine how an employee thought they weren't getting something they didn't have before. If the company did not have a pension plan covering all employees, and some didn't how could those employees not view a 401(k) as a retirement program. Where the view that there was a benefit to the plan was viewed was in the possibility of companies matching the employees contribution, then you are getting free money. Even then wouldn't the average "Joe" in the work place think they had a retirement fund.?

What I really object to is the author(s) trying to create the idea that the average citizen is due a retirement program. We aren't due anything in this country except life, liberty and the pursuit of happiness. We aren't guaranteed happiness, only the pursuit of it. I have maintained for some time that the government should regulate banking, medical coverage, and defense of our welfare. Beyond that, we should be free to pursue whatever economic return we can manage and if we can't build a nest egg then at least a social safety net should provide a floor, but it shouldn't allow me to travel to Europe.

I may have misunderstood the article, but I found it confusing and creating the thought of let "big daddy" take care of me. I'll take care of myself, thank you.

No comments:

Post a Comment