Is 401 (k) Replacing Pension?

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The dream of most Americans is retain their dignity and enjoy security during their retirement. With the increasing levels of retirement insecurity, people are looking for ways to access secure and adequate pensions. The 401(k) retirement savings plan of 1981 was first suggested by Herbert Whitehouse with the intention to allow workers allocate 3% of their pretax salaries into a savings account and invest it in the future. Although 401(k) makes people go home with less money, they prefer it because it is more predictable and less expensive to fund compared to pensions plans which could be weakened or wiped out by company bankruptcies, and are difficult to transfer when a worker switches employers. However, after thirty-five years, this tax-deferred saving tool has replaced pensions, forcing the big companies to reduce expenses. In fact, the number of workers working in the private sector with the traditional pension has reduced to 13% from 38% in 1979. Many proponents of the 401 (k) regret creating the tool even though many Americans use it to save. It was designed to save money for future, but people are using it as the primary retirement tool. As a result, it is exposing workers to high fees from money managers of Wall Street and drops in the stock market. Therefore, the early backers of 401(k) are reversing the situation by encouraging workers to save more. Alternatively, companies need to funnel more money into the retirement plans of their employees…

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