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Was the 401(k) a Mistake? How an obscure, 45-year old tax change transformed retirement and left so many Americans out in the cold. (www.nytimes.com)

submitted 4 months ago by [email protected] to c/[email protected]

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[–] [email protected] 17 points 4 months ago (1 children)

So the solution to 401k inequity is employer-sponsored gold reserves? I think just returning to a pension system probably works...

(Nor are any of the issues with 401ks mentioned in the article related to inflation)

[–] [email protected] -2 points 4 months ago* (last edited 4 months ago) (1 children)

I don't know if a pension system would work as it seems like pensions were primarily for people who stayed for 20 years at one single job and nobody really does that anymore. But employers giving their employees gold wouldn't be a bad thing. The article did not mention inflation, but it is a serious downside to a 401k. As an example, in 40 years, any money you save now will be worth 20% of what it currently is worth. If you save $100 at age 20 in a 401k, then by the time you are 65, that $100 would be worth something like $10 in today's purchasing power. That's an incredibly dumb thing to save in.

[–] [email protected] 2 points 4 months ago (1 children)

Except that 401ks are invested. By default they tend to be invested in a relatively stable, diverse portfolio along the standard long-term investment guidelines of ~60/40 balance of stocks and fixed or cash holdings. Mine made 15% last year invested even more conservatively than that, and it's a no-name 401k provides by my small employer. I would have made significantly less with gold.

If you think people's 401ks are just sitting there in a low-interest checking account, I don't think you understand how they're actually structured.

[–] [email protected] 1 points 4 months ago (1 children)

Oh, I understand. I get that the money is invested in things that will grow over time, but you're still having to take risk in order to get that return. Otherwise, what happens is you lose your money to inflation. At least with gold, it's a steady rise and will not fluctuate a whole lot. Gold holds your purchasing power with very little risk at all.

[–] [email protected] 1 points 4 months ago

You'd find very few financial advisors or experts who would recommend putting your retirement portfolio entirely in gold.