I ran across an interesting article the other day written by Stephen Gandell and featured in the October 2009 edition of Time Magazine. Gandell talks about the various reasons why 401(k)s have failed their owners since their inception. You can click here to read the article in it’s entirety. I would recommend it to anyone who wants to learn a little bit more about the history of the 401(k)s and how we arrived at our current state regarding the usage of 401(k)s.
I was also able to find a video featuring Time’s Managing Editor Richard Stengel talking to MSNBC correspondents about the article. Here are a few points that stood out to me while watching this video:
– The 401(k) is not even 30 years old, Richard compares this to a vaccine that hasn’t been tested.
– “The closer you are to retirement the less choice you have the more money you are likely to lose”
– Richard mentions an “insurance pension plan” as his solution to this problem. Instead of contributing 6% of your salary to a 401(K) you would contribute that money to an insurance plan.
Even though this video and article are over a year old they are still very relevant to our current situation. I was excited to hear Mr. Stengel mention an “insurance Pension Plan” as he is essentially bringing to the forefront the concept of Becoming Your Own Bank. The concept uses a unique insurance plan to replace ,and in most cases, outperform the traditional 401(k). Maybe it’s time to retire your 401(k) before it’s too late.
You can watch the interview with Richard Stengel by clicking here.