We can argue all day long about SS and 401k's both in my opinion were invented as supplemental for an older person.
The big elephant in the room, one of which burns me up to no end is the drift away from true pensions from large corporations, states, counties, and public service employers.
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IMHO I disagree with you on pensions. Its easy to blame the demise of pensions on evil corporations and governments but the prior system was unsustainable. Up until 1974 when ERISA was passed there was very little legal protection for pensions. Companies did not have to prefund the plans, they paid the annual benefits from profits. Companies were in the post WW2 boom and there was minimal major foreign competition. Large companies were growing and their workforces were young so the ratio of retirees to workers was low. The large companies wanted to encourage loyalty so they took care of retirees and maybe even threw the retirees a cost of living allowance on occasion. Unionized companies handed the checks to the unions to administer their own plans.
Folks didn’t live s long back then. I am 60 the youngest son of an older father who was the youngest in his family so most of my uncles and aunts were older working folks. Many smoked, with unhealthy diets and were blue collar so they didn’t exercise and the links between smoking and eating wrong didn’t come into acceptance well until the mid seventies. That meant that most of the aunts and uncles and my parents contemporaries would retire at 62 or on occasion 65 and rarely did they make it to seventy healthy either being in the ground or in some sort of long term care. Usually they had a couple of good years and then health issues waylaid them. Therefore they might work for the same company for 40 years contributing to profits and then the company had to pay out for less than five years.
My mother was somewhat ahead of the curve on health and my dad’s doctor got on his case about getting healthy in his mid 50s, my mom made sure he listened and he went from being sedentary bookkeeper to walking to and back from work 2 miles each way as long as it was over 40 degrees out and the sidewalks were clear. He also quit smoking the cigars he did on occasion. He had a mild heart attack in his 60s and a bypass in his eighties and passed at 97 running out of steam but still pretty active. Therefore his final company he worked for and the federal government had to pay for 30 plus years of retirement for 20 years of working. He was 20 year air force reservist and as he said many a time, best part time job he ever had. Many folks these days are routinely making it to their mid eighties and even my financial planning is based on 100.
In the late seventies and mid eighties came the growth of foreign competition. Automotive, steel and paper companies from the 3rd world countries had young healthy workers that they could replace at any time and there was no such thing as pensions. If the parents made it to the point they could not work, the family was expected to take care of them until they died. This by the way was the system in the US prior to Roosevelt’s New Deal when social security was put in place to get older worker out of the working population. The result of this major foreign competition is the big companies started to shrink while their pension costs increased. Since they were financing payments off of cash flow it started to impact the bottom line. ERISA was not passed out of nothing, it passed because big pension plans were starting to go bust. Up until ERISA unless someone was working for a unionized company the pension agreement was between the company and the employee If the company was having a tough time they could unilaterally change the plan. Even after ERISA was passed, the companies were given many years to build up actual reserves to cover pensions and in many cases they filled with company stock. If the company went bust the people on pension were not at the top of the line. Canada had this system until recently. One of my employers had operations in the US and Canada, the company went bankrupt. The US workers had their 401k contributions plus vested company match while the Canadians got pennies on a dollar when their corporate parent got paid their senior debt notes as they had priority.
The US unionized plans did not work out so well as many of the union pension plans were under the control of elected officers that didn’t have a lot of oversight, some traded their members future for short term gains in their pockets by hooking up with organized crime to pillage the plans. Across the board, these union plan are suffering from more workers taking out then putting in and inadequate reserves to cover them. They are begging for government help and making benefit cuts. Realistically the only real pensions left tend to be defense companies that can charge pension cost to the government and government entities who also ultimately have access to tax dollars, most corporations firms have frozen their plans.
On top of that ,only folks who worked for big businesses or government got pensions, most employees of small firms did not get them. They worked their entire career until they could not work any longer and lived off SS. Another big failing with pensions is they were not portable. Most plans were back loaded so the most benefits were obtained in the last few years of working. If a person was laid off or discharged in their later years they missed out on a lot, in many cases they did not get anything as they didn’t meet vesting. The whole deck was stacked to force loyalty to the company as long as they needed someone. I know my dad was threatened that way by mid level managers at one point and knew many other who were also. That was a standard fear of anyone working for company with a pension plan, that they would get fired or laid off before they had a good enough pension plan to retire and had no way to making it up. Governments generally could not pay private wages so the way of hiring and keeping workers was to give them short retirement (frequently 20 years of service) and generous pension benefits that would not have to be paid until long until the future. Those public plans are now coming to roost and most states and the fed are woefully underfunded, as bad or worse than SS. No matter what the plan, it comes down to demographics, fewer people paying into the system and more taking out of it based on unsustainable promises made years ago by people who knew it but figured they would be long gone before the promises came due.
After the impact to the big companies from foreign competition when they started shrinking, the next part of US growth was the high tech and services industry and most high tech folks were young and highly mobile. I know many tech folks who routinely switched jobs every 2 or 2 years for 20 or 30 years. Far more than half of the companies only lasted over 5 years. They were well paid but a pension did not make sense so 401s were developed as means of giving them control of a portable pension plan that they controlled. Some controlled them well and some used them as a private piggybank to fund a lifestyle they could not afford.
My first real job with a big company had a frozen pension plan so I only could put money in 401k plan and they did a match. I was there for about a year and when I left my 401 transferred to an IRA. I put it in a very conservative mixed mutual fund and left it ever since. That 1 year of contributions is worth $560 a month until I pass at my full retirement age based on buying a deferred annuity today. I then worked for a big company that had a “good” pension plan. Both they and I paid into the plan once I vested for 2 years. The big company got in financial trouble as they were a growth company that stopped growing due to foreign competition. Our division was sold off and the company who bought it didn’t have a pension plan so they dumped the underfunded plan on the PBGC. I had about 5 years in that plan. I got a check for my contributions which I invested while the company share for 5 years means I get $300 a month for the rest of my life at full retirement age. I have subsequently worked for three companies with 401K plans and could be retired now as I converted them to IRAs and kept them invested. Of course my lifestyle is intentionally below what I earn, I am a long term conservative investor and as I have gotten older I have gotten more conservative. I keep a reserve fund and ultraconservative funds to cover my living expenses for the duration of a cyclical market so I don’t need to raid the investments. Folks do not seem to understand that they only lose money when they have to sell, otherwise it is better to buy low and sell high then the reverse.
So from my point of view pensions were doomed and 401ks were a sustainable change for world that is changing, not perfect but better than the alternative. In my circle of friends I know very few folks (one worked for a defense contractor) who would have made out any better with pensions, most would not have qualified for them as they didn’t have a choice to move around as the companies they worked for failed. They most likely would be worse off Folks used to talk about the gold watch given on retirement but very few folks I run into would ever have qualified for one based on longevity with the same company. My dad had a college paper he wrote on the unsustainability of SS back in the 1950s and his advice to me when I went to work was plan as though it is not there when I retire and be happy if it of some semblance of it is. The only way out of this is to change the demographics, if you listen to Bill O’Reilly and other conservative commentators we should contaminate blankets with CV-19 and give it to the old folks to get the sick folks out of the nursing homes like the hyped smallpox in blankets to the Indians. Unfortunately we would need to get to the definition of Decimate (1 in 10 killed) to even make a dent in the demographics. I am already penalized for demographics, my full retirement age is 67 and 10 months. Unfortunately when the change was made they capped it at 1960, had they kept it going it would have taken some pressure off of SS and add in substantially raising the contribution cap will make it sustainable for many more years. SS was never supposed to be comfortable retirement if was the equivalent of welfare with the family and savings kicking in.