How 401(k) Plans Work And Why They Killed Pensions

Since 1980, pensions plans have been phased out in favor of 401(k) plans. They now represent nearly one-fifth of the U.S. retirement market. So how did 401(k) plans become such a popular form of retirement savings and how should they be used? Watch the video to find out.

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How 401(k) Plans Work And Why They Killed Pensions

[Beatricegove]

I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.

[caseybills]

It is advisable to save at least 15% of your income in a 401(k). Online calculators can help you estimate the appropriate savings amount based on your age and income. By saving at least 15% of your income in a 401(k), you can work towards a comfortable retirement. This strategy allows you to benefit from compound interest, potentially growing your retirement savings significantly over time.

[NicoleBarker-hevp]

I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.

[MegatPage]

Recently retired and unsure if my 401(k) and IRA will provide a stable future. i need an approach that will align with my risk tolerance and financial goals, i set aside $1m to achieve this. Do you suggest i get into stocks or buy a rental property?

[KacieLehman]

Investing in a Roth IRA can be a good choice since they are funded with after-tax dollars, and your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. I retired with 2 million dollars.

[ericmendels]

401(k) is a really effective way to grow your money. I love the safety of it, but I also want to have a stock portfolio with high growth potential and invest maybe 100k a year and also get dividends. Any idea how I could do this?

[CameronFussner]

Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My parents both spent same number of years in the civil service, but my mom was investing through a wealth manager, and my dad through the 401k.

[Theresaa]

A Friend told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. is this a good way to potentially grow my retirement savings to about $3M over time?

[pheoix]

They should teach all this stuff in high school along with mortgage. Credit. School loans. Etc etc

[JetSkiBuyFixPlaySellChannel]

Bottom line is that companies saved big money by killing the pension plan and shifting the cost and risk with a 401k onto the employee.

[kanegallagher]

The part of this presentation that’s missing is how corporations shifted the responsibility of saving for retirement to the individual while barely paying them enough to live. 401ks were created as a supplement to pensions, to help with increased lifespan, not to replace them.

[KingDavid-jjtk]

40 now, and everything is paid for. Fortunately, I had a college economics teacher who taught me a lesson when I was 18 years old. That lesson was: you can't buy something else for every purchase you make. Having multiple sources of income is prudent, as is living within your means. I have a 13-year-old vehicle because it is all I need, I like it, and I can do whatever I want with it. My net worth is $4 million, and I can pay my bills without stress, but I don't live like I have that. I have no complaints.

[shoshanarubinstein]

The 401k didn't rise in employee "popularity" it rose it availability by the employers and employees took it to have something for retirement as pensions were no longer offered

[ClementRusso]

As I approach retirement, ensuring the stability of my 401k after the turbulent year of 2022 is a top priority. I've come across stories of investors achieving up to $270k in ROI during this current declining market. Any advice on enhancing my ROI before retirement would be highly valued.

[Glen.Murphy]

It's great to hear that you are considering investing in the stock market after being inspired by the success of Munger and Buffett with Berkshire Hathaway. Here are some key points to consider when investing a significant amount like the proceeds from selling your apartment:

[instinctively_awesome]

I’m currently retired, and considering the current rollercoaster nature of the stock market, I decided to stay on the sideline for awhile, now I’m worried with the numerous bank failures as of late, am I better off reinvesting my savings in the stock market or do I wait?

[jeffjackson-eejv]

The biggest con of a 401k vs. a pension is that once you use up all of whatever is in your 401k it is gone, unlike a pension that pays you up to death. Granted if you have 5 million or so in your 401k, you could live off the dividends and interest, but most people don't have that much. It works for people in high paying jobs, but not so much for "working stiffs" you make 50k or less and don't have the ability to save the max in the 401k.

[Jr]

They killed the pension because they're cheaper than pensions

[stevensmiddlemass]

Why are IRA contribution limits kept so LOW ($6K/$7K)? They should be made the SAME as 401k limits so that folks without a 401K can be on equal footing! Somehow this video has helped shed light on some things but I'm aiming to create a portfolio worth not less than $2m before I turn 60.

[gabrielmm]

The stock market rally still appears to be in the midst of a normal pullback. I just sold my home in the Boca Grande area and I’m looking to remunerate a lump sum into the stock market before stocks rebound, is this a good time to buy or no?