James W. Russell
November 24, 2015
It sounds great, to be in control of your retirement plan. To make the investments you want to make when you want to make them. To be in control of a plan that has the flexibility to meet your particular retirement needs.
And Americans now have more choice than they’ve ever had with their retirement plans. It was given to them by the massive shift in the private sector from traditional pensions to 401(k)-like plans. With traditional pension plans participants have no direct say over how plan assets are invested. With 401(k)-like plans, they have much more say.
That is an appeal proponents of Social Security privatization are also making. Privatization would mean investment freedom. Instead of assets being invested in low yield treasury bonds, as they are now, participants could choose among Wall Street’s myriad products to maximize their gains.
Having the freedom of choice sounds like a universal value that no person in her or his right mind would want to relinquish, especially when it comes to something so important for the future as a retirement plan.
But has that freedom of choice brought more retirement income or security? The answer is a resounding no. We are in a growing retirement crisis precisely because 401(k)-like plans which maximize individual choice have come nowhere close to matching the retirement incomes of the traditional pensions they replaced.
To continue reading, click Being in Control of Your Retirement Plan is a Bad Idea