IMHO: "Diss" Ingenuous
Over the past several years, it has become
"fashionable" in some quarters to bash the workplace
retirement savings plan; most frequently, the
401(k).
IMHO: "Diss" Ingenuous
Critics have long bemoaned "anemic"
participation rates as a sign that the programs aren't
working, faulted what were perceived as inadequate savings
rates as an indication that participants didn't grasp the
need, and pointed to less-than-optimal investment
allocations as proof that those who did save were not
capable of, or not interested in, making those decisions.
In fairness, much of that "criticism" has been of a
constructive nature—from professionals who care about
retirement savings adequacy, who believe strongly in the
support of the employer-sponsored system, and who truly
want to see people have the opportunity to do the right
thing, and to do the right thing with that opportunity.
However, those well-intentioned voices were sometimes
employed in contexts that, over time, have hinted (and
sometimes done so more overtly) that there were inherent
problems with that system that were perhaps beyond remedy.
And there are suggestions, from time to time, that the
retirement savings crisis is overblown, a concoction of
investment providers and advisers who simply want to ensure
their own retirement security.
More recently—and more insidiously, IMHO—is a growing
voice that 401(k)s are little more than tax dodges for the
better-off.
That they, like any tax-advantaged program, provide
disproportionately higher value to those who actually pay
taxes—those who, by definition in our current "progressive"
income tax scheme, have higher incomes.
Alternative Courses
Those opposed to the current employer-sponsored system
do have alternatives.
One is to remove the tax benefits from the 401(k)
altogether, either as a "fairness" move (e.g., since
everyone doesn't have a 401(k), no one should), or that put
forth by those trying to establish some fiscal
responsibility "cred," is the need to save the federal
government money by not deferring taxes on those
contributions and/or earnings and by no longer giving
employers tax benefits for their contributions on behalf of
participants.
Some want to replace the current workplace savings program
with something else; generally, some grand
government-mandated savings program (yes, in addition to
Social Security which, let's tell it like it is, is not a
savings program), while those opposed to "Big Government"
hold out the notion of a government-sanctioned/mandated
payroll IRA, where each worker would have the "opportunity"
to set up their own account anywhere they chose to do so.