1981 was the pivotal point in American history where we shifted from pensions to the 401k as the primary source of retirement funding. Since then we have seen the perils and downsides of a system with a flawed design and execution.  

 

Before the 401k, we had a plan which gave people a better shot of maintaining a substantial percentage of their pre-retirement income. 4 decades later, what is the result of the 401k and its impact on the livelihoods of Americans? Sadly, not good. 

 

What was the 401k actually designed for? How is it creating problems for employees and threatening their retirement income? 

 

In this episode, I talk about the huge problems with the 401k design and how it will impact your financial future. 

3 Things We Learned From This Episode

How the 401k became a vehicle for Wall Street to take advantage ofThe rise of the 401k goes hand-in-hand with the increased power of Wall St. It paved the way for the increased investment in the stock market, and for Wall Street to entice us with lies about what we can do with a 401k, including deferring tax. 

 

Why the 401k puts you at more risk financially The 401k is a market-based vehicle with no guarantees and the risk of market volatility. All of the risk has been transferred from the employer onto the employee’s shoulders.  

 

What the 401k was originally designed forThe 401k was originally a plan designed to be professionally managed for highly-compensated executives. It was ultimately adopted because it was a way for companies to avoid the more costly Defined Benefits Plan.