The joke is on him. Poker Stars has already taken my retirement. <VBG>
What Obama realizes is that 401Ks were designed to supplement corporate pensions, which were annuities. Now, the corporate pensions are mostly history. At Citigroup, they had one that was such a joke that nobody even talked about it.
The other problem is that most self managed 401Ks have invested in choices that are far too limited (anyone remember how hard it was to find a gold option in a 401K plan before gold tripled in price?) and owners who are far too unsophisticated. I still remember many of my broker friends saying "if you buy stock, you will make x, but if you buy bonds, you will make y." Huh, they cannot possibly know that and it used to be a crime to say that sort of thing to make a sale. So, after 20 years of growth and one year of crash, most 401Ks have been creamed by inflation. Retirees will definitely run out of 401K before they run out of lifespan, on average.
Part of this is just logic. The population cannot outperform the average, as their investments make up the average. Some people can, but most cannot.
Annuities are definitely not the answer. The expenses are ridiculous and insurance cos. have not distinguished themselves as investors (with the possible exception of Northwestern Life). The guarantees will be worth zero in a major downturn. Most of these annuities are Ponzi schemes with new buyers paying off those who are currently taking distributions. |
