Each generation of workers since the nineteenth century has had more retirement security than the previous generation. That is, until 1981, when 401(k)s began replacing traditional pensions. For the last thirty years, we've been advised that the best way to build one's nest egg is to invest in 401(k)-type programs. This financial experiment, promoted by neoliberals and Wall Street, has come full circle, with tens of millions of Americans now discovering that they would have been better off under traditional pension plans long since replaced. As James W. Russell explains, this do-it-yourself pension system-in which individuals with modest incomes are expected to invest large sums of capital in order to reap the same results as professional high-end money managers-isn't working.
Social Insecurity tells the story of a massive and international retirement robbery-from its ideological origins in Milton Friedman's infamous Chicago School to its implementation in Chile under Pinochet's dictatorship and adoption in America via Reaganomics.
Can You Afford to Retire?
•Looming retirement crisis. Almost half of middle-class workers will be poor or near poor in retirement. In 2010, 75 percent of Americans nearing retirement had less than $30,000 in their retirement accounts.
•A great risk shift. In 1981, 59 percent of private sector workers with retirement benefits had traditional pension plans. By 2010 that figure dropped to 19 percent as 81 percent now had 401(k) and similar private investment plans.
•Costly hidden fees. The Department of Labor has shown that even a mere 1 percent increase in fees deducted over the course of investing will reduce your final balance by 28 percent.
Why It's Time to Retire the 401(k)
•Myth 1: 401(k)s produce higher rates of return than traditional pensions or Social Security.
•Myth 2: 401(k)s are cheaper for employers and employees than traditional pensions.
•Myth 3: 401(k)s fail to provide adequate retirement income only when individuals do not save enough.
•Myth 4: There is no fiscally sustainable alternative to 401(k)s.