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Originally Posted by Redshift Z
Well my understanding is that this point in time of OUR history the world market has never owned as much of the American stock, real estate and U.S currancey. My whole concern is why invest in your future on pure speculation.
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While admitting that stocks, bonds, etc are certainly non-secured risks and subject to gains and losses, I'm not sure that calling them "pure speculation" isn't a bit of overkill. There is enough historical past to make them viable alternatives for investors. While I rarely invest in individual stocks myself (almost all of my investments are mutual funds), there is enough available documentation on the assets/profitablity of companies to make wise decisions whether you're buying individual stocks or measuring the stock portfolio of a particular fund to make it somewhat less than "pure speculation". The same goes for bond funds except you are measuring those companies abilities to repay debt.
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i tend to believe that the 401K was designed to hook ,line and sinker the american worker into a much grander retirement plan.
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Actually the 401k plan wasn't based upon any new legislation or an offshoot of any administrations particular agenda.
The term '401k' is really nothing more than a subsection of IRS tax code #401 which covers qualified pension, profit-sharing and stock bonus plans.
It's popularity was founded several years ago when some very bright folks in the private sector were looking for alternatives to defined benefit, defined contribution and profit sharing plans. They stumbled across this particular subsection and found a way to make it usable and popular among both employers and employees.
The reason they were looking for alternatives was that the defined benefit pension plans were becoming too expensive for many employers and the standard profit sharing arrangements were too iffy for employee tastes. They also did not allow (for the most part) any employee participation for those that wanted to take advantage of tax deferred savings. And lastly, the administration costs of these other retirement plans was very costly when compared with the costs of administering a 401k program.
I think the entire point of section 401 of the tax code was to provide the means for the working man/woman to become less dependent on Social Security and other entitlement programs after retirement....especially with the average life expectancy rising as fast as it has over the last 50 years.
Call it a self-defense mechanism for government. If workers are allowed and even enticed to save for their own retirement, there is less pressure for future demands on the government to raise Social Security (and other entitlements) to keep up with inflation and a rising standard of living.
Mike
