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URL:  http://boards.fool.com/these-days-you-can-pretty-well-tell-the-27133594.aspx

Subject:  Re: Retirement in danger Date:  10/27/2008  9:00 AM
Author:  aj485 Number:  1309 of 1491

These days you can pretty well tell the difference between someone who has a good pension coming their way and someone who will have to rely on 401Ks and IRAs. The former are sleeping much better these days. Doubly so if they are retired or have a very secure job.

Given the state of a lot of companies/governments and their un/derfunded pension liabilities, while a lot of the people who have pensions may be under the illusion that they can sleep better, they probably shouldn't be.

The whole premise of the article is incorrect, based on the information that they were using. This guy had a pension. The reason that it 'disappeared' was that his company went BK, not that he didn't have one available. Companies going belly up and subsequent pension decreases was happening long before 401(k)s made their appearance, and was part of the reason that the Pension Benefit Guarantee Corporation (PBGC) was started.

In this case, had the guy saved significantly for his retirement by using the 401(k) that he had available to him, IRAs and/or taxable accounts, he would have been able to weather the fact that the company went BK a lot more easily. However, using him to illustrate that people are going to have a hard time retiring because pensions are generally not offered to new employees any more is factually incorrect.

Besides that, how many of today's new graduates do you really think will be able to stay with a company for the 30 years that it requires to get a full pension? Even if the person is willing, many of the companies aren't around 30 years from now.

The 401(k) was an attempt to build portable pensions that people can carry with them from job to job. What fails is that they are voluntary, so people have to take some responsibility on their own. And even with the new automatic enrollment rules, employees can choose to opt out. So people can choose to not participate, and then become sob stories for articles like this one.

AJ
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