A 401k is an employer-sponsored, long-term savings plan that is intended to help you sock-away money for your retirement. A 401k offers significant tax breaks and has a few drawbacks. The money you put away now to be used later after 59 ½ years of age or at retirement is not taxed until it is distributed. Some companies match part of the dollars that you stash away. Your retirement savings are increased through these employer matching contributions. You can borrow against a portion of a 401K, as long as you pay it back plus the low interest. Otherwise, if you tap into your savings before 59 ½, you pay penalties for early withdrawal and the early distribution is also treated as regular income for tax purposes.
Submitted by Anonymous on
With regard to the individual investor, is the belief that one should "buy and hold" now extinct in the current market?
Word has spread rapidly that we're in a traders' market and that current long term (roughly 5-10 years) investments are uncertain.
Teresa Ghilarducci is a 51 year old economist who directs the Schwartz Center for Economic Policy Analysis at the New School in New York.
Why was Ghilarducci--who sure looks like a nice person in her picture--labeled the most dangerous woman in America in a recent US News & World Report column?
The short answer is that she thinks 401k plans stink and she is not afraid to let the world know.
Ghilarducci is the author of a recent book titled: When I'm 64: The Plot Against Pensions and the Plan to Save Them. Ghilarducci uses the book to lay-out the case against the 401k plan and to advocate an alternative which would involve a retirement system run by the government rather than the private sector.
Among her criticisms are the following:
