Time Magazine Feature: Why It's Time to Retire the 401(k)
An interesting read...
Much of the focus of the article is about the fact that there aren’t any protection features in the 401k. The message from government over the past 15 years has been that the onus is on us to find the way to fund our own retirement.
The biggest lacking feature in company 401k s is the fact that the vast majority do not have a plan advisor attached to them. They are “unserviced” investment accounts without a professional minding the overall asset allocation. Under this regime, not only is the funding of your retirement on you, so is the professional investment management. If plan participants had the option to work with an advisor, the asset allocation should be adjusted as the participant moves closer to retirement. Over 90% of investment success is determined by asset allocation.
The other major focus of the article is retirement insurance—the idea that we should pay premiums for a “just-in-case” income policy. Retirement insurance already exists in the form of living benefit annuities.
In my opinion, the problem with retirement funding is not the investment vehicles, but the lack of planning.
