These days, very few people get guaranteed pensions and they are almost always 401ks instead.
If you are running a business, isn’t it cheaper to provide pensions? You can invest the money in the same sort of funds that a 401k is invested in, but money not paid out (say, both retiree and spouse die) can be pocketed where 401k goes to whoever is a beneficiary like kids, extended family, charities, pets, etc).
In: Economics
A pension ties you to jobs that are in the specific pension. 401(k) is portable. If you leave your job, you just roll it into your new job’s 40 1K plan.
Simple explanation:
Pensions are a pool of money that you all pay into and you get a set amount out of every month until you die based on your years of service and age of retirement.
401k is money you contribute into your own account and then when you work with a planner to know when you can retire and how much you can draw out monthly until it’s all gone. It’s based on investments.
Pensions are losing steam because people are living longer and not staying at the same companies for life anymore. It’s just not feasible to have a large enough staff to operate one and be able to keep funds in it while still keepIng up with the retirees monthly distributions.
Simple explanation:
Pensions are a pool of money that you all pay into and you get a set amount out of every month until you die based on your years of service and age of retirement.
401k is money you contribute into your own account and then when you work with a planner to know when you can retire and how much you can draw out monthly until it’s all gone. It’s based on investments.
Pensions are losing steam because people are living longer and not staying at the same companies for life anymore. It’s just not feasible to have a large enough staff to operate one and be able to keep funds in it while still keepIng up with the retirees monthly distributions.
I’ll give you the “real” (conspiracy) reason. You see, the average voter has no real reason to care about the stock market, except indirectly. It is mostly a concern for those with enough capital to invest. So how do you get a typical voter to support policies that help the wealthy? Well, you make the quality of retirement directly tied to the performance of the stock market. Especially voters who are 50+ years old (close to retirement, and keeping an eye on their 401k portfolio value), who also happen to be more reliable voters.
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