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How the 401(k) System Fails Most People

Contributed by mm | July 28, 2004 04:21 PM PST



This MSN Money article discussed Brooks Hamilton's conclusion why 401(k) failed to work for most people. Brooks summarized three mistakes (or "Big Monkeys" as he called them):

1. 30%-40% do not join the plan in the first place.
2. For those who do join, 30% of them will contribute too little.
3. For those who do join and do contribute enough, 90% will fail to achieve near-market results that lead to enough retirement income.

Brooks concluded that by the end of the day, there are only 5% who can retire comfortably out of the 401(k) system.

I totally agree that people will need more 401(k) education and will argue they should save even more after they max out 401(k) contribution. After all, there is a cost of not saving for retirement.

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Read More ... 67 Posts In The Same Category

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