Stop the Pension Panic

Filed in archive Retirement on January 25, 2006

For example here is what one blogger recently said after hearing of the IBM decision to have its workers enter into 401k plans, "The details: after Dec 2007, benefits will no longer accrue to the defined-benefit programs that cover 117,000 workers (that is, programs that promise that a retired worker will receive a specific amount of money each month). Instead, IBM will force everyone into 401K plans. Welcome to casino retirement--if the market is doing well, when you retire AND you happened to be in a plan that made the right investments, you might do okay. But, if the market goes south, it's dog food for breakfast, lunch and dinner."

Here is someone that knows nothing about finance. He refers to the 401k as 'casino retirement.' He obviously knows nothing about investing. For example, as one gets older and closer to retirement, you start moving more of your money out of stocks and into bonds or lower risk investments.
Yes, if you keep everything in stocks till the day you retire, there would be more risk than if you reallocated your portfolio.

Even his reference to the possibility of the market going south, shows that he isn't even trying to truthfully report what's going on. The fact of what I just said about going out of the market into safer offerings proves this point. The 'Stock Market' isn't the only place that there is to put your money.

His adolescent comment that if the market does fall in the time you are going to retire, you'll be eating dog food for breakfast, lunch, and dinner, is just another demagogue trying to put fear into people because they will be given responsibility for their own finances. Some people just don't like that idea. There are those that will always panic just because there is change. You don't have to be one of them!