Is Your 401(k) Kinda Bullsh*t?

The headline of a recent article didn’t pose that as a question. And that should make you think.

The article, penned by a not-yet-30-year old, was mostly negative on the nation’s primary private retirement savings vehicle, but to my read, that wasn’t her fault. Rather, it was the net result of the feedback she got from a number of what we might consider the “usual suspects” who garner headlines that bash the 401(k), including (at least indirectly) the man the mainstream media credits with being its “father” (trust me, there’s more to it than that).

One of the folks she talked to was yours truly – and while I clearly wasn’t persuasive enough to overturn (completely) the cynicism with which I sensed she came to our conversation (at one point she went so far as to say, “you’re a lot more positive about the 401(k) than anyone else I’ve talked to”).

In the course of our conversation we covered a lot of ground – the origins of the 401(k), why traditional pensions have faded in the private sector, the notion that they were widespread and provided full benefits to those who were covered, the benefit of the employer match, and the innovations (like automatic enrollment and target-date designs) that have helped the 401(k) become “better” since I began saving.

Not all of that made it into the article, and some of it was worded differently than I would have explained it – but it was clear that she was listening and trying to understand, even though her article indicates she spent only two days doing her research.

That said, last week if you had Googled “401(k)”, her article came up a lot higher than anything I had managed to write in the last month (though, in fairness, I almost never use profanity in my titles, and reserve use of the “f” word for things like fiduciary).

There is good news here. The author’s cynicism (and misunderstanding of the U.K.’s pension system) notwithstanding, she’s (already) saving in her 401(k), cognizant of issues like fees and investments, and willing to press for continued improvements even as she continues to save. She sees value in having access to the advice of an ERISA fiduciary (though, perhaps since we didn’t discuss it, she doesn’t quite understand the impact of the fiduciary rule, or that it’s currently in place), and is desirous of steps that would make the 401(k) simpler and easier to use by non-experts.

Her 401(k) may still be “kinda bullshit.” But I’m pretty happy with mine. How about you?

Add Your Comments


  1. url url'>Henry E. Tebben
    Posted December 5, 2017 at 1:28 pm | Permalink

    Very impressive by the young lady. Daily I find where plans have shirked their fiduciary duty regarding investment fees, performance and Admin costs. Many don’t even have a process for review , yet know what they are paying or how their funds are performing or should perform. If more participants took an interest as she did, there would be less garbage plans. My advice: She should ask to be part of the 401(k) committee. They could use her help. As far as the language. Sometimes one has to speak in the language of your audience to make a connection, which she probably accomplished. It got your readers’ attention.

    You do good work Nevin, Thankyou!


  2. url url'>Jimmy Masters
    Posted December 5, 2017 at 1:33 pm | Permalink

    I continue to come up short in understanding that somehow the 401k is a “rip-off” or “snakeoil”. True, there are some out there that may be more expensive than they should be, but in truth, it continues to be the efficient way for the average worker to save money for retirement. And if one is fortunate enough to work for an employer with a match or non-elective component then all the better. I like to say we pay ourselves first, before we leave work, drive home, and pay everyone else in our lives. That would seldom happen if we went home first and paid everyone else and then tried to write a check for our retirement savings. It’s a “rip-off” for those who don’t take full advantage of it.

  3. Kevin O'Connor
    Posted December 5, 2017 at 3:44 pm | Permalink

    Perhaps you should have told her that she does in fact have a pension. Its called social security for which 12.4% of her compensation is used to fund the benefit liabilities. Just imagine if 12.4% of comp was used to fund her 401k account over 40 year career. Show her the math and I’m quite certain she would be in favor of her 401k.

  4. Nevin E. Adams, JD
    Posted December 6, 2017 at 7:18 am | Permalink

    Appreciate very much the read – and comments. Oh – and on the point of Social Security, she’d be the rare Millennial who expects to see anything from Social Security…but then, at her age, neither did I. ;-}

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