401 Not O(k)?

Andrew Sullivan —  Dec 5 2008 @ 8:03am

Justin Fox writes about those out to kill the savings instrument:

Unlike pensions, 401(k)s are voluntary, and many workers either don’t participate or don’t set aside enough money to give them a shot at a comfortable retirement. Those who do save enough often bungle their investment choices. Those who choose well pay higher investment fees generally than pension funds do. Even participants in the best-run, lowest-cost retirement funds face the risk that the market will tank — as it has done this year — when they’re close to retirement. At retirement comes another issue: pensions insure against the risk that you’ll outlive your money, because they pay until you die; 401(k)s don’t. And finally, the tax breaks built into the 401(k) — about $80 billion a year — fall mostly in the laps of high earners.

The alternative, Ghilarducci’s  government-run pension plan, doesn’t sound very promising. State governments have vastly underfunded the public pensions they are already responsible for.