Retirement and investment experts have a litany of complaints about 401(k) plans: fees are often too high, returns are often too low and it’s difficult for unsophisticated investors to figure out which assets to choose in their plans.
Vanguard Group founder John Bogle is part of the chorus.
“We have a 401(k) system that is profoundly flawed, even as it has moved to the position of pre-eminence in our retirement system,” he tells The New York Times.
Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.
“There are elements of the 401(k) system that are just unacceptable if you’re trying to build a system that accumulates for retirement.”
One tip Bogle offers for 401(k) investors is to choose index funds, thereby minimizing fees.
Almost all experts agree that you can maximize your retirement kitty by pumping money into your 401k early and often.
“The trick is to contribute from Day 1 if your employer has a plan, and leave the money there,” Alicia Munnell, a retirement specialist at Boston College, tells The Times.
A survey the school conducted shows that among workers whose employers have a 401(k) plan, 21 percent decline to participate, she says.
Confirming Bogle’s criticism, even efforts to reform the 401(k) system have their limits.
For example, a new study shows that a recent rule requiring companies that manage 401(k) plans to disclose what they charge employers for their services has given many small businesses more questions than answers, Reuters reports.
Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.
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