Fairly or unfairly, the 401(k) is getting an awfully bad rap lately. Among the most recent jabs was from last Sunday's piece on "60 Minutes," which profiled tales of ordinary Americans who -- although traveling different career and financial paths -- met the same fate: unable to secure the retirement they'd dreamed of, due to retirement savings losses.
The segment also interviewed 401(k) heavyweights David Wray, president of the Profit Sharing/401k Council of America, and Brooks Hamilton, who helped design retirement plans for some of the country's largest corporations.
Wray, maintaining that the 401(k) is the best retirement vehicle the nation has, commented that the economic collapse and resulting stock market plunge that contributed to the massive 401(k) losses is "not a 401(k) problem. That is our entire investment system. In America, it's a society based on freedom and choice and personal responsibility. We need to help [investors] understand these responsibilities and execute them to the best they can. 401(k) is part of that. There are no guarantees."
Hamilton, who called the quality of mutual funds in 401(k)s "mediocre," also observed that 401(k)s were meant to be part of a three-legged stool that included Social Security and defined benefit plans. However, he noted, "The three-legged stool, if you will, has gone to two legs and it's wobbly."
