Is It Time to Rethink 401(k)s?

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I got my education through the Bogleheads.org web site (specifically the Bogleheads Wiki). Prior to that I had no clue what I was doing with the retirement savings as they were scattered in five 401(k) plans with former employers in mutual funds with high fees.
I consolidated them into one rollover IRA, with the exception of my current employers 401(k), which I now max out every year. I choose Vanguard Index Funds in my rollover IRA and 401(k) because of the low expense ratio, and I've created a lazy portfolio for myself. Investing can be simple if you know how. The Bogleheads taught me how to do it.

Nervous Cat of 4:40PM May 15, 2012

I love my 401K and Simple IRA plans - they need to be kept (or TRULY improved, if perhaps say, the Government wants to match my contribution also!!). But, over the years, I've noticed a few things that cause problems for WAY too many people.
1) Lack of participation. "I can't afford/don't want to participate in the company 401K plan". These people invariably smoke like chimneys, drink like fish, and never have any money.
2) Using their "loan" option as an ATM. As soon as some people get a little bit saved up, they immediately take money out of the plan, saying that they're paying themselves the interest anyway.
3) Putting the entire contribution into one sector only - all FOREIGN stock mutual funds because they don't trust the American economy, or all in their company stock because it is "different" (read "better") than every other company in the country, or what I've seen an awful lot of - the entire sum in the GUARANTEED option (at what, say 0.30% APY!!).
I completely understand that not every person is capable of becoming an investing expert. Heck, I've been very actively investing for 18+ years now and I still have questions. But, doing SOMETHING now, watching, learning and evaluating, sure beats doing NOTHING, and then hoping and praying that the government (or "someone") will come riding in and save the day - that sure ain't gonna happen!

Renard of IN 9:18PM May 14, 2012

All of this advice works only if there are financially sound ways for small investors to grow their money within the confines of 401(k) rules. In my experience, there are not, especially for older workers with healthy aversion to risk.
My two conservative target retirement funds ate all my employer's contributions -- back when there was such a thing -- and nicked mine. Luckily I have some long-term bonds that are still paying dividends. The market is too volatile for me to stomach. I'd like to know what percentage of employers still match contributions for line workers (not just execs). Seems to me they've found a way to divest themselves of any responsibility for their workers' future well-being. So thanks for the advice, but it seems to me 401(k)s are just ways to further empty our pockets.

Old skeptic of UT 12:02PM May 14, 2012