Is the 401(k) Obsolete?

That seems to be the view of Aaron Brown, writing for Bloomberg News, in an article titled “401(k) Plans No Longer Make Much Sense for Savers”.  Susan Tompor, a columnist for the Detroit Free Press disagrees and has written an exceptional rebuttal titled, “Does a 401(k) plan still make sense for you? It might, or might not”.

We agree with Susan.  While the 401(k) may not be the perfect savings vehicle, it is still better than most of the alternatives, in part because of the discipline inherent in the structure.  Sure, you can make a case for a self-managed approach to saving utilizing low cost ETFs.  However, investing as a D-I-Y project has significant risks, perhaps less than do-it-yourself surgery, but still potentially problematical.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA