Hacker Cinema
The Retirement Gamble
2013 · Film · 53 min
The Retirement Gamble reveals how fees, self-dealing, and kickbacks bring great profits to Wall Street while imperiling the prospects of a secure future for individuals. The film questions who has the consumers best interests in mind, and whether there is a better way to manage our retirements.
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4 comments on Hacker News
> Why isn’t the model just to pay employees more and let them save to a 401k that they control? If you really want to understand this, it's probably worth your while to check out the Frontline piece The Retirement Gamble[0]
But a few key takeaways:
1) the 401k was never designed to be a general purpose retirement plan, 2) you would expect professional fund managers to be better at maximizing returns compared to a trucker selecting their own individual funds..., 3) if they even voluntarily invest in it in the first place. The purpose of the pension is that a pool of employees collectively invest a portion of their income by hiring professional investment managers that ostensibly know what they are doing and can stay abreast of the market. They design short and long term investment strategies to meet the defined obligations of those pension contracts. The 401k is not the same thing; we are placing the onus on the individual to research funds, understand the market, re-balance their portfolio. And in the event of a recession, the individual might be SOL if they are dependent on that portfolio.
Next time you're at a rest stop, take a sampling and see how financially literate they are and how much they know even about mutual fund selection.
[0] https://www.pbs.org/wgbh/frontline/documentary/retirement-gamble/transcript/, https://www.pbs.org/wgbh/frontline/documentary/retirement-gamble/
This was covered well in a PBS Frontline documentary, "The Pension Gamble":
https://www.pbs.org/wgbh/frontline/documentary/the-pension-gamble/
And also in their followup, "The Retirement Gamble":
https://www.pbs.org/wgbh/frontline/documentary/retirement-gamble/
Both can also be found on YouTube.
I rewatched both just a few months ago, to understand the history a bit better. The short answer is that eliminating pensions was part of a larger restructuring in corporate America, wherein major companies that became megacaps in the 20th century used the Chapter 11 bankruptcy rules as a shield to eliminate employee pensions, while the burgeoning consumer finance industry of the 1980s and 1990s was all too eager to create a new fee-generating monster in the form of 401ks.
These days, 401ks with low fee index funds are the only sane retirement tool available to middle-class workers, but much like US employer-sponsored healthcare, the system is about 10x more complex and 10x more precarious than it otherwise could be, and it benefits all sorts of ridiculous middleman paper-pushing rent-seeking corporations along the way.
I watched a good documentary about this a while back.
http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/
bogleheads.org
Also, the Frontline episode, "The Retirement Gamble"