The Great 401(k) Hoax: What You Need to Know to Protect Your Family and Your Future

by Bill Wolman, Anne Colamosca, William Wolman

According to business and finance journalists Bill Wolman and Anne Colamosca, the American public has been hoodwinked: 401(k)s, the most popular mechanism for retirement investing, were established to satisfy corporate, not individual, interests. They are replacing defined benefit-pension plans at an alarming rate and are vulnerable to the vicissitudes of the market, which--if history serves as our guide--is destined for at least a decade of lackluster performance. Drawing on primary historical and contemporary data, Wolman and Colamosca build a compelling case against the 401(k) as a tool for ensuring long-term financial security. They urge individuals and families to diversify their savings and investments, building conservative portfolios that include bonds, high-dividend stocks, and savings. In the process, they explore the colorful social history of our love-hate relationship with the stock market and address many key questions facing any family today, such as: How do I accumulate enough wealth to educate my children and retire comfortably? How secure are my sources of income and how can I anticipate change? Timely and incisive, The Great 401(k) Hoax is guaranteed to inspire debate and action from the water cooler to the boardroom to the voting booth.

256 pages, Hardcover

First published May 1, 2002

Reviews

[John · Rating 4 out of 5]

The counterbalance. In the 90s, working people got sucked up into the ballyhoo of the stock market and the promise of riches, if not immediately, then at least in retirement. Invest in stocks, maintain a balanced asset allocation, and you'll be a millionaire by 65. This book is the antidote to all of that snake oil. First, the stock market's value represents total profits expected in the economy, and the authors show that there is no way to support all Amerian retirees based on those profits. Second, Wall Street is a marketing machine with the mission to sell stocks under any circumstances. That is, it only has one type of advice: now is the time to invest in stocks. Third, the 401(k) is a great money-saver for corporations compared to defined benefit pension plans. Finally, the investing advice this book gave in 2002 is that the stock market is going to stagnate for 20 years, which means stocks are a bad investment for a while. This appears to have been true for the remainder of the decade since the book was published. The antidote? Invest in bonds during periods of stagnation; lobby for the preservation of pension plans and Social Security; and resist Wall Street's marketing monster with all of your might -- never take investing and retirement advice from an industry that stands to profit (incredibly) from your decision to buy, buy, buy the financial instruments that are their specialty.

[Paul · Rating 2 out of 5]

This book didn’t age well.

[Sam · Rating 2 out of 5]

Makes the VERY liberal case for index investing and EFH portfolio design.