Do not be afraid.
Supposed “news” items on the internet regarding a recent hearing in Washington have been scaring everyone by saying that the government — most likely implicating the upcoming new Obama government — wants to liquidate your 401(k) and roll it into Social Security. If you look closely enough at these news items you’ll see that they’re not news reports but blogs. Most of them are pretty fancy, leading you to believe that they’re reliable, but they’re just blogs like this one, espousing a personal opinion.
I started researching this article at Google, as I usually do, and came up with almost 700,000 hits for my search terms (congress 401), and the first 5 pages (50 items) are all blogs — every single one. Even the sites with wallstreetJournal and MSNBC in the address are merely blogs on those sites.
This is our information age, for better or worse. I like the idea of getting an opinion out there, but the least a writer can do is make it clear that it’s merely an opinion. A glitzy site with it’s own header looks like a corporate site and falsely leads one to believe that the writer is bound to some sort of code of ethics. Whether an actual corporate site actually does this as well is also debatable, and may well be the root cause of the popularity of the non-corporate site, but at least a corporate site must be fearful of a backlash against an irresponsible reporter, thereby losing revenue and reputation. Very few blogs carry a favorable reputation beyond a handful of loyal readers, so the risk of being irresponsible is small for people of small mind and limited morals.
Here’s a sampling of sites that have “reported” on the scare:
The Wall Street Journal has one too, but it was so poorly written that I chose not to include it. There are hundreds, maybe thousands, more.
Do not be afraid.
The actual transcripts from the October 7th, 2008 hearings with the Committee on Education and Labor at the US House of Representatives can be found here. This is the important stuff. This is the stuff you have to read for yourself and not let a bunch of scared people with jerky knees decide what you think or know. The comments in question came from Dr. Teresa Ghilarducci of the New School for Social Research Department of Economics. Here’s her comments (pdf [Acrobat Reader required]), and here’s her email address. What she said was:
“Congress let workers trade their 401(k) and 401(k) – type plan assets
(perhaps valued at mid-August prices) for a Guaranteed Retirement Account composed
of government bonds (earning a 3% return, adjusted for inflation). When the worker
collects Social Security, the Guaranteed Retirement Account will pay an inflation
adjusted annuity, based on the accumulated funds.”
Two sentences that have instigated thousands of bloggers to lash out.
She did say that Congress would let workers go to this new proposed plan — not force them, but the important facts are that it was an idea floated in a hearing before the Committee on Education and Labor by someone who works at a school nobody’s ever heard of. The committee’s in the House, not before the general assembly of Congress. How Chairman Rep. George Miller (D of California) decided who to hear testimony from her is beyond me — maybe she’s a friend of the family.
The fact is that it was one of many hearings called to figure out what happened to cause the meltdown of so many financial institutions. We are spending $700 billion to help them, and I support the hearings. This particular hearing was about protecting people’s retirement investments, and other ideas were put out as well, including one that forces employers to put more money toward an employee’s 401(k) when the economy was lagging. I’m not sure that was a good idea either, but it has yet to take the fiery path that Ghilarducci’s did.
I do think it would be a good thing to protect people’s investments a bit — there’s no reason that someone who doesn’t have time to micromanage their 401(k), or someone who makes a bad selection, should be flat-broke because some self-centered CEO took his company down the crapper. It’s easy for someone in their 20s with good investments to say “stay away from my 401(k),” but what happens when that person nears retirement and the whole thing gets wiped out by circumstances beyond his control? I suspect he’d be looking for some assistance from anywhere he could get it.
Do not be afraid.
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