You could likely tell not a big fan of 401s. Consider myself lucky (although it was a conscious choice) I am on a pension plan. Used to be the norm a few decades ago. Pension plan puts all the risk on the employer. If investments don’t go well they cover the losses. 401s put all the risk on the employee. Markets go to shit even 10 years out from retirement it can fuck up your plans and lifestyle. 401s wiped in 08 took almost 12 years to return to where they were, and even then they were 12 years behind as that just put them at pre-08 levels. Most participants don’t get to choose the company that manages and have very limited control of how they invest.
Pension= defined benefit. Means what you get is spelled out years in advance so you can properly plan a retirement.
401= defined contribution. Means only guarantee is how much you pay, what you get is up for grabs. People that dedicate decades to a company deserve more security.
A pension plan is good for most people, people who don't care about learning very simple investing basics, and prefer others do the work for them, people who are fine with less money and less control/freedom in exchange for more "security."
I personally prefer my 401K plan over a pension plan because it gives me far more control over my own investments and I know how to accumulate far more on my own with a 401K and other retirement account types than with a pension plan. I'll take the risk along with control of my own investments over the "security" of a pension plan any day.
Pension plans have issues and risks of their own. They can go belly up, and even if insured they will pay a reduced amount which can mess up your lifestyle in retirement. You can't take your pension early, you can't take it with you when you change jobs, etc.:
"If you’re counting on a traditional defined-benefit pension, there’s reason to worry that you might not get everything you’ve earned. About 80 percent of the 29,000 private-sector defined-benefit plans insured by the federal Pension Benefit Guaranty Corp. have been underfunded by $740 billion. State and local public employee pensions were recently in a $1 trillion hole.
Instead of beefing up plan assets, many companies have cut benefits. Employers can change their pension rules going forward using a variety of tactics, including tinkering with benefit formulas so that your eventual payout will be reduced, “freezing” the plan to stop further accruals, or terminating an underfunded plan.
“Vested” pension assets—those that legally become your property after a period of time—are generally safe thanks to federal law. But if the plan is terminated, the PBGC, which itself is $26 billion in the red, is required to pay vested benefits only up to a certain amount, which varies by the employee’s age and the year in which the plan is terminated.
Pensions of government workers aren’t covered by the agency but are often protected by state constitutions or laws. Still, 26 states have squeezed benefits for new hires, some other workers, and retirees.
Assess specific threats. They can range widely depending on your age, how many years until your retirement, and exactly how your benefits are altered. For example, a so-called hard pension freeze, which stops benefit accruals based on job tenure and compensation growth, is worse for mid-career workers, who are denied the added pension kick that late-tenure accruals tend to provide.
Earlier this year, American Airlines said it would freeze the plans of most of its 130,000 employees and retirees after threatening to terminate its pension (underfunded by $10 billion) and letting the PBGC take it over. Both options ultimately create a freeze, but a takeover would put into effect payout limits that could shortchange higher-income beneficiaries. For plans ended this year, PBGC maximum monthly benefit are $2,094 for 55-year-old workers and $4,653 for 65-year-olds."https://www.consumerreports.org/cro/magazine/2012/07/how-safe-is-your-pension/index.htmPension vs. 401(k)"A 401(k) can be more aggressively managed, and you control the growth, which can be greater than that of a pension fund, whose growth you don’t control. It can start earning money immediately, while a pension usually takes five to seven years before you are vested.
A 401(k) is also more portable; you can take it from one employer to another by rolling it over into a new 401(k) at your new job. You can also roll it over into an individual retirement account (IRA).11 A pension stays with the employer who provides it if you switch jobs. You must keep track of it, and when you are ready to retire, you have to apply for the pension before you can get your payments."https://www.investopedia.com/ask/answers/100314/whats-difference-between-401k-and-pension-plan.aspI still have the option to take say 1/3 my nest egg in retirement and buy a simple annuity if I want the "security" of a pension, but I probably won't do that.
Markets go to shit even 10 years out from retirement it can fuck up your plans and lifestyle. 401s wiped in 08 took almost 12 years to return to where they were, and even then they were 12 years behind as that just put them at pre-08 levels.
Sequence of Return Risk is very real, but there are simple ways to deal with it a decade or two around retirement for those who are risk averse: Keep 2-3 years cash to cover expenses so you don't have to sell low during market run-downs, a more conservative asset allocation, spending flexibility, a simple annuity, dividend investing, etc.
