The Retirement Gamble
Why the old system changed, the newscasters Marcela Gavira and Martin Smith start by
indicating that the number of Americans borrowing from the 401(k) was increasing. The old
system failed when it became too expensive from the standpoint of an employer since they were
forced to efficiently manage the investment risk, which was becoming a hard thing for them to
In 401(k), the employee and employer both have to bear the risk. The employee might
not know how long they will live. They might save faithfully and diligently only to die earlier.
The employer might promise to cater for their expenses after saving for their entire lives once
they retire only for the economy to perform poorly.
Question Three A
Advantages of 401(k) were that it was much more comfortable since, by 1970, more than
42 percent of the American was entitled to a pension which had been guaranteed by their
employers and right gets an excellent salary and benefits on retiring. Therefore, 401(k) plan was
a more natural way to ensure that employees would have a decent life upon retirement.
Question Three B
The challenge associated with 401(k) was that the burden was taken from the traditional
pension plans and was placed on individuals and corporations. The individuals and corporations
would grow greedy over time and charge hefty fees on the employees who could have added up
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for an extended period. The employees, as a result, felt manipulated as some lacked an
The Morgan Asset Management indicated that in 1981, a majority of people knew
nothing about the 401(k). It became a lexicon by 1989, and in the 90s, all large employees had
plans. In my opinion, the country was quick to accept a new thing that they had no idea what
would happen if it failed or someone lost a job.
The department of labor in the United States, according to Martin Smith, is the body that
is mandated by the government to regulate the retirement plan of the employees in the country.
However, they had failed to predict the failure of 401(k), especially during the great depression
that devastated the country, and many people lost their jobs as a result.
In my opinion, on plans and managed plans is that people should not just buy an idea just
for the sake, the 401(k) plan, but the pension scheme was a managed plan. A managed plan has
the ability to predict the worst-case scenario and offer measures that could be put in place to
ensure that the public will remain afloat.
A fiduciary advisor from the video appears to be an individual or an organization
mandated to manage the assets of another person, the same way the 401(k) were doing. The
fiduciary advisor seems different from a non-fiduciary advisor by in that the fiduciary is
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registered while non-fiduciary advisors are not and therefore cannot manage the assets of other
My primary concern was why the government allowed a program that had not been tested
to replace the already existing and functioning retirement plan. The public was not educated
adequately, and some did not know what they were getting themselves into.
My impression from the video was a concern of all the employees who lost their savings
through the 401(k) plans during the great depression and economic crush. Some lost their jobs
even. Their lives became miserable while they had done so much to ensure that they would have
a decent retirement.
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SEASON 2013: EPISODE 8. The Retirement Gamble raises troubling questions about how
America’s financial institutions protect our retirement savings. Retrieved from