Scrambled Nest Eggs

Pensions vs. 401(k)s: What’s the difference? A quick primer.

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since 1975, companies have gone from contributing more than 90 percent of their workers’ retirement funds to pitching in less than half. How? Mostly by switching from “defined benefit” pension plans to 401(k) and similar “defined contribution” accounts. In such a shift, employees typically lose about one-third of their benefits. Some other key differences:

Pension vs 401(k)

Company assumes risk of investing

In addition to wages

Benefit depends on your salary, work history

Guaranteed by federal government

Employer pays fees and expenses

Company must contribute unless plan shut down

Employee assumes risk

Taken out of wages

Benefit depends on stock market

No guarantee

Employee pays

Company can suspend contributions
at will

 

1983 vs 2007

Percentage of workers with retirement plans who had:

Scrambled Nest Eggs Pie Charts

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We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

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