"God Bless the Dream, the Dreamer and the Result." 

Monday, October 13, 2008

Sinking 401(k)s Raise Debate on How to Save

Tumbling stock markets have cracked open the piggy bank that many Americans use to store retirement savings—401(k) accounts—sparking fresh debate about how best to save money, the Washington Post reports. Supporters argue that 401(k)s offer bigger rewards than traditional pensions, which are less exposed to market turbulence. But they lose more on average too—between 7.2% and 11.2% over the last year.

Critics argue that plummeting 401(k)s hurt the economy in other ways, like forcing people to work past age 65, freezing young people out of the job market. "That has a perverse effect on the business cycle," one analyst said. Either way, experts advise against pulling out of your 401(k) unless you can't sleep at night. Hold on tight, they say, until you regain your losses.

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