Today’s revelations of the blindingly obvious: Poorer workers are more likely to cash out 401ks when losing their jobs than are executives and professionals. Yet both groups eat, live in shelters, and so forth!
The research: “Nearly Half of U.S. Employees Cash Out Their 401(k) Accounts When Leaving Their Jobs“, Hewitt Associates, 28 October 2009. These consultants worry about the lack of discipline and foresight among the lower classes and young people. Pamela Hess, Hewitt’s director of retirement research, explains:
“Particularly during the economic downturn, employers and financial advisors have been increasingly vocal about the negative impact that cashing out of a 401(k) plan has on retirement savings. But employees don’t seem to be getting the message. In a society where less than 1 in 5 workers will likely be able to meet their needs in retirement, employers and policymakers need to work together to implement solutions that change employee behaviors and reduce cash-out rates. Otherwise, millions of Americans who rely on defined contribution plans will find themselves unable to achieve a financially secure retirement.”
Wonderful advice for unemployed members of the worker class: give up eating, live under a bridge. These are the keys to a secure retirement.
Seriously, nowhere in this does it suggest that unemployed people might need their retirement money in order to survive. Let’s look at some statistics Hewitt’s research team ignores.
From Calculated Risk, % of the civilian labor force unemployed for over 26 weeks. These people have lost not just their jobs, but in most cases their medical insurance, disability insurance, and life insurance (provide though group employee plans for most people). After 26 weeks their savings are often exhausted.
Another perspective on the plight of the unemployed, by David Altig (SVP, research director at the Atlanta Fed), posted at Macroblog, 21 October 2009:
In next week’s issue of Revelations of the Blindingly Obvious: Articles in the Harvard Law Journal proves the perfection of the US legal system by showing that both rich and poor have an equal right to sleep under bridges!
To see other other callous, even obtuse, comments about the unemployed
The comments are filled with people denouncing aid to the unemployed. Almost beyond belief.
- Why has the worst recession since the 1930’s had such a mild effect on America?, 14 July 2009
- Update: why has the worst recession since the 1930’s had so little impact on the economy?, 5 October 2009
For more information from the FM site
To read other articles about these things, see the FM reference page on the right side menu bar. Of esp relevance to this topic:
- Posts about Financial crisis – what’s happening? how will this end? – Esp section 8 about solutions
- Good news about America, a collection of articles!
Reference pages about other topics appear on the right side menu bar, including About the FM website page.
Some posts discussing solutions:
- A solution to our financial crisis, in 3 steps
- Stabilize the financial system.
- Stabilize the economy.
- Arrange long-term financing for steps #1 and #2 with our foreign creditors.
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