Nobody Can Retire

Five reasons to throw in the towel on your 401(k)

Anna Murray


Photo by Aaron Burden on Unsplash

No one has saved enough money to retire.

Seriously, have you?

Here are five reasons to consider your 401(k) a lost cause.

1. The 401(k) account was never designed to be an actual retirement plan

The 401(k) was invented by mistake in 1978.

Most people are too young to remember a time before 401(k)s — when there was something called an employer pension.

In 1978, congress passed a bill to change the tax code. The tax law had a new provision allowing people to defer a portion of their salary tax free. The sub-paragraph containing this new rule was, “Section 401(k).”

Almost immediately, lightbulbs ignited in employers’ minds. Here was a golden opportunity to phase out traditional pensions in favor of 401(k)s! By 1983, half of all large firms offered 401(k)s instead of pensions.

It’s not hard to see why. In the old system, corporations paid for pensions and took all the risk. In the new system, the workers would take on both the cost and risk.

Beginning as a sub-section of a tax-code rewrite, soon “401(k)” became the strange but ubiquitous synonym for “everyone’s retirement.”

2. 401(k) plans set you up to fail

Everyone knows weight-loss programs don’t work. Unfortunately, the same is true for saving money in 401(k)s.

We know this from the Marshmallow Experiment.

Forty years ago, Stamford researchers offered children a choice: Eat one marshmallow now. Or wait 15 minutes and have TWO marshmallows. Most kids ate the one marshmallow immediately. Some waited. Later research showed those willing to wait had higher test scores and improved metrics in many areas. Thus demonstrating patience is a virtue.

The Marshmallow Experiment had a fascinating and much-overlooked side story with significance for retirement:

If the two-marshmallow payoff was not 100% reliable, kids ceased to wait for it. In other words, if researchers promised a second marshmallow and didn’t deliver, the…



Anna Murray

Tech expert, novelist, and essay writer with an ticklish funny bone. My novel, “Greedy Heart,” is First Best Book Finalist in the VIVIAN Awards.