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If your year-end 401(k) statement made you ill, I have one consolation for you: It could be worse. How’s that possible, given how horrible last year was for investors?
Simple. If you’re not close to retirement, you’ve got time to recover. If you’re in the retirement-age zone, as I am (I’m 64), at least you’ve got the option of hanging on until things get better. If you’re in the mandatory-withdrawal part of life (older than 70 1/2 ) or just need some retirement cash, you can take a minimal distribution this year and hope for the best.
If, however, you were forced to buy a lifetime annuity with your current balance — when you buy such an annuity, you trade your cash for a series of guaranteed payments for the rest of your life — you’d be making your loss permanent. That’s how things could be worse.
That is what could have happened to many people under President Bush’s proposed Social Security privatization program. It would have required people of modest and very modest means who invested their Social Security taxes in the market to turn some or all of those accounts into annuities when they hit retirement age.
More from Ken Silverstein:
Perspective — October 23, 2013, 8:00 am
How pro-oil Louisiana politicians have shaped American environmental policy
Postcard — October 16, 2013, 8:00 am
A trip to one of the properties at issue in Louisiana’s oil-pollution lawsuits
Acres of hemp grown by “patriotic‚” U.S. farmers in 1942 at the behest of the U.S. government:
A study suggested that the health effects of exposure to nuclear radiation at Chernobyl were no worse than ill health resulting from smoking and normal urban air pollution.
Greenpeace apologized after activists accidentally defaced the site of Peru’s 2,000-year-old Nazca Lines when they unfurled cloth letters reading “time for change” near the ancient sand drawings. “We fully understand,” the group wrote in a statement, “that this looks bad.”
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“I hope that after reading the following pages the leaders of the Y. M. C. A. will start a campaign to induce good young men to do nothing. If so, I shall not have lived in vain.”