When the 401(k) plan was created approximately 35 years ago, it was envisioned as a supplemental savings plan rather than as a retirement plan. What is the difference? In a word: “income.”
The defined benefit (DB) pension plans of yesteryear provided guaranteed lifelong income, much in the same way that the Social Security system does. In contrast, fewer than one in five 401(k) plans offer participants an opportunity to convert their accounts into guaranteed lifelong income.
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Source: Jeffery Brown (www.forbes.com)
