Quote:
Originally Posted by ecriture d'adulte
Yes, they are claimed (with matching etc) to incentivize saving. 401(k)s were never meant to be the bulk of people's retirement savings. They initially started as a means for top earners to get a reduced tax bill. Then once pensions got eliminated they became a replacement but have largely failed.
Imagine how that debate between workers and employers roughly went.
Workers: we want a package that secures retirement.
Employer: I don't want to pay you more, you guys should secure your retirement by saving.
W: Ok we want to be paid more so we can save.
E: I don't want to pay you more, you should invest in the stock market.
W: our savings are not big enough to invest after taxes and fees to trade.
E: I don't want to pay you more, we'll defer your taxes and setup joint funds and i can hire someone to manage your money collectively.
W: We can already do that, and your guy isn't beating the market and in/directly invests into the stocks you own. Why don't you just pay us more?
E: ok, I'll start matching some of your savings but only 50c on the dollar with a cap. that's basically the same as paying you more.