How many years of labor does it take to earn 20 years retirement in private employment in the US? With a 401K paid by the employer, it can be done in only 400 years.

Some government jobs provide retirement benefits that last throughot the workers retirement. It is not even uncommon to see silent generation government workers work 20 years, and retire at full benefits for 40 or 50 years.
But what about the private sector, in the employment of a publicly traded corporation? Well in the past it was traditionally that a person usually worked and retired and received company retirement benefits. It was common for a person to work 40 years and retire for 20 years or more comfortably.

Now days, many companies offer no retirement benefits as it is not mandated that they do such. If a company does offer a retirement plan as a recuiting tool, then in order to shed the cost of such retirement plans from the corporations profit ledgers, it is common for a company to instead provide a small payment into an employees 401K plan.
This “retirement plan” is commonly at 5% of a employees wages. This means that if a person wants a single years worth of retirement, they have to work 20 years.

This equation: 20 years work * 5% of a years pay, per year worked = 1 year retirement.

So for every 20 years of labor, a person gets 1 year retirement. That means that if you now want to retire for 20 years, you have to work for that company for 400 years.
Seriously, that is 400 years, yes four hundred years. Does anyone really do this?

The argument that the 401K should increase in value is faulty, as typical stock and bond 401K's value really only increases in line with true inflation. So then should the employee be paying for their own retirement on the side? If so, then why is it called a "retirement at company B" plan and not a "retire on your own time" plan?

For those who have no plan, social security is the only hope, and it is a fading hope.
It was that workers paid 1% to 3% social security tax and only on their first $3000 of earnings, and retired at age 62 with healthy benefits.
Now workers pay 12.6% social security tax on their first $142,800 in income, retire at age 67, with much less healthy benefits. Add to that, then they retire into a system that is expected to be broke in a decade, and will pay even less than was originally expected.

So should we keep working those 400 years and earn a full retirement, or look at other solutions? Learn more.

Copyright 2021