Scrambled Nest Eggs

Pensions vs. 401(k)s: What’s the difference? A quick primer.

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since 1975, companies have gone from contributing more than 90 percent of their workers’ retirement funds to pitching in less than half. How? Mostly by switching from “defined benefit” pension plans to 401(k) and similar “defined contribution” accounts. In such a shift, employees typically lose about one-third of their benefits. Some other key differences:

Pension vs 401(k)

Company assumes risk of investing

In addition to wages

Benefit depends on your salary, work history

Guaranteed by federal government

Employer pays fees and expenses

Company must contribute unless plan shut down

Employee assumes risk

Taken out of wages

Benefit depends on stock market

No guarantee

Employee pays

Company can suspend contributions
at will

 

1983 vs 2007

Percentage of workers with retirement plans who had:

Scrambled Nest Eggs Pie Charts

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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