401(k) plans favor rich people. Here's how to change that.
CBSN
The 401(k) is the most common way in America to save money for retirement. But even before the coronavirus pandemic, that approach was failing most workers. Fully half of U.S. families have no retirement accounts whatsoever, according to the Federal Reserve.
Meanwhile, those who earn less tend to be left out: Less than 40% of lower-paid workers have retirement accounts, compared with 80% of middle- and upper-income families. Workers who do try to squirrel something away often fall woefully short, not saving enough, starting too late, or losing money through bad investment decisions or excessive fees. The median 401(k) today is worth a paltry $25,000, according to Vanguard. One reason for this disparity is that lower-paid workers have less money to start with, and most of it is spent on day-to-day living expenses. What's more, the main draw of a 401(k) — the ability to save tax-free — is essentially a subsidy that doesn't do much for low-wage earners given that they don't pay much in income taxes. In other words, a low-paid worker gets no tax advantage from putting $10 into a retirement account and would likely find it more helpful to put the money toward their bills.Ashley White received her earliest combat action badge from the United States Army soon after the first lieutenant arrived in Afghanistan. The silver military award, recognizing soldiers who've been personally engaged by an attacker during conflict, was considered an achievement in and of itself as well as an affirming rite of passage for the newly deployed. White had earned it for using her own body to shield a group of civilian women and children from gunfire that broke out in the midst of her third mission in Kandahar province. All of them survived. She never mentioned the badge to anyone in her battalion.
The knock at the door came at nighttime on Mother's Day 2008 in Oregon, where Jessica Ellis' parents lived. It was around 9:20 p.m. and his wife, Linda, was already in bed; her father Steve Ellis told CBS News, that he thought someone let their animals out — but two soldiers in Class A uniforms were standing at the door.