401(k) plans have gone from 0 to about $5 trillion in assets in just 35 years. They have become THE dominant way that people save for retirement today as pensions have become a thing of the past. Today on the NGPF Podcast, you will hear from the "Father of the 401(k), Ted Benna." You will hear about his "aha moment" that led to the birth of the 401(k), the challenges of getting employers and employees to adopt the program in the early years and his opinion of 401(k) plans today. Enjoy!

Details:

• 0:00–1:20 - Introduction
• 1:21–4:00 - His background and childhood money story
• 4:01–8:03 - His "aha moment" and the birth of the 401(k)
• 8:04–16:26 - Entrepreneurship: benefit consulting business & how he built it
• 16:27–20:27 - The year was 1978, and thus the 401(k) was created
• 20:28–25:44 - Testing, testing, 4-0-1: the pioneers try their hand
• 25:45–26:45 - It’s all smoke & mirrors when garnering media attention
• 26:46–30:19 - Initial reactions, facing barriers, and “enrollment meeting” strategies
• 30:20–34:18 - Investment choices and early implementation
• 34:19–37:50 - Short-term to long-term savings & the end to the glorified “Christmas clubs”
• 37:51–40:38 - Ted’s inside man, Secretary of Transportation, Andrew “Drew” Lewis
• 40:39–43:30 - The unfortunate IRA expansion and the 401(k)’s near death experience
• 43:31–45:17 -“Those who do not learn history are doomed to repeat it” –Karl Marx
• 45:18–47:12 - Where does the current presidential administration go tax from here?
• 47:13–51:04 - The long game of “forced savings”
• 51:05–57:39 - The challenge for investors and the problem for employers today
• 57:40–59:02 - More 401(k) plans, more problems (and Ted’s solution)
• 59:46–1:12:16 - Embracing target date funds
• 1:12:17–1:14:26 - How Ted would teach investing to students
• 1:14:27–1:17:32 - Are you a spender or saver?
• 1:17:49–1:19:26 - Life advice from Ted Benna
• 1:19:27–1:20:16 Conclusion

Resources

• Ted's website: 
  • Father of the 401(k)
  • History of the 401(k)
    • 401: section regarding retirement plans
    • Paragraph “k” added in a tax bill in 1978
    • Political fluke
  • “Operation Freedom: Escaping These High Investment Fees”–chapter in his 5th book (yet to be released)

• Ted's Books

  • How to Set Up Your Own 401(k) Guide
  • Tips for Successfully Managing Your 401(k)
  • 401(k)s for Dummies
  • Managing Your Money All-In-One
   
• Research on Educators’ 403(b) plan
• Early Mutual Fund offerings in 401(k) plans 
  • Fidelity Magellan, run by legendary Peter Lynch
  • Vanguard Windsor

• NGPF Resources
  • NGPF Case Study: Compound My Interest in 401(k)s
  • NGPF Project: First Day on the Job Means Paperwork

Quotes

• “[The] 401(k) made [mutual fund businesses] what they are today”
• “You have to start early on and have that mentality that saving is a priority”

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.