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American Morning
Minding Your Business: Fleeing the 401(k)
Aired November 17, 2003 - 07:54 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Business-wise, 401(k) plans let workers save for their retirement with a tax incentive, no less. So, why are more and more U.S. workers dropping out?
Andy Serwer is "Minding Your Business" this morning.
Hey, Andy. That's kind of shocking, isn't it?
ANDY SERWER, "FORTUNE" MAGAZINE: It is. Good morning, Soledad. And we'll talk about why in a second.
Kind of a financial report card for Americans this morning, and I've got to give us a C-minus at best here. This is not good stuff.
A new survey by plansponsor.com, an article in "USA Today," 3,000 people surveyed showed the number of people participating in 401(k)s dropping, dropping, dropping 3.6 percentage points, that is, there, down to less than three-quarters of Americans eligible -- the second year in a row that this number has dropped after 20 years of going up.
Now, you asked why, Soledad? No. 1, Enron, fears of these 401(k)s dropping to zero in some of these crises where these companies were accused of skullduggery. No. 2, people just need the money. I mean, they don't have the extra money. Even though you're getting matched free money, they don't have enough to put in. And, you know, it's really too bad, because it would have been a great time to be in these plans buying stock while it was cheap over the past couple of years.
O'BRIEN: It's a sign of the health of the economy then.
SERWER: Yes, absolutely.
A couple of other little tidbits here. Only 42 percent of Americans put away money for retirement outside of 401(k)s, the lowest since 1980.
O'BRIEN: Yes.
SERWER: And then bankruptcies are just really going through the roof here. This is a story we've seen over the past couple years, a trend continuing, but a new number out. A government study shows that basically 98 percent, what is that? That's a double. I mean, you can see it's doubled over the past 10 years. This is both personal and business bankruptcies.
A lot of people, Soledad, say it's too easy to declare bankruptcy in the United States. That's kind of a controversy.
O'BRIEN: So, maybe that's why that they're so high.
SERWER: Right, that's right. But it does reflect the fact that people are strapped and stretched.
O'BRIEN: All right, Andy, thanks, as always.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired November 17, 2003 - 07:54 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Business-wise, 401(k) plans let workers save for their retirement with a tax incentive, no less. So, why are more and more U.S. workers dropping out?
Andy Serwer is "Minding Your Business" this morning.
Hey, Andy. That's kind of shocking, isn't it?
ANDY SERWER, "FORTUNE" MAGAZINE: It is. Good morning, Soledad. And we'll talk about why in a second.
Kind of a financial report card for Americans this morning, and I've got to give us a C-minus at best here. This is not good stuff.
A new survey by plansponsor.com, an article in "USA Today," 3,000 people surveyed showed the number of people participating in 401(k)s dropping, dropping, dropping 3.6 percentage points, that is, there, down to less than three-quarters of Americans eligible -- the second year in a row that this number has dropped after 20 years of going up.
Now, you asked why, Soledad? No. 1, Enron, fears of these 401(k)s dropping to zero in some of these crises where these companies were accused of skullduggery. No. 2, people just need the money. I mean, they don't have the extra money. Even though you're getting matched free money, they don't have enough to put in. And, you know, it's really too bad, because it would have been a great time to be in these plans buying stock while it was cheap over the past couple of years.
O'BRIEN: It's a sign of the health of the economy then.
SERWER: Yes, absolutely.
A couple of other little tidbits here. Only 42 percent of Americans put away money for retirement outside of 401(k)s, the lowest since 1980.
O'BRIEN: Yes.
SERWER: And then bankruptcies are just really going through the roof here. This is a story we've seen over the past couple years, a trend continuing, but a new number out. A government study shows that basically 98 percent, what is that? That's a double. I mean, you can see it's doubled over the past 10 years. This is both personal and business bankruptcies.
A lot of people, Soledad, say it's too easy to declare bankruptcy in the United States. That's kind of a controversy.
O'BRIEN: So, maybe that's why that they're so high.
SERWER: Right, that's right. But it does reflect the fact that people are strapped and stretched.
O'BRIEN: All right, Andy, thanks, as always.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
