The 401(k) Is Younger Than Star Wars
When we try to make our financial futures a certainty, we can forget an important fact: the rules of retirement in America aren't settled, and a lot of what feels permanent about our financial lives is much younger than we tend to assume. The 401(k) is a good example of this. Most people treat it as something that’s always been there. In the scheme of things though, it's young. And its origins are less grand and intentional than you’d think.
In 1978, a fairly simple change was made to the tax code to limit executive perks. A couple years later, Ted Benna, an employee at a small firm (in Pennsylvania!) was looking to help his client, and noticed this change could be interpreted in a way nobody had tried yet. As it often goes, his client passed on the idea, so Benna ended up using it at his own company instead.
That’s sort of it. No lobbying or grand plans from members of government, and no nation-wide announcement that the retirement landscape had begun a huge shift. Just a guy who noticed an opportunity before someone else did. Now he’s regularly referred to as “the Father of the 401(k)”.
Jump to today, there's a lot of money sitting in 401(k) accounts (around seven trillion). Ted Benna is still working in Pennsylvania, and occasionally gives interviews where he talks about what he’d do differently if he were starting over.
Earlier we said its origins aren't grand or intentional. That's understating it a bit. Its existence is almost by accident, with cascading effects that shifted the entire financial landscape, playing a major role in the growth of firms like Vanguard and Fidelity. It’s also younger than some members of Gen-X, and younger than Star Wars.
We try to make our financial futures a certainty, but don't forget that major shifts have already happened in our lifetime, and there's no reason to assume the next one is far off. There won’t be a neon sign, and it won’t always be fast. The 401(k) didn’t have wide-spread adoption for years, and now its name has become synonymous with retirement accounts across our culture.
Have a plan and try to stick to it, but don’t forget the status quo rarely stays the same for long.
Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Laurel Financial Group is a separate entity from WFAFN.
In 1978, a fairly simple change was made to the tax code to limit executive perks. A couple years later, Ted Benna, an employee at a small firm (in Pennsylvania!) was looking to help his client, and noticed this change could be interpreted in a way nobody had tried yet. As it often goes, his client passed on the idea, so Benna ended up using it at his own company instead.
That’s sort of it. No lobbying or grand plans from members of government, and no nation-wide announcement that the retirement landscape had begun a huge shift. Just a guy who noticed an opportunity before someone else did. Now he’s regularly referred to as “the Father of the 401(k)”.
Jump to today, there's a lot of money sitting in 401(k) accounts (around seven trillion). Ted Benna is still working in Pennsylvania, and occasionally gives interviews where he talks about what he’d do differently if he were starting over.
Earlier we said its origins aren't grand or intentional. That's understating it a bit. Its existence is almost by accident, with cascading effects that shifted the entire financial landscape, playing a major role in the growth of firms like Vanguard and Fidelity. It’s also younger than some members of Gen-X, and younger than Star Wars.
We try to make our financial futures a certainty, but don't forget that major shifts have already happened in our lifetime, and there's no reason to assume the next one is far off. There won’t be a neon sign, and it won’t always be fast. The 401(k) didn’t have wide-spread adoption for years, and now its name has become synonymous with retirement accounts across our culture.
Have a plan and try to stick to it, but don’t forget the status quo rarely stays the same for long.
Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Laurel Financial Group is a separate entity from WFAFN.