Something good happened in New Jersey this week (that’s the first time we’ve ever written that sentence). Gov. Chris Christie signed a compromise bill that’s a variation of numerous laws in other states establishing government-run 401(k)s. If your employer is too small—or too cheap—to offer a plan, the benevolent state in which you reside will do it for you. If only …
We’ve noted the potential flaws in doing so, as have many others (lack of portability, taxpayer liability, etc.). The great thing about the Garden State is that it only establishes a marketplace to encourage 401(k) expansion, rather than requiring it like other states.
While we’d normally advocate for a barrel of monkeys over incompetent politicians when it comes to meddling with Americans’ retirement, we also admit we’re torn, as Social Security (despite long-term solvency concerns) is generally successful and incredibly popular, one of the only government programs to claim that mantle. Even if you disagree with this pillar of the New Deal, when combined correctly it unquestionably gives the 401(k) participant portfolio a longevity boost at a time when baby boomers need it most.
The Jersey plan also protects the private sector and lets 401(k) advisors do what they do best without fear of being crowded out. It’s exactly the kind of plan the industry should encourage, and all advisors get behind.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
