Fact: In the 1960s when the 401k account first came out they were not called "retirement accounts" instead the government called the "government tax-sheltered accounts". The linkage of 401k and retirement accounts that we know today was coined by the private Investment Industry. In a way the big firms such as Vanguard, T Row Price, Schwab,... found that they were able to sell their once unpopular mutual funds in these account and thus opened an untapped market.
Now this was not all bad because it allowed stocks for the common man and offered an alternative to putting money away under your mattress or blindly depending on your company pension.
The three downsides of a 401k is that:
1) Companies typically charge .02-2% expense ratio. This is a big deal when especially computed over 20+ years of compounding. .05% seems small but it could mean 10% less money at the end if stocks go up 5% every year.
2) This transitions into the fact that this is 2010s and into the future. This prolonged economic slow down is not going anywhere. You know those people who are waiting to sell their homes at pre 2008 levels... well they better get comfortable because when you draw your lines of average growth we may not get there to 2025. I digressed I'm just making a point that the days of 20% gains per year are over. Experts say to expect 5-7% annual growth for the next generation.
3) The selection of funds in a company sponsored 401k program are typically crap since it is a limited selection and bad expense fee structure. It is like going to the restaurant and the waiter saying you can just order the hamburger. At the very least, transfer your money from your 401k to a Roth IRA or IRA but make sure your are taking advantage of any company match if available to you.
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