Most people here in the U.S. are somewhat fortunate. Beginning in 1978, the 401's were enacted into the IRS rules that allowed employees to make contributions to a fund and also allowed the employer to contribute to the employee's fund as well. People that jumped on-board as soon as they were eligible and remained committed to making their contributions were able to have a nice little nest egg by the time retirement rolled around, so long as they did not withdraw or borrow from their fund. For most, these contributions were tax deferred until retirement, unless the employee invested into an after-tax fund.
In 2006, I believe, the Roth IRA came along that, in my opinion, was or is an even better deal. The main problem or concern with all of these investment instruments is just that; they are investment instruments that need to be carefully monitored, especially if the employee has invested his money in mutual funds, which are comprised of stocks, bonds and some cash funds. As we saw in 2009-2010, many people lost a large portion of their 401(k) fund, or their Retirement IRA when the recession hit. Many people had the idea that their financial investment house that was holding their money was looking out for them and would have moved their money into a safe haven to prevent from having heavy losses, but normally, that does not work that way, unless one pays for that service. In other word, most of these types of accounts are self-managed.
I have heard a lot of horror stories living part time here in a retirement community in Florida. I really feel bad for them. One gentleman that was a licensed insurance broker for Prudential when he worked told me that he lost about 75% of his retirement IRA because self admittedly he was unaware of how the fund worked. He did not know or understand that he was the one making the decisions on controlling the money in his account. Today, he has to struggle, but he says he is getting by.
