GLOSSARY OF TERMS
The current economic crisis has brought these esoteric terms into mainstream conversation.
| TERMS | | 401K | | |
An investment and/or savings plan that allows employees to save money in a tax-free account. These defined contribution plans create a tax incentive to save money for retirement. 401(k)s have made news during the recent financial crisis because investors have seen the value of their accounts reduced by steep stock market declines.
While defined contribution plans have worked well in getting workers to start saving for retirement, the stock market's downturn and the investment risks associated with 401(k) plans has frightened many plan participants.
By some estimates, the U.S. financial crisis had resulted in $2 trillion in losses in the months preceding October 2008. The impact has been so severe that polls show many workers who are 45 and older now believe they will have to delay their retirement plans for several years.
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