I was reading the section titled, "Hey, Big Spender" and a question occurred to me that I thought maybe some of you might know the answer to.

My wife and I both turned 42 this year and with 20+ years till we can retire, we have been operating on the assumption that social security and medicare will be gone by the time we retire.  Therefore she is putting as much as she can into her 401K (she works for GSK) and I have been putting money into a 403B.  After reading this section, I am more than a little scared that the PA state retirement system may be broke by the time I retire as well.

My question is, why are there no 401K's available for public sector employees.  My wife puts money into a 401K, which her company will then match up to a certain amount.  This money will serve as her retirement funds.  This is what the authors call a "defined contribution" plan.  It can never be underfunded and assuming it is invested prudently (we get to choose how it is invested) and the stock market doesn't totally tank, it will be there for us when we hit 65.

As a teacher, I am putting money into a retirement system (we have no choice in this, and essentially the money they are taking out of my paycheck today is going to pay current retirees), with the assumption that when I retire I will be guaranteed a certain amount of money per month for rest of my life.  In an ideal world, I understand that this is a better plan for me than my wife's plan, however, in the world we are living in, I can't help but worry that all that money they are taking out of my check every month will in the end not earn me anything because PA is going to go broke before I retire.

Why not just switch everyone over to the 401K option now.  I am sure they could figure out some equitable way to grandfather in people who are close to retirement age.  I would rather not be putting money into a retirement plan that is underfunded and instead be getting a company (or in this case state) match into my 403B.  I understand that forcing the state to match funds is going to cost them more now, but they would not be on the hook for my retirement so they should save money in the long run.