Also, what is the average interest rate on most 401(K)'s?
401K plans are managed by financial firms such as Fidelity, who are not banks and are not covered by government guarantees. It's not likely, but such firms could suddenly go out of business due to fraud or mismanagement and investors could lose money.
The "average" interest rate depends on what stocks or mutual funds you selected for your 401K. If you had selected "index funds" or similar mutual funds just a couple of years ago, your rate of return would be in double digits -- possibly as much as 50%, but averaging in the 20%-30% range. The stock market indexes are currently at record highs.
401(k)s are not guaranteed for a number of reasons. First and foremost, the company can change the match at any time they want - bad times may mean the company looks for places to reduce expenses and the match is easy pickings. Next, the money in the account is invested as per your wishes. Thus, any money in the account increases or decreases as per how well you pick your investments. If you throw all your 401(k) money in an investment that loses money, you lose money.
And there is no "interest rate" on a 401(k). There is either appreciation (growth) or depreciation (loss) and, going back to the fact that 401(k) investments are self-directed, you account does only as well as you do in your investment. If you choose a relatively secure/safe investment you would expect to get a lower rate of return than a more risky investment (risk-reward trade off).
Your post doesn't make sense.
Large employers have their 401ks with outside firms so the money not only exists, but they cannot touch it.
Compared to pensions, if honored, a pension is a defined payment and all risk is on employer; a 401k is a defined contribution with all risk on account holder.
As for income, it depends on what you invest in. 5%?
Say you work for a big company, like Ford or GM. Why would a 401(K) not be guaranteed?
Also, what is the average interest rate on most 401(K)'s?
