Based on loanable funds, if the interest rate decreases, what happens? Demand increases all other things held constant. So more will want to borrow money. Hopefully, in our current economy this will push businesses to want to borrow at this new low rate to finance new projects which will increase business spending, the real laggard in the economy.
Withdrawal penalty
I have a friend that wants me to manage his employee retirement fund because he has employees taking out money to buy cars, etc. then are mad at him for not telling them there is a penalty. He says, I did tell you there’s a penalty when I gave you the material to read about the plan, and you didn’t call me to say you were taking a withdrawal. NO way I am taking on that task, thanks anyway. 😉
Defined benefit plans
Regarding defined benefit plans, they are less effective with today’s mobile work force. If you change jobs every five years, the roll over of the defined benefit, if there is one, is not nearly as good as staying put or a defined contribution. Work force flexibility is pushing retirement flexibility.
Dr. Douglas Rice 