Primitive Laments 401K accounts

[landofconfusion80]

http://www.democraticunderground.com/10026003819

NewDeal_Dem (340 posts)





401(k)s are a sham: Duped by a DIY retirement dream, elderly face staggeringly low living standards
 

 


   
 â€œFor retirement, the answer is 4-0-1-k,” proclaimed Tyler Mathisen, then editor of Money magazine in 1996. “I feel sure that someday, like a financial Little-Engine-That-Could, it will pull me over the million-dollar mountain all by itself.”

For this sentiment, and others like it, Mathisen was soon rewarded with an on-air position at financial news network CNBC, where he remains to this day. As for the rest of us? We were had.

The United States is on the verge of a retirement crisis. For the first time in living memory, it seems likely that living standards for those over the age of 65 will begin to decline as compared to those who came before them—and that’s without taking into account the possibility that Social Security benefits will be cut at some point in the future.

The culprit? That same thing Mathisen celebrated: the 401(k), along with the other instruments of do-it-yourself retirement. Not only did they not make us millionaires as self-appointed pundits like Mathisen promised, they left very many of us with very little at all...

According to a recent report issued by the National Institute on Retirement Security, the median amount a family nearing retirement has saved for their post-work lives is $12,000. As for the magical 401(k)? If a household where the earners are between the ages of 55 and 64 does have a retirement account, they barely hit the six-figure mark at $100,000—a far cry from $1 million we’re told we need.

Yet whether the stock market goes up, down or sideways, the financial services sector makes out when it comes to your retirement accounts. How much do they earn? Astonishingly, we don’t know the answer. In 2008, Bloomberg magazine polled a group of pension consultants and came to the conclusion that 401(k) fees alone totaled $89.1 billion annually...

http://www.salon.com/2013/08/06/big_finance_lied_401ks_will_not_save_aging_americans_partner/?utm_source=facebook&utm_medium=socialflow


The IRS recently changed the rules for IRA rollovers, which means that now you can only rollover one IRA a year, once a year. Does anyone understand the ramifications of this?
 

It ticks me off because I feel like it's designed to get you to put all the money in one IRA so it's easier to steal. 

So it's somebody else's responsibility that you didn't save enough for your golden years?  Of course it is.....

silverweb (14,410 posts)

3. SO glad I mistrusted this from the start!
 
As soon as I heard that Wall Street was part of the scheme, I backed away. Family criticized my decision, but I just didn't trust the idea.

My brother lost 2/3 of his IRA between 2007-2009, then was penalized for taking early withdrawal of the rest.

Wall Street is nothing but a legalized gambling racket with other people's money, favoring "the house." 

Shameless 2nd hand bouncy.... but here's the money shot:

HERVEPA (4,287 posts)

11. If he lost 2/3, he put his money in some very high risk investments
 
That was his choice. Otherwise he shouldn't have lost more than 1/3.

The Perveha primitive might be getting a pizza soon...

HERVEPA (4,287 posts)

19. The 401k plan almost definitely igave him choices of where to invest. If he lost 2/3
 
he didn't take the time to read very basic info.

well this is awkward....

jberryhill (35,655 posts)

122. do you know that half the population is below average intelligence?
 
And they deserve to be shit on every day. Is that it?

This primitive stumbles upon the truth...

[BattleHymn]

Weren't 401k plans a loophole to avoid some sort of confiscatory move by the government back in the seventies, under Carter? 

[Wineslob]

I feel like it's designed to get you to put all the money in one IRA so it's easier to steal. 

Ya, show me where this has actually happened.

[Chris_]

Ya, show me where this has actually happened.

The only people I hear about wanting to steal other's 401ks usually have  (D) next to their name.

[I_B_Perky]

Weren't 401k plans a loophole to avoid some sort of confiscatory move by the government back in the seventies, under Carter?

I believe your are correct BH.  If I remember correctly it was some loophole that some tax guru figured out for some of his investment clients. It really did not become popular until all the big steel companies and others starting going tits up in the late 70's/early 80's and it was discovered the companies had not kept their pension plans separate and had used most of the money to keep themselves in business. Workers left and right got screwed. The 401k then became the retirement vehicle, with the government's blessing, since it was your money and the company could not get their hands on it.

[JohnnyReb]

What the DUmmies really mean, or want, is for the government to roll all that independent wealth into Social Security so DUmmies can get a larger check for having done nothing to secure their old age.

[Ralph Wiggum]

More completely unintelligent and ignorant economic DUmmy posts. 

[Mr Mannn]

NewDeal_Dem (340 posts)

401(k)s are a sham: Duped by a DIY retirement dream, elderly face staggeringly low living standards

Translation: "If only Obama and the govt would take over all the retirement accts and redistribute the wealth to we who never planned ahead."

[landofconfusion80]

Just as a notice:  On more than one occasion, the primitives have discussed their life savings.  The most common number appears to be <$100.  The average retirement savings amount for normal people is $12000, which in itself is incredibly pitiful.  This is a perfect example of the shockingly poor lifestyle choices that primitives make on a regular basis.

[tanstaafl]

My 401k's have made it possible for me to retire early. Well, the discipline it taught me made that possible.

It's an investment. If you don't seek out advice from a professional, then you might as well bury your savings in the back yard. Since I was able to start one during the Reagan years, contributing the max allowed by my employer, it has grown by leaps and bounds, with a few speed bumps during Democrat administrations.

And the answer to the question regarding confiscation, only the Reverund Jackson postulated that tax-deferred savings should only be allowed one investment tangent. To wit: Invested in Public Housing. Might as well burn it as do that.

[BattleHymn]

Just as a notice:  On more than one occasion, the primitives have discussed their life savings.  The most common number appears to be >$100.

Wait, did you mean <$100, or possibly ~$100? 

$100 in the pocket for most primitives is the equivalent to winning the Powerball.

[98ZJUSMC]

jberryhill (35,655 posts)

122. do you know that half the population is below average intelligence?

The figure for 2012 was 52%.   

[USA4ME]

As if pensions wouldn't have also gone south in a market turndown, too.

Everybody loves 401K's and the stock market when the economy is exploding and you can't hardly pick a stock that loses money. But when things get tough and the money isn't growing just by being there, it's the fault of the investment instrument, or the mysterious people in control behind the curtain, and never the fault of the investor.

Like all things in life, libs want a sure thing using someone else's money where they get the benefit. And if they don't get what they want, then it's those dastardly corporations and Wall Street and those robber barons twisting screws and throwing wrenches and gumming up the works where only they will benefit.

Ah, the life of the perpetually angry and simpleminded. Yes, liberalism is a mental disorder, but it runs so much deeper than just that.

.

[tanstaafl]

As if pensions wouldn't have also gone south in a market turndown, too.

Everybody loves 401K's and the stock market when the economy is exploding and you can't hardly pick a stock that loses money. But when things get tough and the money isn't growing just by being there, it's the fault of the investment instrument, or the mysterious people in control behind the curtain, and never the fault of the investor.

Like all things in life, libs want a sure thing using someone else's money where they get the benefit. And if they don't get what they want, then it's those dastardly corporations and Wall Street and those robber barons twisting screws and throwing wrenches and gumming up the works where only they will benefit.

Ah, the life of the perpetually angry and simpleminded. Yes, liberalism is a mental disorder, but it runs so much deeper than just that.

.

My investing philosophy, that I have used successfully over the past 30 years is this:

Never run with the herd.
Pay attention to the number of hogs at the slop trough.

When the evening news carries starts stories on the 'soaring' stock market - SELL.

[jtyangel]

I have recently learned how to figure the breakdown beloved vehicle of retirement of the dummies: the defined benefit pension plan and I hate to tell you idiots but a large portion of that is invested the same markets that one would invest in a 401k. When you talk about people being stupid you are talking about people who should probably utilize the advice of a third party to invest their retirement money rather than doing it themselves; that's really the only difference were discussing here  and the nice thing about the 401 K is that while it is not professionally managed it is your money and is protected from any company or entity confiscating it for their own means. The same cannot be said in the past of the defined benefit pension planhowever the obvious attraction for someone unwilling to navigate their own investments of this plan is the security of a defined payment or something they can anticipate at the end of their working years.

I don't deny either one. I tend to think there actually is room for both in a well-planned retirement plan if one has access to both and especially if one is unwilling to navigate the investment waters oneself or exclusively, and would like a certain amount of the retirement plan to be defined. However, those types of pension plans have gone and are going the way of the dodo anyway.

Now that saId, dummies indeed like to demonize a 401k for antiquated reasons like Scrooge McDuck as CEO or for reasons that R expected based on risk and experience level of the investor. They also have a disconnect that market conditions are often linked to the economic policies of those in power so if they are unhappy with downturns they should probably look to those they elect that help of policies in place that helped to create downturns. while doing so remembering that a defined benefit pension plan is not exempt from the effects of the market either so that the company whether they can or not will be eating those losses someday or having to default on the pension altogether leaving the individual with nothing. These idiots also they do not realize just how many strides over the last 20 years have been made towards improving ethics accounting and disclosure in companies far more than has been made for the fraud that goes on amongst themselves as welfare and disability recipients I might add

The bottom line is they want a risk-free vehicle for retirement and there just is not one. Instead, what it boils down to is who absorbs the risk in the end and many people are willing to accept the responsibility of the risk themselves to have the freedom to invest in their retirement as they choose ie the 401 K where others do not want to absorb the risk and would rather be company or the government absorb the risk and hedge their bets that they will be able to absorb the rest and they will still get a payment via pension plans and Social Security but what they don't get is they are taking a risk as well of the company or government being able to absorb that and that may not be the case which is what happens the steel workers in the past and what is happening to Detroit City workersTnow. they are all so infantile in the assumption that one will make the same as they did working on a pension plan. History has proven that companies fall under the weight of those plans when enough people are retired and outlive the actuary tables and the defined benefit is out of line for the investments that have been made over the years and the contribution made to the accounts 

[landofconfusion80]

Wait, did you mean <$100, or possibly ~$100? 

$100 in the pocket for most primitives is the equivalent to winning the Powerball.

Just caught that myself. serves me right for posting on a one day work week. lol

Anyway, I always take great pleasure in talking with these types of people about the stock market.  I had one try to tell me that his money was safer in a small business than actually investing.  2 years later, his shop was boarded up and thousands were lost due to a multitude of reasons. Not knocking on small businesses, but the lack of knowledge people have about basic investing is staggering.

[Ralph Wiggum]

I have recently learned how to figure the breakdown beloved vehicle of retirement of the dummies: the defined benefit pension plan and I hate to tell you idiots but a large portion of that is invested the same markets that one would invest in a 401k. When you talk about people being stupid you are talking about people who should probably utilize the advice of a third party to invest their retirement money rather than doing it themselves; that's really the only difference were discussing here  and the nice thing about the 401 K is that while it is not professionally managed it is your money and is protected from any company or entity confiscating it for their own means. The same cannot be said in the past of the defined benefit pension planhowever the obvious attraction for someone unwilling to navigate their own investments of this plan is the security of a defined payment or something they can anticipate at the end of their working years.

I don't deny either one. I tend to think there actually is room for both in a well-planned retirement plan if one has access to both and especially if one is unwilling to navigate the investment waters oneself or exclusively, and would like a certain amount of the retirement plan to be defined. However, those types of pension plans have gone and are going the way of the dodo anyway.

Now that saId, dummies indeed like to demonize a 401k for antiquated reasons like Scrooge McDuck as CEO or for reasons that R expected based on risk and experience level of the investor. They also have a disconnect that market conditions are often linked to the economic policies of those in power so if they are unhappy with downturns they should probably look to those they elect that help of policies in place that helped to create downturns. while doing so remembering that a defined benefit pension plan is not exempt from the effects of the market either so that the company whether they can or not will be eating those losses someday or having to default on the pension altogether leaving the individual with nothing. These idiots also they do not realize just how many strides over the last 20 years have been made towards improving ethics accounting and disclosure in companies far more than has been made for the fraud that goes on amongst themselves as welfare and disability recipients I might add

The bottom line is they want a risk-free vehicle for retirement and there just is not one. Instead, what it boils down to is who absorbs the risk in the end and many people are willing to accept the responsibility of the risk themselves to have the freedom to invest in their retirement as they choose ie the 401 K where others do not want to absorb the risk and would rather be company or the government absorb the risk and hedge their bets that they will be able to absorb the rest and they will still get a payment via pension plans and Social Security but what they don't get is they are taking a risk as well of the company or government being able to absorb that and that may not be the case which is what happens the steel workers in the past and what is happening to Detroit City workersTnow. they are all so infantile in the assumption that one will make the same as they did working on a pension plan. History has proven that companies fall under the weight of those plans when enough people are retired and outlive the actuary tables and the defined benefit is out of line for the investments that have been made over the years and the contribution made to the accounts

Oh come on.  Easier just to blame Bush/Cheney and the "evil" banksters and Wall Street goons!!!

[jtyangel]

Oh come on.  Easier just to blame Bush/Cheney and the "evil" banksters and Wall Street goons!!!

I just laugh that thier dumb asses don't get thier beloved d pension plans are gasp in investments as well. They are the institutional investors they loathe so much.  The ones who help influence the markets to begin with because of the sheer size of money movement when anything is done by them.  Dumb asses 

[Ralph Wiggum]

I just laugh that thier dumb asses don't get thier beloved d pension plans are gasp in investments as well. They are the institutional investors they loathe so much.  The ones who help influence the markets to begin with because of the sheer size of money movement when anything is done by them.  Dumb asses

They are the self-proclaimed smartest group of people on the internet, don'tcha know?

[DumbAss Tanker]

Very good post, Jetty, but then your analysis is usually excellent. 

The current Federal civil service retirement system (Not the one the talking heads on Fox Biz love to bash, which ceased to exist for new hires 30 years ago) is a pretty optimal mixture of a largely-optional 401K-like vehicle and a (Quite) modest defined-benefit program, integrated into Social Security on top of that, and it actually works pretty well (The older system which ended in the 80s, where Fox Biz financial commentators apparently live, was a rather high defined-benefit-only system that was, however, exempt from Medicare and Social Security).  In fairness to the talking heads, a lot of state, municipal, and school system retirements are based on a system like the defunct Federal one, and they just suck at being able to make the distinction between those systems and the Federal one when they start blathering about the cost of government pensions. 

The 401K-like part, called the TSP, matches the first 5% of employee contributions (So it's like throwing away 5% of your paycheck to refrain from participation), in a slightly nonlinear way, and allows the employees to contribute up to an additional unmatched 5% of their own.  The six current investment options are extremely broad based and rigid (No cafeteria plan there), but range from a US government bond fund (Minimum risk but minimum return) to what is essentially an S&P index fund (The highest risk option but also definitely the highest return over the history of the program), with the employee having complete freedom to split both current contributions and existing balance up among the funds as he or she sees fit...but to only change it twice a month max, and with a (Real, not Pitt variety) '24 business hour' time to implement the change once it's put into the system.

Not much of anybody is going to get a million bucks from TSP, but a lot of aggressive and attentive people would end their career with between 200K and 500K in it if they maximized their investment and generally picked wisely in choosing and changing their allocations within TSP over the years.  Damned few people could live on that for the rest of their lives, unless they cashed in their chips just a few years after retiring, but combined with the limited defined benefit (Which is in the same ballpark as the civil service retiree's SS paycheck if they drawn at the earliest opportunity) it is enough to retire in reasonable comfort, provided one did not spend one's working life blowing every dime and living on credit cards.   

[obumazombie]

A million dollars is not what it used to be.
If you put it in a security or otherwise like investment, the typical rate of return you could expect is anywhere from 1 to 3% over the last 10 to 15 years.
That's $10,000.00 to 30,000.00 annually.
You will be right on the verge of poverty, in it, or right above it.
If you have your house paid off, and no debt, you might be able to get by on that.
But you won't be living like a king.

[jtyangel]

Very good post, Jetty, but then your analysis is usually excellent. 

The current Federal civil service retirement system (Not the one the talking heads on Fox Biz love to bash, which ceased to exist for new hires 30 years ago) is a pretty optimal mixture of a largely-optional 401K-like vehicle and a (Quite) modest defined-benefit program, integrated into Social Security on top of that, and it actually works pretty well (The older system which ended in the 80s, where Fox Biz financial commentators apparently live, was a rather high defined-benefit-only system that was, however, exempt from Medicare and Social Security).  In fairness to the talking heads, a lot of state, municipal, and school system retirements are based on a system like the defunct Federal one, and they just suck at being able to make the distinction between those systems and the Federal one when they start blathering about the cost of government pensions. 

The 401K-like part, called the TSP, matches the first 5% of employee contributions (So it's like throwing away 5% of your paycheck to refrain from participation), in a slightly nonlinear way, and allows the employees to contribute up to an additional unmatched 5% of their own.  The six current investment options are extremely broad based and rigid (No cafeteria plan there), but range from a US government bond fund (Minimum risk but minimum return) to what is essentially an S&P index fund (The highest risk option but also definitely the highest return over the history of the program), with the employee having complete freedom to split both current contributions and existing balance up among the funds as he or she sees fit...but to only change it twice a month max, and with a (Real, not Pitt variety) '24 business hour' time to implement the change once it's put into the system.

Not much of anybody is going to get a million bucks from TSP, but a lot of aggressive and attentive people would end their career with between 200K and 500K in it if they maximized their investment and generally picked wisely in choosing and changing their allocations within TSP over the years.  Damned few people could live on that for the rest of their lives, unless they cashed in their chips just a few years after retiring, but combined with the limited defined benefit (Which is in the same ballpark as the civil service retiree's SS paycheck if they drawn at the earliest opportunity) it is enough to retire in reasonable comfort, provided one did not spend one's working life blowing every dime and living on credit cards.

I was thinking exactly of FERS and TSP when I mentioned a combined approach. Great minds. Places like Nationwide which is privately owned also offer a combined approach to retirement.

[txradioguy]

401(k)s are a sham: Duped by a DIY retirement dream, elderly face staggeringly low living standards

And the next trial balloon goes up in the attempt to nationalize our retirement plans.

Progressives can't stand the fact that there is $17 trillion locked away in 401(K) and other types of IRA's that they can't get their hands on.

They started in 2010 trying to get their hands on that money and tried again in 2012.

Expect another push over the next two years to demonize the eeeeeevil private retirement account system and how much better it could be run if the Feds were in control.  There will be horror stories of "retirement dreams shattered when the company folded and with it, their company funded retirement nest egg". 

Then we'll hear the advantages of federal retirement plans, union retirement plans and how wonderful it would be if you never had to worry about retirement because the Federal Government put your retirement in it's capable hands.

[Ralph Wiggum]

And the next trial balloon goes up in the attempt to nationalize our retirement plans.

Progressives can't stand the fact that there is $17 trillion locked away in 401(K) and other types of IRA's that they can't get their hands on.

They started in 2010 trying to get their hands on that money and tried again in 2012.

Expect another push over the next two years to demonize the eeeeeevil private retirement account system and how much better it could be run if the Feds were in control.  There will be horror stories of "retirement dreams shattered when the company folded and with it, their company funded retirement nest egg". 

Then we'll hear the advantages of federal retirement plans, union retirement plans and how wonderful it would be if you never had to worry about retirement because the Federal Government put your retirement in it's capable hands.

It would not surprise me in the least to see some attempt to confiscate private or company based 401k, 403b or other similar retirement savings.  For the general good of the government, probably to help pay for all the illegals they desire to flood our country.

[Carl]

What they want is a lavish retirement of a guaranteed amount that is paid for by others with no care of the exact ramifications or desire to have ever contributed themselves.