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(Cape - Gazette)   401(k): 1978-2008. Alas, we hardly knew ye. Rest in peace   (clusterstock.alleyinsider.com) divider line 141
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7530 clicks; posted to Business » on 23 Dec 2008 at 2:37 PM (6 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2008-12-23 11:46:38 AM  
The first mistake is depending on an employer or the government for your retirement. If you save 10% of your income from age 18 on, you'll have plenty to retire on.
 
2008-12-23 12:13:01 PM  
Diversification is the key. Every 401(k) in which I've enrolled gave me a myriad of options from high risk/high yield, to safer, but lower yield, funds.
 
2008-12-23 12:13:15 PM  
I predict baby boomer parents will be moving into their children's basements over the next 15 years. FINALLY, a return to old fashioned family values where elderly are cared for directly by their adult children!
 
2008-12-23 12:15:40 PM  
Personally, I think a Roth IRA is a fools bet. Does anyone under the age of 40 actually believe there will no withdrawal tax?
 
2008-12-23 12:17:00 PM  
GaryPDX: The first mistake is depending on an employer or the government for your retirement. If you save 10% of your income from age 18 on, you'll have plenty to retire on.

If education in this country was free, I'd be able to do that. As it stands, in order to "pick myself up by the bootstraps" as all republicans encourage me to do, I had to take out massive loans to afford my education, and thus, won't be able to save 10% of my income until I'm about 35 years old.
 
2008-12-23 12:20:22 PM  
SangamonTaylor: I predict baby boomer parents will be moving into their children's basements over the next 15 years. FINALLY, a return to old fashioned family values where elderly are cared for directly by their adult children!

That would be in line with their style. The parents of the Baby Boomers were right, they are a worthless generation.
 
2008-12-23 12:20:27 PM  
t's because we just don't save enough period for retirement. The fact that we tax income and savings (through inflation and capital gains taxes) might have something to do with it as well.

bingo.

we don't encourage thrifty behavior. In fact, if someone tries to save up any amount of money, we tax the crap outta them.
 
2008-12-23 12:22:57 PM  
MmmCrime: If education in this country was free, I'd be able to do that. As it stands, in order to "pick myself up by the bootstraps" as all republicans encourage me to do, I had to take out massive loans to afford my education, and thus, won't be able to save 10% of my income until I'm about 35 years old.

You had twelve years of free - heck, forget free - compulsory education. College isn't a right. It's an investment, and like anything else, if you are borrowing to do it, you need to invest wisely. There are also a myriad of grants, scholarships and work study programs available to hard workers. I worked myself through my undergraduate work at a small but reputable state school. I also had huge student loans from my graduate work, but I accepted that element going in. Sorry if your loans are a burden. I feel your pain, but I don't expect the government to pay it off.
 
2008-12-23 12:24:27 PM  
SangamonTaylor: I predict baby boomer parents will be moving into their children's basements over the next 15 years. FINALLY, a return to old fashioned family values where elderly are cared for directly by their adult children!

um...15 years? it's already happened. Dad got fired 2 and a half years back and he's been sleeping on my couch for the past year or so. And lemme tell ya - it hasn't been all that great. Ok, I sort of derive some measure ironic and slightly sadistic glee in putting Dad in the room where I store much of my Role Playing game collection, which back in the day he was always trying to throw away on me....but that aside, it's been more 'down' than 'up'. I just hope that he gets a job this year and can get back on his feet. Not just for my sanity but it's been hard for him to have to live off of me.
 
2008-12-23 12:26:06 PM  
Yea me!!


Personal Rate of Return from 01/01/2008 to 12/22/2008 is -40.1%
 
2008-12-23 12:26:20 PM  
GaryPDX: The first mistake is depending on an employer or the government for your retirement. If you save 10% of your income from age 18 on, you'll have plenty to retire on.

Technically doesn't every worker already pay like 6-7% into social security and the employer matches it for a 12-14% total "deposit"? I know, I know, it is immediately sent out to pay someone's benefits but the point remains that we are already required by law to "save".

The biggest problem with non-government savings plans is that what do you do with people who fail to save enough or who pick poor investments? Someone will have to pay to take care of them. What about people wiped out by lawsuit judgments or medical bills? All of their assets, including savings, can be fair game under certain conditions.

The problem is complex and goes beyond an Ayn Rand solution. If economics is allowed to run in a totally dog-eat-dog manner than one can reasonably expect that physical violence will eventually trump economics. If you have a gun and your family is starving the legal ramifications of robbery or murder start appearing less threatening. Sort of like the post-apocalyptic fantasy stories that tell of people stockpiling supplies to make sure they make it when the balloon goes up.

Humans are animals that just happen to rest at the top of the food chain, metaphorically speaking. We already will kill each other for things we WANT. Killing someone for something you NEED, like food, water, shelter, etc is not far beyond.
 
2008-12-23 12:28:11 PM  
Instant Karma: What about people wiped out by lawsuit judgments or medical bills? All of their assets, including savings, can be fair game under certain conditions.

Many categories of retirement accounts, including 401(k)'s cannot be siezed by judgment creditors. That's how OJ managed to keep the Goldmans away from a lot of his money.
 
2008-12-23 12:28:23 PM  
Weaver95: In fact, if someone tries to save up any amount of money, we tax the crap outta them.

Not to mention being arrested, having a microscope shoved up your ass and your money confiscated when you have more cash than authorities think you should have.
 
2008-12-23 12:34:04 PM  
Instant Karma: The biggest problem with non-government savings plans is that what do you do with people who fail to save enough or who pick poor investments?

Ever heard of Darwin?
 
2008-12-23 12:34:30 PM  
Instant Karma:
Technically doesn't every worker already pay like 6-7% into social security and the employer matches it for a 12-14% total "deposit"? I know, I know, it is immediately sent out to pay someone's benefits but the point remains that we are already required by law to "save".


Yeah, and the return on that 'investment' is far below what is advertised. And I don't expect to get anything at all from social security - I think the Boomers are gonna drain that fund completely dry long before I get there.

we have to stop taxing the middle class to death. it really is that simple. But we're not gonna do that, because Congress desperately needs the money. we've got a war on drugs, war on terror, war in the middle east to pay for. not to mention all those wall street bailouts and entitlement programs, oh and earmarks! can't forget those! I could go on, but you see the problem....we tax the hell out of the middle class and let Congress spend money like a drunken sailor.

Now, we COULD start electing fiscal conservatives to office....but look what happened to Ron Paul when he urged fiscal restraint. He was ignored and then eventually dismissed as a 'kook'. The man said we should stop spending money like mad and he was labeled a 'kook'. Think about that for a moment. THAT is how far gone this country is - that we consider fiscal restraint and responsibility to be crazy.

we're almost going to have to have at least a partial fiscal implosion before this society learns from it's mistakes. And even then i'm not sure we'll behave.
 
2008-12-23 12:36:49 PM  
GaryPDX: If you save 10% of your income from age 18 on, you'll have plenty to retire on.

Some of these were people who, with employer contributions, were saving 10% but are now saving only 7% because their employer lowered their compensation by stopping matches. Some of these are also people who were fine until everything financial tanked. In this economy, it might be hard for people to come up with the extra 3% while also saving for college and dealing with the ramifications of house worth less than what they may owe that they can not sell.

Weaver95: we don't encourage thrifty behavior.

So we weren't supposed to go shopping at the mall to fight terrorism like the Great Leader told us to do?
 
2008-12-23 12:36:54 PM  
GaryPDX: Weaver95: In fact, if someone tries to save up any amount of money, we tax the crap outta them.

Not to mention being arrested, having a microscope shoved up your ass and your money confiscated when you have more cash than authorities think you should have.


God help you if you run a successful, largely cash only business. it's amazingly easy for a small, independent business owner to get stopped and lose his receipts as 'drug money'.
 
2008-12-23 12:46:20 PM  
damageddude: So we weren't supposed to go shopping at the mall to fight terrorism like the Great Leader told us to do?

The catch 22 is for the economy to "recover", people have to spend like drunken sailors on credit. That's the fallacy being pitched by the new administration. They are trying to get the economy back where it was and that's nothing but bad news. If, by and large, people have learned a financial lesson, the economy as we've known it, will crash. The economy has been living on over extended consumerism for far too long.

It's never going to be like it was.
 
2008-12-23 12:54:30 PM  
Weaver95: Yeah, and the return on that 'investment' is far below what is advertised. And I don't expect to get anything at all from social security - I think the Boomers are gonna drain that fund completely dry long before I get there.

There is only one way to avoid this. We must spend the SS money first! I propose that we drain SS immediately to pay off the public debt. Let's do it for the children so they aren't stuck with the financial sins of their fathers.
 
2008-12-23 12:59:40 PM  
Thankfully I'll walk away from this economic roundtable having learned something; it's really hard to read when your eyes are rolling.
 
2008-12-23 01:06:38 PM  
For people that consider yourself fiscal conservatives, you really don't know jack shiat about how the economy is supposed to work. There are reasons we tax people that horde money or companies that are not reinvesting their assets. It is the only way for the economy to grow. The main reason that most people don't save enough is because they do not share in enough of the wealth while they are working and our society is really expensive to live in.

Look we can go back to the 1950's and everyone can live in a 1200 sqft tract home and have one car per family, but that is not the goal of our capitalist system. The goal is to create wealth and then for those who participate to share in that wealth. Go back and read Wealth of Nations if you do not believe me (personally I think this whole division of labor thing has been a clusterfark, but I digress).

This is the core of the problem. We can take our national wealth and divide it in thirds. The top 1% owns 1/3rd. The next 9% own another 1/3rd. The bottom 90% only control 1/3rd of the wealth. That means that the top 10% controls twice the wealth of the bottom 90%. I am not saying it is feudalism or trying to say that the bottom 90% are all starving. What I am saying is that the goal of any economic system should be to create and distribute wealth. We do a very good job of creating wealth (which leads to opportunity) in America, we are not so good at letting that wealth trickle down.
 
2008-12-23 01:13:41 PM  
DaSwankOne: We do a very good job of creating wealth (which leads to opportunity) in America, we are not so good at letting that wealth trickle down.

We haven't "created" wealth in a long time. We've been in an ever spiraling revolving credit line.
 
2008-12-23 01:22:50 PM  
I put all that money in there for nothing?!
 
2008-12-23 01:29:56 PM  
DaSwankOne: For people that consider yourself fiscal conservatives, you really don't know jack shiat about how the economy is supposed to work. There are reasons we tax people that horde money or companies that are not reinvesting their assets. It is the only way for the economy to grow. The main reason that most people don't save enough is because they do not share in enough of the wealth while they are working and our society is really expensive to live in.

Yeah, "supposed to work," just like socialism is "supposed to work." Here's a tip, it doesn't work. The money always ends up trapped in the hands of a few. The rest get screwed.

Then we revolt, kill the "few," and start the cycle over again.
 
2008-12-23 01:33:35 PM  
Nabb1: Instant Karma: What about people wiped out by lawsuit judgments or medical bills? All of their assets, including savings, can be fair game under certain conditions.

Many categories of retirement accounts, including 401(k)'s cannot be siezed by judgment creditors. That's how OJ managed to keep the Goldmans away from a lot of his money.


True, but I was speaking in a generality. A divorce can empty a 401k quite easily however and we have enough of those.
 
2008-12-23 01:37:15 PM  
GaryPDX: Instant Karma: The biggest problem with non-government savings plans is that what do you do with people who fail to save enough or who pick poor investments?

Ever heard of Darwin?


You must have skipped the last paragraph of what I said. There is not enough security personnel in the US to protect the haves from a 20-30% have-nots. Remember that the 55 million homes have guns and there is a gun for every man, woman and child in the US nearly (260mil vs 300mil).
 
2008-12-23 01:38:52 PM  
Instant Karma: GaryPDX: Instant Karma: The biggest problem with non-government savings plans is that what do you do with people who fail to save enough or who pick poor investments?

Ever heard of Darwin?

You must have skipped the last paragraph of what I said. There is not enough security personnel in the US to protect the haves from a 20-30% have-nots. Remember that the 55 million homes have guns and there is a gun for every man, woman and child in the US nearly (260mil vs 300mil).


Things get too bad, we kill kill the haves and start over. We've been doing that as a species for thousands of years.
 
2008-12-23 01:46:36 PM  
netweavr: Yeah, "supposed to work," just like socialism is "supposed to work." Here's a tip, it doesn't work. The money always ends up trapped in the hands of a few. The rest get screwed.

Then we revolt, kill the "few," and start the cycle over again.


Or we tax them and use it for programs that create more opportunity for the rest of us you know like we used to before Reagan.
 
2008-12-23 01:49:33 PM  
DaSwankOne: netweavr: Yeah, "supposed to work," just like socialism is "supposed to work." Here's a tip, it doesn't work. The money always ends up trapped in the hands of a few. The rest get screwed.

Then we revolt, kill the "few," and start the cycle over again.

Or we tax them and use it for programs that create more opportunity for the rest of us you know like we used to before Reagan.


Yeah, that doesn't work forever. Someone always screws it up for the rest of us. Someone like the Baby Boomers.
 
2008-12-23 01:52:43 PM  
GaryPDX: We haven't "created" wealth in a long time. We've been in an ever spiraling revolving credit line.

We have created wealth the problem is that we only put 10% down. When we lost more than 10% of our investment we did not have enough capital to cover further losses. I personally think that we should have printed money for the bailout and loaned it to the banks to cover outstanding debts and put an end to the fractional reserve system.

/that and put an end to derivatives
 
2008-12-23 02:09:29 PM  
Frontline had a great special on the 401k. I recommend anyone that participates in one of these programs and thinks they are going to be able to retire watches it.

Link (new window)
 
2008-12-23 02:23:48 PM  
pixistick: Yea me!!


Personal Rate of Return from 01/01/2008 to 12/22/2008 is -40.1%


Lucky bastard.

My 401(k) this year is sitting right at 50% of what I had at the end of last year - net loss of almost $75K.
 
2008-12-23 02:25:39 PM  
netweavr: DaSwankOne: For people that consider yourself fiscal conservatives, you really don't know jack shiat about how the economy is supposed to work. There are reasons we tax people that horde money or companies that are not reinvesting their assets. It is the only way for the economy to grow. The main reason that most people don't save enough is because they do not share in enough of the wealth while they are working and our society is really expensive to live in.

Yeah, "supposed to work," just like socialism is "supposed to work." Here's a tip, it doesn't work. The money always ends up trapped in the hands of a few. The rest get screwed.

Then we revolt, kill the "few," and start the cycle over again.


I wonder if any of those bankers we transferred $700,000,000,000 to thought about that?
 
2008-12-23 02:35:47 PM  
SurfaceTension: I wonder if any of those bankers we transferred $700,000,000,000 to thought about that?

They never seem to.

Well, I should qualify that. The only ones who think about it tend to end up financing and leading the revolt. I'm looking at you American Revolution.
 
2008-12-23 02:46:09 PM  
You can't rely on social security, you have to contribute to a 401(k).

Ok, I'll contribute to a 401(k)

You can't rely on a 401(k) to retire, you have to build a time machine and go back and tell yourself to not buy that kickass camaro that got you laid all summer and instead put it in savings.
.
.
.
Screw it. I'll work at mcdonalds after I retire. Paycheck and "free" food.
 
2008-12-23 02:49:30 PM  
superbeerchan: My 401(k) this year is sitting right at 50% of what I had at the end of last year - net loss of almost $75K.

I guess I should consider myself lucky: Mine's only gone down 35%. Of course, that's also only $1900.
 
2008-12-23 02:51:45 PM  
Spanky_McFarksalot: Screw it. I'll work at mcdonalds after I retire. Paycheck and "free" food.

I don't ever plan on really retiring. I enjoy my work, and can make good money doing it, and it involves sitting in front of a computer pushing buttons.

Yeah, I'm saving for my "retirement," but I'm really hoping I'll never need it.
 
2008-12-23 02:53:22 PM  
Let ME have all my FICA, and I will guarantee you I will have more when I retire, whenever that might be, than the federal government will return to me in the form of SS.

What sucks is that firms WILL go away from the company match. That was tax free (until withdrawn) money.

www.blog.joetaxpayer.com
 
2008-12-23 02:54:01 PM  
My employer matches 100% up to 4%, and 50% up to 8%. If I wanted to, I could put it all in a high yield savings account. I for one, plan on keeping my 401K, since it's essentially giving me an extra 6% on top of my salary, and I'm saving far more than that anyway.


/ Squirrel.
// No gigantic nuts.
 
2008-12-23 02:55:46 PM  
DaSwankOne: For people that consider yourself fiscal conservatives, you really don't know jack shiat about how the economy is supposed to work. There are reasons we tax people that horde money or companies that are not reinvesting their assets. It is the only way for the economy to grow. The main reason that most people don't save enough is because they do not share in enough of the wealth while they are working and our society is really expensive to live in.

Look we can go back to the 1950's and everyone can live in a 1200 sqft tract home and have one car per family, but that is not the goal of our capitalist system. The goal is to create wealth and then for those who participate to share in that wealth. Go back and read Wealth of Nations if you do not believe me (personally I think this whole division of labor thing has been a clusterfark, but I digress).

This is the core of the problem. We can take our national wealth and divide it in thirds. The top 1% owns 1/3rd. The next 9% own another 1/3rd. The bottom 90% only control 1/3rd of the wealth. That means that the top 10% controls twice the wealth of the bottom 90%. I am not saying it is feudalism or trying to say that the bottom 90% are all starving. What I am saying is that the goal of any economic system should be to create and distribute wealth. We do a very good job of creating wealth (which leads to opportunity) in America, we are not so good at letting that wealth trickle down.


The problem is that the system you described needs ever increasing levels of debt to maintain the growth. "Wealth" is created but it is not based on a tangible source of value. Only on fiat money that is created through debt. When the "wealth" that's created is expanded to a point that the promise of future labor and production no longer can sustain it you have a giant bloody contraction that apparently starts in 2006 and continues till xxxx.

The goal of an economic system should be to ensure that all parties in that system can acheive and maintain a standard of living that can be recognized as civilized and healthy. Perpetual growth is possible if that growth parallels the actual growth of society. In our case powerful people created fanatasy money to create and keep massive amounts of wealth in the hands of a few and that wealth was literally created out of thin air.

Our system is the problem. If it had been run by true "fiscal conservatives" whether they be Dem. or Republican than this system may have had a chance for measured healthy growth.
Instead, we get our system being gamed for political expediency and corporate greed. Alas, that is always what happens with a Managed Economy as opposed to a Free Market system..
 
2008-12-23 02:55:46 PM  
Szech: My employer matches 100% up to 4%, and 50% up to 8%. If I wanted to, I could put it all in a high yield savings account. I for one, plan on keeping my 401K, since it's essentially giving me an extra 6% on top of my salary, and I'm saving far more than that anyway.

People who don't sign up for a 401k if they're offered matching funds are effectively saying "No, boss, I don't want any more of your money."
 
2008-12-23 02:58:28 PM  
netweavr: Weaver95: Yeah, and the return on that 'investment' is far below what is advertised. And I don't expect to get anything at all from social security - I think the Boomers are gonna drain that fund completely dry long before I get there.

There is only one way to avoid this. We must spend the SS money first! I propose that we drain SS immediately to pay off the public debt. Let's do it for the children so they aren't stuck with the financial sins of their fathers.


Sorry to break this to you, but that's already been done. SS money is all directly "invested" in US Treasury Bonds. So basically, Uncle Sam wrote an IOU to himself with the money he already taxed from you. And in addition to that, if congress decides to default on SS, you have no legal recourse as determined by the Supreme Court.
 
2008-12-23 03:00:05 PM  
Szech: My employer matches 100% up to 4%, and 50% up to 8%. If I wanted to, I could put it all in a high yield savings account. I for one, plan on keeping my 401K, since it's essentially giving me an extra 6% on top of my salary, and I'm saving far more than that anyway.


/ Squirrel.
// No gigantic nuts.


You're not really an extra 6%, think in terms of rate of return. You're earning 100% on your first 4% and 50% on the next 4%.
 
2008-12-23 03:04:04 PM  
I'm always amazed at what white collar drones are willign to put up with. The real question is why are workers allowing their employer to reduce the value of their job? I mean if my employer came in today and said they were "suspending" their 6% match into my 401(k) I would demand a 6% raise or other compensation that matchs 6%.

That 401(k) contribution is part of how I value this job and you better be willing to compensate me for removeing it, even if it is defered compensation. If my company was unwilling to negotiate then they would lose my services the day that "suspension" went into effect. Then again I, unlike most of the idiots I work with, have enough liquid assets to take a year off work and not worry about paying my bills.
 
2008-12-23 03:04:27 PM  
why do the Baby Boomers hate America?
 
2008-12-23 03:06:11 PM  
Between a municipal-backed pension, employer matching RRSP (Canadian version of 401K), Canada Pension Plan (similar to Social Security), and emergency cash savings, I squirrel away about 20%.

I've got a unionized government job that pays pretty decent. I consider myself pretty lucky.
 
2008-12-23 03:08:16 PM  
Weaver95: Ok, I sort of derive some measure ironic and slightly sadistic glee in putting Dad in the room where I store much of my Role Playing game collection, which back in the day he was always trying to throw away on me

Well, are you are least spending father/son time RPG'ing?

/RIP WEG 6-sided Star Wars goodness.
 
2008-12-23 03:17:40 PM  
Gumercules: Our system is the problem. If it had been run by true "fiscal conservatives" whether they be Dem. or Republican than this system may have had a chance for measured healthy growth.
Instead, we get our system being gamed for political expediency and corporate greed. Alas, that is always what happens with a Managed Economy as opposed to a Free Market system..


Yep because under a free market system there is no inequity! WTF are you smoking.
 
2008-12-23 03:23:00 PM  
I have managed to only lose 20% of my 401k, which is exactly the amount matched by my company. Its sad that stuffing the $$ in a mattress is better than most people I know did.
 
2008-12-23 03:23:00 PM  
If you were within a couple years of retirement and got killed by the market crash, you weren't managing your money very well.
 
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