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(Forbes)   This just in: If you're relying solely on your 401k and SS for your retirement, you're screwed   (forbes.com) divider line 59
    More: Obvious, real estate investment trusts, retirement, interest rate risk, Betamax, structured product  
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4757 clicks; posted to Business » on 18 Jul 2013 at 9:45 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



Voting Results (Smartest)
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2013-07-18 11:06:44 AM
7 votes:

Great Janitor: Inflation is 5%, so any program that doesn't match increase at 5% or more is losing value


Get yourself some professional financial help immediately!

Let's say that your company matches 50% of your contribution up to 6%, for a total company contribution of 3%, which is common.  So if you make $10,000 you'll put $600 of it into your 401k.  Your company will put in $300.  You invested $600 and you have $900 immediately.  That's a 50% return instantly!  And a 401k is just a tax-advantaged investment account.  So, you invest all that money.  So you put that $900 into stocks or bonds or whatever and it makes whatever gains it makes (hopefully outpacing inflation).

My advice to Farkers starting out (and remember what you paid for it) is to invest for retirement in this order (i.e.  As you have more to invest, work your way down the list):

1)  Contribute enough to your company 401k to get the maximum employer match.  Do this no matter what.  That match is free money!  If your company offers a Roth 401k (somewhat rare), you'll probably want to go with that.
2)  If you are financiallly disciplined enough to know that you'll follow through, put any additional retirement money into a Roth IRA.  You pay taxes on money you invest into a Roth retirement account up-front and the withdrawals/gains are not taxed when you retire.  For most people, this will save you a ton of money in taxes in the long run.  Additionally, IRAs give you a bit of flexibility that 401k's don't.
3)  If the Roth IRA gets maxed out, then increase your 401k contribution until you get to the max there.
4)  If you're maxing out both the IRA and the 401k, then you should really be getting advice from the guy you pay to haul around your wheelbarrows of money and not some guy on Fark.  But the next step is to open a taxable brokerage account somewhere.
2013-07-18 10:08:08 AM
4 votes:
This is why you should marry younger than you. You retire while they still work.
2013-07-18 09:54:33 AM
4 votes:
This just in: if you're relying on retirement, you're screwed.
2013-07-18 09:02:47 AM
4 votes:
I plan on dying in the salt mine.
2013-07-18 10:17:46 AM
3 votes:
This just in: if you think as a non 1% you are going to ever be allowed to retire, think again.
2013-07-18 10:09:49 AM
3 votes:
I'm planning on whoring myself out to college age women when I reach retirement age.
2013-07-18 10:00:01 AM
3 votes:
I plan on funding my retirement through an esoteric brand of law called "squater's rights"
2013-07-18 09:49:39 AM
3 votes:
1/3 to rent
1/3 to taxes
1/3 to retirement

where is food in this equation?
2013-07-18 12:57:24 PM
2 votes:

AngryDragon: FARK YOU.


No, fark you. If you don't want to participate in society then go live in Somalia or something. This bullshiat where people like you pretend that the job you're able to go to and are healthy enough to work at just fell out of your own ass one day is completely retarded.

Your job, your health, your education, everything right down to the fact that you're able to go get a drink when you need it without having to worry it will leave you dying of the runs over the course of the next week comes down to the fact that you are participating in a society. If you're going to accept those benefits then you should accept some of the costs as well.

If you think you can go kill your own food with your bootstraps and catch rainwater in the boots, go farking do it and quit your goddamn whining.
2013-07-18 12:05:02 PM
2 votes:

JolobinSmokin: I'll remember to tell this to my uncle who lost all his money in 2008 in the stock market.

That job with a pension was a shackle, you did a good job taking the one with the 401k.


Was he near retirement with near 100% vestment in stocks? You're not supposed to do that.

Did he freak out when the market crashed, and sold all of his stocks? You're not supposed to do that either.
2013-07-18 11:08:00 AM
2 votes:
Millenials are screwed.
Student loans and high housing prices are going to leave them paying off debt and renting for most of their prime earning years, unable to build any savings.
2013-07-18 10:38:00 AM
2 votes:
Great Janitor:
Banks aren't great at investing, given that a CD is less than 3%.  So you'll actually lose money compared to inflation.  A 3% matching 401k still doesn't work due to inflation, which is why I've always turned down 401k options (also, if you need your money from a 401k before retirement you get hit with double taxes and double penalties).

If you put in 6%, and your employer puts in a match of 3%, then 9% is going into the 401K. That's a 50% boost.
The returns would have to be pretty low for inflation to eat that up I think
2013-07-18 10:16:17 AM
2 votes:

Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?


Pensions are a crap idea anyway.  I would much rather have a slightly higher salary upfront and be responsible for my own savings.

Great_Milenko: SlothB77: if we are screwed anyway, let's get rid of Social Security then.

Things are bad.  Let's make them worse!



Same thing with social security.

Also, I am baffled by people who rely on either of these for retirement.  Seriously, people have been saying how dumb these programs are for years now.  It's nice to be ideological every once in a while, but you would bet your starvation on it?  It's like ND Tyson said about science.  "It's true no matter what people think or say" Same thing with social security.  It's a fundamentaly bad system no matter what people think.  Don't rely on it and start saving now in an IRA or regular ol' taxable account (once you've maxed your IRA contributions).
2013-07-18 10:15:24 AM
2 votes:
I honestly don't know how anyone that's firmly in the "middle class" can ever hope to retire.

I was working for a company that contributes a total of 0.9% to their employees' 401k's.  So if you make $40k/yr, they're going to contribute exactly $30/mo to your retirement account.  Gosh thanks!  And they didn't pay very well, so it was extremely hard to put away much on your own.  I changed jobs about a year ago, and while there were a few reasons to jump ship, the fantastic benefits at my new company were a huge draw.

Even if you max out your 401k, right now you'll just watch your investments get eaten by inflation if you choose the "safe" options.

If you're young (<40), get into 100% stocks right now.  Diversify by putting a chunk in small caps, a chunk in mid caps, a chunk in large caps and another chunk overseas.  Find funds with as low fees as possible, and have faith that the market will beat bond interest over the next 20+ years.  Our retirement accounts are up ~18% YTD.  Of course, we have bad years too, but the overall average has been pretty good.

If you're closer to retirement (~50's) and you haven't already socked away a big pile of cash, it seems pretty dire.  About all you can do to prepare for retirement is get your expenses and expectations whittled down to the bone so that you can live on the pittance Social Security is likely to give you.
2013-07-18 10:03:24 AM
2 votes:

FarkedOver: sigdiamond2000: It's one of the worst times to retire in recent history.

What does this sentence even mean?

It means get back to work!


Funnied because a Farker telling another Farker to get back to work at 10AM on a weekday is just the height of hilarity.
2013-07-18 09:02:07 AM
2 votes:
Almost makes the destruction of pensions look like a bad idea, doesn't it?
2013-07-19 01:28:46 PM
1 votes:
My retirement plan is a bottle of loudmouth and a shotgun shell.
2013-07-19 09:40:53 AM
1 votes:

Parkanzky: gshepnyc: Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?

This, Wall Street talked us into losing any sense of value for work. We had to put our money all in the hands of the Olympian "risk-takers" right? Well, what is more risky than devoting your entire life to working for a wage without any guarantee that your lifetime of labor will result in anything but an impoverished old-age?

Pensions are shackles.  You don't dare leave the company until you're vested in the pension so you have to accept crap raises and poor treatment and can't take advantage of a lucrative opportunity at another company.  However, if you get laid off before you're vested, you have nothing!  Also, if the company goes bust a year or two before you want to retire, or even worse, a year or two after, you could lose a big part or even all of your retirement!

With a 401k, you own your retirement money.  You can invest it however conservatively or aggressively you feel suits you.  If you leave your company, that money is still yours and since your company has nothing to do with it once it's in your account, it's not at risk if your employer pulls an Enron.  Also, assuming your company provides a reasonable match, you'll end up with more money in the long-run that you would with a pension.


Yah, this is the bullshiat theory MY ex crap company tried to sell us when they screwed us by doing away with our defined pension and replacing it with an 'enhanced' 401k.  So what that basically said was, 'so the experts who manage pension funds for a living can't make it work anymore, so HERE you broom pushers and button pushers, we're sure YOU'LL make out like fat rats trying to do it!'  You know damned well that if the company was trying to change it, it was benefitting the company, not you.  (btw we had a defined benefit pension AND a decent 401k with decent match beforehand.  They simply did away with the pension and added just a fraction more to the 401k match.  Thanks a $^$&& lot.)
2013-07-18 10:23:42 PM
1 votes:

plcow: Sergeant Grumbles: CujoQuarrel: Ahhh. Someone else who's run the numbers. Mine was close to $900k.

And on average you get back about $300k

It's insurance, not investment.
Do you calculate the ROI on your health insurance? Car insurance? Homeowner's insurance?
I'll bet you could make a lot of more money if you pulled your money out of those worthless.... unless something bad were to happen... amirite?

First of all, you don't collect insurance unless the trigger event happens.  With SS you do. So no, it's not insurance.  And yes I do calculate ROI on insurance, everybody does.  And when I run an assessment of SS the answer is quite simple.  To the extent that it is "insurance" I would rather be self insured.


The trigger event is getting to your 65th birthday.  Not everyone lives that long.  At it's heart, it is nothing more than welfare for old people.  Back when it started barely anybody lived long enough to collect, and those who did make it didn't stick around very long to collect much.

We did this because it would be a disgusting mark of shame on our country if our elderly couldn't afford food or housing.  Nobody wants to see this on America's streets:

www.visualphotos.com

They just needed to candy coat it by having everyone get some payments out of it, so we can all feel "invested" in the system and keep it going.
2013-07-18 05:08:42 PM
1 votes:

GoldSpider: Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?

I don't know about you, but I'd prefer to own my retirement assets instead of rely on the promise of my company that the money will be there when I retire.


On the one hand, I completely agree with the premise. On the other hand, an awful lot of people are, shall we say, not in a good position to be in charge of managing their own retirement assets. Let's just say that the switch from pensions to 401k plans has had winners and losers.
2013-07-18 04:33:02 PM
1 votes:

mcreadyblue: Hyjamon: mcreadyblue: Hyjamon: Rapmaster2000: Sounds good. I think you can probably be a little higher risk than that at your age. I wouldn't worry about throttling back into bonds until you're 45. That said, I am an pretty high risk investor so I understand most people aren't comfortable with that.

BTW, 10% is an incredible employer contribution. I would just verify that those are actual contributions and not a matching % up to 10%. I only get 4.5% matching.

You may want to look into 529 Plans for the kid, or Coverdell plans if you qualify. I see you're in GA as am I. For the Georgia 529, you don't pay any taxes on 529 plan earnings for both in-state AND out-of-state tuition. There are also tax deductions available. I think that might be a better option.

Yea, it is a 10% contribution.  Even if I lower my contribution say to 3%, employer still contributes 10% (state employee).

We looked at 529's and we are hedging our bets against the possibility of our child getting scholarships. HOPE, or possibly not choosing college.  That is why we went with the Roth.  Also, the Roth seemed to have more flexibility if we needed to pull from it for some unforeseen issue.  Also, how portable are 529's?  If we moved to a different state for example.

Glad to hear I can be more aggressive.  once the market turned down in 2008, I started looking more into the stock market and I know being so young I will see some more boom and bust cycles before I reach retirement.  I will probably change a good bit of investments next year.  I made a few "round-a-bouts" in the past months with my initial foray into changing investments, I am on a watch list with fidelity for a few funds.  Never knew that about funds, but that I what I am trying to do, learn.

I hope you know the State can take their contributions back and give you an IOU redeemable at a future date.

Something about this sounds fishy to me.  I don't know how they would do that or how that could hold up in court, sounds like breach of contract.  Please enlighten me (note this is not a pension, but a 401k) on how they can ask for the money they paid me back.  I can see if they erroneously over-paid me and ask for the overage back, but I find it hard for them to take what was correctly paid to me back.

Also, with none of us getting pay raises for 5+ years, if they were to pull a stunt like that, the brain drain from GA would be incredible.

California paid with IOUs a few years ago.

Also, City of Detroit just declared bankruptcy.

Unless the money is in your account, it's not really yours.


If its a true 401k you are indeed golden! 401k can survive your own bankruptcy.
2013-07-18 04:18:21 PM
1 votes:

meyerkev: Rapmaster2000: You want the middle class to come back? Make it pay to work again.

You can go ahead and defer additional earnings because of higher tax rates if you'd like.   I won't.

If you read that link, the basic problem is that you're not deferring additional earnings, you're losing tens of thousands of dollars in benefits.

[www.zerohedge.com image 600x449]

Now here in SV, you'd have to be crazy to work less.  Rent on a functional apartment is approaching $2000/month, so being at $50K is poverty, and $70K is roommate/paycheck-to-paycheck time.

But if you're in the midwest, where $55K a year is totally survivable, and only serious professionals or really, really good union jobs can break $60K, yeah, you're way better off working at Walmart and abusing welfare.  And you'll teach your kids that abusing welfare is better than actually working.  And THAT's the problem.  The utter inability to break out of poverty, combined with a culture that teaches that living on the welfare is better than not working.  (And remember, that chart doesn't include SSI.  With SSI, we're off to the races.)

/And yes, I wish that the exchange rate between "Money I spend"/"Stuff I get" was better, but the above is the real problem, especially once we get even higher taxes and wealth taxes.


A single mom is better off making $29,000 with $1,000,000 in benefits than making $29,000 with $57,000 in benefits.  They're both about as likely to occur.

FYI, you can save yourself the trouble and just grab the Tom Ridge Pennsylvania slides from The American Enterprise Institute:  http://www.aei.org/files/2012/07/11/-alexander-presentation_100635322 7 8.pdf

I love this one:

www.zerohedge.com


You need to adjust your bullshiat detector.  Especially when it's the kind of bullshiat you like to hear.

1.  That number above, 66,000,000, includes everyone - including children.
2.  A wealth producer means "someone who is employed in a private sector job".  It doesn't include people on retirement who are drawing a salary from savings and paying taxes.  Apparently, a dollar invested isn't "producing any wealth."  That sounds kinda liberal.
3.  Garbage in garbage out.

There is no "welfare crisis" in America.  That siren wail is 50 years old and it's been due to destroy America any day now since then.  Any.day.now.
2013-07-18 04:08:55 PM
1 votes:

robertus: Some of the Farkers in this thread seem to have a head for this sort of thing, so I'll ask:

About 10 years ago, I stashed a very small amount of money (that I wouldn't miss) in mutual funds that eventually became HILGX and HEIIX (Hennessey Cornerstone Large Growth and Equity & Income Institutional Class, respectively). Now, it works out to be about $1,500 total between the two funds, give or take. Not a real significant amount, but there's a comma in there, so it's worth taking a look at. Are these funds any good? Should I be thinking about consolidating that money into one or the other, or letting it ride? Is this such a pithy amount that it doesn't make much of a difference?

I don't have disposable income to throw into them (been reinvesting the dividends, but that's the only activity). We're squirreling money away into an emergency fund and to pay off the mortgage in the next few years, and don't want to put that money at risk (i.e., this isn't farkaround money like the initial investment).

/Meeting the company match on the Vanguard 401k.


I assume this is in a taxable account, and not an IRA.  It sounds like you don't want to take risk on that $1500 because you'll need it within a short-term time frame.  If so, sell your shares and put it in an FDIC insured bank account or bank CD.  No point taking market risk if you're going to need that money soon, say within five years or so.

If you're looking for a long-term investment, go with boring-ass index funds.

If you chart the performance of HILGX compared to the plain vanilla Vanguard Total Stock Market index fund (VTSMX) or ETF (VTI), you'll see there isn't a great deal of difference.  You've been paying a 0.98% expense ratio vs VTSMX's expense ratio of 0.17%, and VTI's expense ratio of 0.05%.  That's not much, but every little bit in your pocket helps.

I'm not a big fan of balanced funds because I prefer a bit more control over my portfolio's asset allocation, but the same argument holds for HEIIX, which has a portfolio of about 60% stocks, 35% bonds, and 5% cash, with an expense ratio of 1.08%.  Compare its performance to Vanguard Wellington (VWELX), which has a similar stock/bond ratio and an expense ratio of 0.25%.

If you don't need that $1500 soon, you could just let it ride.  You might have to take a long-term capital gains haircut by selling, and paying higher expense ratios on holdings of $1500 going forward isn't going to kill you.  I'd put any new investment money into cheap-ass Vanguard funds, or the equivalent (Fidelity Spartan funds, etc.).

If you want to know more, check out the "Bogleheads" books on investing and retirement planning.  Bogleheads.org has a good financial wiki, and very helpful forums.  Also check out early-retirement.org
2013-07-18 03:44:26 PM
1 votes:

Sergeant Grumbles: CujoQuarrel: Ahhh. Someone else who's run the numbers. Mine was close to $900k.

And on average you get back about $300k

It's insurance, not investment.
Do you calculate the ROI on your health insurance? Car insurance? Homeowner's insurance?
I'll bet you could make a lot of more money if you pulled your money out of those worthless.... unless something bad were to happen... amirite?


First of all, you don't collect insurance unless the trigger event happens.  With SS you do. So no, it's not insurance.  And yes I do calculate ROI on insurance, everybody does.  And when I run an assessment of SS the answer is quite simple.  To the extent that it is "insurance" I would rather be self insured.
2013-07-18 03:07:08 PM
1 votes:

AngryDragon: pdieten: Yeah, and you kind of missed the point. I interpreted your complaint as that you didn't want to pay Social Security tax on income and then have means testing that would prevent you from collecting it. Nobody is entitled to get their Social Security money back. You're paying an insurance premium when you pay social security tax. Insurance works by collecting from many and paying out to few, otherwise the business model doesn't work. Income redistribution happens when you get back less than you pay in, because the long-lived poor collect more than they paid in. Means testing SS, which we don't currently do, would increase the amount of redistribution. But nobody is going to take your personal retirement savings away, if that's what you're talking about now. That belongs to you.

No, I got your point quite well.  After paying into social security for 30+ years AND saving privately for retirement, you are telling me that if I save enough that my benefit should be reduced or forfeit..  I would already have to live to 115 to get out of SS what I contributed (plus interest).  It's not my fault that the government has screwed up the SS Trust.   At what point does fairness to an individual's labor get coopted by the general public?  It's ludicrous.  SS is supposed to be insurance, that's correct.  But EVERYONE is supposed to collect on it in some form or another.  That was the deal.  Retirement, survivor benefits, disability, available to every citizen.

If that is the case then I shouldn't be forced to play.  I will happily give up my SS benefit for life, surrendering everything that I've paid in so far, if I can just opt out.  I can easily provide for myself by adding my SS deduction to my investments.  Again, I have no problem with removing the income cap to help make the system healthier.  But if I contribute, I better damn well get a benefit back when the time comes.  Otherwise it really IS a Ponzi scheme.


I think you don't understand how Social Security works. Second time: You are entitled to NOTHING from Social Security. That is not your money. It does not belong to you in any way. If you die before the age you can start to collect, neither you nor your estate gets any of it. And you don't get to opt out of the system for the exact same reason that you're not allowed to just "opt out" of Obamacare. The model doesn't work if everyone doesn't participate. Have you thought about what happens if you lose your savings? Could happen very easily, and then you would pass the means test and collect Social Security. What if you had opted out? Then what?

How it works is: As the law stands today, if you contribute during your working lifetime, you get money when you reach the age of distribution. That is the beginning and end of your "entitlement" as of today. It could be changed. You may or may not get a benefit depending on how the law is written at the time you try to collect.

Incidentally, a Ponzi scheme is illegal because at some point the new income will end and there won't be any money to pay back investors. The US government cannot by definition run a Ponzi scheme because we assume it will continue to exist in perpetuity and always be able to collect new income to pay out. The trust fund has absolutely nothing to do with anything. That's just where they stick the excess collected funds that they don't have to pay out immediately. If there is no trust fund, then the distributions are made from current collected funds. Maybe it's less than what the statement had said 20 years prior. Oh well.
2013-07-18 02:24:26 PM
1 votes:

Rapmaster2000: Sounds good. I think you can probably be a little higher risk than that at your age. I wouldn't worry about throttling back into bonds until you're 45. That said, I am an pretty high risk investor so I understand most people aren't comfortable with that.

BTW, 10% is an incredible employer contribution. I would just verify that those are actual contributions and not a matching % up to 10%. I only get 4.5% matching.

You may want to look into 529 Plans for the kid, or Coverdell plans if you qualify. I see you're in GA as am I. For the Georgia 529, you don't pay any taxes on 529 plan earnings for both in-state AND out-of-state tuition. There are also tax deductions available. I think that might be a better option.


Yea, it is a 10% contribution.  Even if I lower my contribution say to 3%, employer still contributes 10% (state employee).

We looked at 529's and we are hedging our bets against the possibility of our child getting scholarships. HOPE, or possibly not choosing college.  That is why we went with the Roth.  Also, the Roth seemed to have more flexibility if we needed to pull from it for some unforeseen issue.  Also, how portable are 529's?  If we moved to a different state for example.

Glad to hear I can be more aggressive.  once the market turned down in 2008, I started looking more into the stock market and I know being so young I will see some more boom and bust cycles before I reach retirement.  I will probably change a good bit of investments next year.  I made a few "round-a-bouts" in the past months with my initial foray into changing investments, I am on a watch list with fidelity for a few funds.  Never knew that about funds, but that I what I am trying to do, learn.
2013-07-18 02:23:41 PM
1 votes:

Sergeant Grumbles: Girion47: college debt paid off, have a house, can currently make the mortgage but the hard to enter professional market with low-ball salaries is what's making life difficult.

How did you manage the debt and the house with such low-ball salaries? Those are making every step difficult.


Focused on paying down debt hardcore while jumping companies when the opportunity presented itself.

My definition of lowball meant, low for the field I'm in and years experience that I have, it's not low for the average income nationwide.
2013-07-18 02:22:16 PM
1 votes:
An article written by a baby boomer lamenting the current retirement challenges. How adorable.
2013-07-18 01:34:24 PM
1 votes:

Sergeant Grumbles: Millenials are screwed.
Student loans and high housing prices are going to leave them paying off debt and renting for most of their prime earning years, unable to build any savings.


millenial here!

college debt paid off, have a house, can currently make the mortgage but the hard to enter professional market with low-ball salaries is what's making life difficult.
2013-07-18 01:09:17 PM
1 votes:

Hyjamon: Also, would like to hear what managed fund are out there for >0.15% fees


I forgot to respond to this.  Vanguard basically created the model on low fee funds, but now some firms like Schwab, Etrade, and Fidelity have gotten onboard.

Here's a chart of 70 funds and their fees.

http://money.cnn.com/magazines/moneymag/bestfunds/index.html
2013-07-18 12:54:06 PM
1 votes:
Some of you already know this, but here is the blueprint for retirement savings:

Lazy Portfolios

Pretty much echos what the more knowledgeable here have been saying.
2013-07-18 12:38:22 PM
1 votes:
So strengthen SS.
2013-07-18 12:37:13 PM
1 votes:

Hyjamon: NostroZ: Finally, your investments. Your family, make sure they are not dicks and will forget about you in your old age. If you know they will be dicks, connect them not throwing you in a dilapidated nursing home as a contingent in your will. As far as where to sock away your money, just make sure you're not paying high 4b1 fees or other 'management' fees above .5% on any fund. The rest, I'm sure other Farkers will help you with (diversification, local & foreign index funds, proper mix for your age, etc.)

Chagrin: But watch that 3% match get eaten by the 401K manager's fees (Fidelity takes 1%) and expense ratios on their funds (2%).

Seriously, the fees and default disbursement for my employer's 401K managed by Fidelity is that way.

AngryDragon: Yeah, there should be a law against fleecing 401(k)s with management fees. I'm lucky. The funds I hold have a total expense ratio of 0.08% and the brokerage is still making money.

Rapmaster2000: That depends on two things.

1. 401k manager fee: The average is 0.78% (yes, that is too high in my opinion, but it's not 1%).
2. 2% expense ratio is ridiculous. Choose better funds. I'm a big believer in Vanguard Indexes rather than hoping some fund manger his the jackpot and beats the market. 0.17% is the expense ratio of VFINX which my 401k offers.

So the fees are significantly less than what you're proposing IF you do it right. The average stock fund expense is 1.44% - highway robbery.

This is the conversation I want in on.  There was a discussion similar to this a few months back that got me to look harder at my fund investments (Fidelity for sake of conversation).  So I tried to find funds with low fees, but the only ones I could find (granted i have access to 500+ so hard to look at everyone of them) were index funds (i have a vangaurd index at something like .07-.08).  All the other managed funds are around 0.7-0.85.  Choose a few of those in different markets(large cap, discovery, low priced, real estate, utilities, yad ...


I don't believe there's ever been a study that found a long term difference (aside from higher costs) in the performance of active vs passive funds.  The dirty secret of fund management is that nearly everyone closet indexes (meaning they decide to hold say GE within 1% of the S&P 500) because if one doesn't they're exceedingly likely to get fired rather quickly when they have even a modest performance differential.
2013-07-18 12:34:24 PM
1 votes:
I'm self employed so no 401K for me, I have an IRA that I max every year, some jumbo CD's and saving accounts.  I probably won't ever buy stocks(atm, but this could change in the next two years) and I have no plan on retiring other than what I'm about to describe.

I'm a real estate appraiser so I have a low stress job that I can do until the end of time that pays $4-500 an appraisal and I do between 15-20 appraisals a week with very very low over head ( which when I'm older I'll probably take the low stress route and do about 7 or so a week myself and my apprentices will do the rest and I'll just split the fee with them.

Most ppl who want to become an appraiser in the old days were men who after they retired from their jobs became one, so I'm about 30 years younger then all my peers.

I also am set to become the president of a large charitable foundation that will pay me an annual salary of $60,000 a year for one meeting a month.  I may also inherit a few million from an uncle(he's not actually my uncle, he was married to my coont of an aunt and they've been divorced for several years but we are really close so it's not really an inheritance and more of a, you're responislbe type person please carry on my legacy type deal) of mine with no kids or wife and I'm an only child and the only one in the family.  Both of my parents are dead so it's just the two of us.

Even if all that pans out, I'll still appraise houses and continue to make over six figures a year for the next 30-40 years since i'm only 34 right now, so with all that I'm hopefully set plus my wife is doing all that stuff everyone is talking about with her 401k IRA and employer matching.

But I have cousins who are brick layers and other lower skilled jobs that I really feel sorry for, their only hope is to retire with social security and to really work until they drop dead.

I need to have another kid so me and my wife won't be so lonely when we get older.

I'm not saying my way is any better than anyone else and I know I can do much better and plan to in the next two years (hopefully with stock purchases and stuff I don't really know anything about), but I don't feel as worried as some people should because even if nothing I've been told pans out, I'll still be a real estate appraiser and can do that well into my 80's like an old teacher of mine has done just not as often or work as hard as I do now.

I'm very blessed for a guy with a liberal arts degree from North Eastern Oklahoma A & M.  Go Golden Norsemen!
2013-07-18 12:27:32 PM
1 votes:

pdieten: Even if you're getting free money from the government from income redistribution, being poor sucks so hard that it's worth working harder to avoid it.


The American worker has shown no problems working harder and being more productive.   They're just seeing any fruits of their labor in terms of living wages since the American public laughably and gullibly bought into "trickle down" economics sold to them by Wall Street

encrypted-tbn2.gstatic.com.
2013-07-18 12:16:06 PM
1 votes:

meyerkev: Because I just graduated college and it's student loans yes, but housing prices no, since right when I buy a house is the same time when all the Baby Boomers die and drop millions of houses onto debt-saddled Millennials which sends the price screaming through the floor.


I would like to think that will happen, but I have my doubts. I can see prices never decreasing appreciably, or whole neighborhoods bought up by investors/developers and turned into rentals.
2013-07-18 12:08:39 PM
1 votes:

Sergeant Grumbles: Millenials are screwed.
Student loans and high housing prices are going to leave them paying off debt and renting for most of their prime earning years, unable to build any savings.


Define "Millennials".

Because I just graduated college and it's student loans yes, but housing prices no, since right when I buy a house is the same time when all the Baby Boomers die and drop millions of houses onto debt-saddled Millennials which sends the price screaming through the floor.

Now my cousins who are all about 10 years older than me, they're boned.  They got hit with both and lost their shirts.  But my cohort is going to be doing ok (not great, but ok), as long as they didn't do something stupid like take out $200K in student loans for an Art History degree (and if you honestly thought that was a good idea, you're an idiot).
2013-07-18 11:48:21 AM
1 votes:
What is this "retirement" you speak of?

//I'm farked, but I'm ok with that.
2013-07-18 11:45:46 AM
1 votes:

Johnsnownw: OMG, you mean I have to be responsible for my own finances!? I have to plan for my own retirement, and live life within my means?

/Seriously, people, it aint that complicated.


It kind of is. they really should have it as part of high school curriculum. Most people I know have not done all that well when it comes to retirement planning. and I work at a fortune 500.
2013-07-18 11:42:01 AM
1 votes:

mcreadyblue: pdieten:


Housing prices seem to have gone up a tad bit in the last 15 years.

And bacon.


So how many people buy a new house after they retire? This is why you're supposed to buy a house when you're young and working, so for the price of property taxes and maintenance you have someplace to live after you retire. Or sell it so you can afford a few years of rent in the senior home.

And chances are if you're retired then your doctor told you to lower your bacon consumption because it's bad for your heart condition. I tell you, getting old is hell.
2013-07-18 11:37:45 AM
1 votes:

Chagrin: E5bie: Great Janitor:
Banks aren't great at investing, given that a CD is less than 3%.  So you'll actually lose money compared to inflation.  A 3% matching 401k still doesn't work due to inflation, which is why I've always turned down 401k options (also, if you need your money from a 401k before retirement you get hit with double taxes and double penalties).

If you put in 6%, and your employer puts in a match of 3%, then 9% is going into the 401K. That's a 50% boost.
The returns would have to be pretty low for inflation to eat that up I think

But watch that 3% match get eaten by the 401K manager's fees (Fidelity takes 1%) and expense ratios on their funds (2%).

Seriously, the fees and default disbursement for my employer's 401K managed by Fidelity is that way.


All of your fund options have 2% expense ratios?  That's ridiculous.

I have one fund that has an expense ratio over 1%.  It's an international fund and I expect it to have higher expenses.  All the rest have expenses under a couple tenths of a percent.  Most are ~0.1%.  This is with Fidelity and I don't pay Fidelity anything to manage my 401k.

Are you with a small company?  Both my current and previous employers use Fidelity for 401ks.  My previous company (very small, a couple hundred employees and low revenue) 401k choices generally had higher expense ratios than the options I have at my current employer (bigger company with thousands of employees and billions in annual revenue).

Please, don't tell people not to invest in their 401k's.  First, they really are a good deal.  The company match is one big advantage, but the tax savings is another huge plus.

If you start early, you'll accumulate a really nice chunk of change in 10 or 20 years.

Second, the alternative for most people is not to save at all...
2013-07-18 11:29:37 AM
1 votes:

Great Janitor: Social Security has a negative rate of return.  We're supposed to pay into it today so we can retire on it, but we get less money back than we pay in.  We'd be better off with ANY other form of retirement planning.  Hell, I'd be better off taking the money I pay into Social Security, taking it to the casino and playing roulette with it. At least that way I could possibly see some gain with it.


SS isn't a retirement account. It's retirement insurance. If you die early, there is no left over money in an unused account. If you don't die fast enough, you still get paid after a retirement account would have been gone.
2013-07-18 11:24:05 AM
1 votes:

AngryDragon: sigdiamond2000: It's one of the worst times to retire in recent history.

What does this sentence even mean?

It means that after gutting the entire social structure, the boomers are whining again that they have to face the consequences now.


Nah, we Boomers are in much better shape than you Gen-alphabetsoupers. Not as good as our Greatest Gen parents, but hey...they will all die off in their 80s and 90s while many of us Boomers will live twice as long, so I guess there's a trade off.
2013-07-18 11:20:30 AM
1 votes:

Sergeant Grumbles: Millenials are screwed.
Student loans and high housing prices are going to leave them paying off debt and renting for most of their prime earning years, unable to build any savings.


This. It should eventually fix itself, but the people caught in the transition will likely get hosed. And those people are looking like the millennials.
2013-07-18 11:15:38 AM
1 votes:

gshepnyc: Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?

This, Wall Street talked us into losing any sense of value for work. We had to put our money all in the hands of the Olympian "risk-takers" right? Well, what is more risky than devoting your entire life to working for a wage without any guarantee that your lifetime of labor will result in anything but an impoverished old-age?


Pensions are shackles.  You don't dare leave the company until you're vested in the pension so you have to accept crap raises and poor treatment and can't take advantage of a lucrative opportunity at another company.  However, if you get laid off before you're vested, you have nothing!  Also, if the company goes bust a year or two before you want to retire, or even worse, a year or two after, you could lose a big part or even all of your retirement!

With a 401k, you own your retirement money.  You can invest it however conservatively or aggressively you feel suits you.  If you leave your company, that money is still yours and since your company has nothing to do with it once it's in your account, it's not at risk if your employer pulls an Enron.  Also, assuming your company provides a reasonable match, you'll end up with more money in the long-run that you would with a pension.
2013-07-18 10:58:31 AM
1 votes:
And I'm still fully participating

Great Janitor: I've known people who knew how to super inflate their Universal Life Insurance policies and pull it off.


If I only get through a single point in this thread, here it is. For the love of god, please do not allow anyone you care about to buy one of these idiotic policies. You may have one or know someone who does. It may have had a lot of money in it - great. It would have had a lot more if they'd invested that same money in a different savings vehicle.
2013-07-18 10:52:09 AM
1 votes:
you're supposed to own everything you need when you retire.  I'll own my house at 60, i'll presumably trade in my power image car, for a mid-90s beige crown vic, i'll cancel internet and start getting not-newspapers, i'll eat bland food and drink cheap whiskey, and i'll take up gardening as a hobby.

retirement is cheap.
2013-07-18 10:49:56 AM
1 votes:

hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?


One way is by getting into a horrific car accident - a closed head injury is a plus - and then saving away the lawsuit winnings.
2013-07-18 10:27:45 AM
1 votes:

Saiga410: Hmmm, low inflation yields low returns..... ya dont say.

Though I wonder why tuition increases factor into your ability to retire.....  I know when I retire I will not be going back to school to be that one guy that always sits in the front row asking the most assinine questions in a 100 level class.


Yeah, there was all kinds of shiat wrong with TFA. Not only am I not paying my grandkids' tuition, but I'm not retaining this 5 bedroom house much longer. Nor do I expect to spend like I did while in my peak earning years. The kids are gone and with them their expenses. Bonds are worthless in the Japan-style deflation we're likely to be locked in for the foreseeable future, so I don't own any and don't envision ever doing so. The keys to a successful retirement are the same as always: get out of debt as quickly as possible, then invest that same amount in IRAs, 401(k)s and other investment vehicles over the life of your working career.
2013-07-18 10:24:47 AM
1 votes:

hej: No, I was implying that the advice was for the rubes (i.e. me), not coming from it.


Oh, my bad, self-deprecation is so rare online, it caught me off-guard.

Well... learning to cook is a good start, you've got the idea down... lower your expenses as much as you can.  Make your own coffee / eggs.  Find hobbies that are free (biking, hiking, city architecture, botany, etc.).

Second, you want to increase your ability to earn an income.  Learn a trade that you can do when you are old.  Anything that does not require heavy physical labor and you can be a simple clerk at (old people are often discriminated against, so you'll have to have a lower totem pole job in your old age, despite your years of experience).

Finally, your investments.  Your family, make sure they are not dicks and will forget about you in your old age.  If you know they will be dicks, connect them not throwing you in a dilapidated nursing home as a contingent in your will.  As far as where to sock away your money, just make sure you're not paying high 4b1 fees or other 'management' fees above .5% on any fund.  The rest, I'm sure other Farkers will help you with (diversification, local & foreign index funds, proper mix for your age, etc.)
2013-07-18 10:22:53 AM
1 votes:

Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?


Yea, I know I for one would prefer to put all my eggs in one basket in the hopes that a company not only continues to exist 30-60 years from now but is still profitable and doesn't try to bully their way out of pension obligations.

/Seems to be working out well for soooo many of our elderly already...
2013-07-18 10:18:11 AM
1 votes:

hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?


A 401k and an IRA.... followed by a 401k and an IRA and a non sheltered portfolio, followed by golddigging.
2013-07-18 10:15:24 AM
1 votes:

hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?


You might want to begin your solicitation of advice by something other than implying that those that will be providing it are 'financial rubes'.

My advice to you, besides pulling your head from between your butt cheeks, is to learn to cook... or develop a taste for cat food (they have it in lots of varieties).
hej
2013-07-18 10:11:59 AM
1 votes:
So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?
2013-07-18 10:08:55 AM
1 votes:

RoyHobbs22: Too lazy to find the Nick Cage "you don't say?" picture but it is exactly what comes to mind.  Was considering investing in beach property to partly enjoy and partly rent for vacations.  Other ideas?


Join a radical leftist group and incite workers revolution?
2013-07-18 10:02:25 AM
1 votes:
401k + Social Security + part time job + cat food + living in part of town where I carry a gun = RETIREMENT!
2013-07-18 10:01:38 AM
1 votes:

sigdiamond2000: It's one of the worst times to retire in recent history.

What does this sentence even mean?


It means that after gutting the entire social structure, the boomers are whining again that they have to face the consequences now.
2013-07-18 09:52:51 AM
1 votes:

brainscab: 1/3 to rent
1/3 to taxes
1/3 to retirement

where is food in this equation?


0bummer will cancel elections and be named dictator for life and issue everyone EBT cards and 0bongo phones.  He will force mass abortions and mass membership in trade unions.  Welcome to the United Bolshevik States of America!!
2013-07-18 08:55:27 AM
1 votes:
if we are screwed anyway, let's get rid of Social Security then.
 
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