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(LA Times)   New report says the 401(k) system leaves most people with inadequate retirement savings. That report is called your 401(k) statement   (latimes.com) divider line 206
    More: Fail, pension plans, saves, Economic Policy Institute  
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1572 clicks; posted to Business » on 06 Sep 2013 at 11:38 AM (49 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-09-06 08:53:57 AM
Yeah, it's The System's fault you can't save any money.
 
2013-09-06 10:56:54 AM
I have SS, 401k, a retirement fund, two houses paid for and I still doubt I'm set up for retirement.

But that (of course) is because I'm lazy and don't know how to handle money. That's ALWAYS the right wing answer...
 
2013-09-06 11:09:03 AM
Well that made me feel a little bit better about my economic situation.

Wait, the fact that impoverished octogenarians are going to be lining up outside my box/soup kitchen fighting over dog food and gruel doesn't make me feel good at all.
 
2013-09-06 11:42:36 AM
Its a good thing that all I want to do when I retire is drink beer, watch tv and occasionally go bowling or to a strip club.

Im all set.
 
2013-09-06 11:46:19 AM

brap: Wait, the fact that impoverished octogenarians are going to be lining up outside my box/soup kitchen fighting over dog food and gruel doesn't make me feel good at all.


You can take bets on who's going to win.
 
2013-09-06 11:53:55 AM
I'm on board with SS, 401k, Roth IRA, health insurance and two pensions. I think I'll be OK for retirement but I just hope I don't get laid off before I choose to retire. Sweating out the last several years.
 
2013-09-06 11:54:41 AM
Yes, let's return to the magically sustainable world of pensions. That will solve everything.
 
2013-09-06 12:06:31 PM
I have an awesome 401K with about 500 dollars in it.

Retirement, here I come!
 
2013-09-06 12:09:26 PM

You're the jerk... jerk: Yes, let's return to the magically sustainable world of pensions. That will solve everything.


Oh, and why is that, pray tell? Because businesses want to give more money to shareholders, executives, CEOs rather than the employees who make the businesses run?

Expect the next benefits to lose from employers to be, in no particular order: Health insurace, paid vacation days, pay raises.
 
2013-09-06 12:12:21 PM
Yep, subby. All the system's fault.  Has nothing to do with this.  Personal responsibiltiy is only for others, amiright?

www.creditwritedowns.com
 
2013-09-06 12:15:23 PM

HeadLever: Has nothing to do with this. Personal responsibiltiy is only for others, amiright?


Your first mistake is assuming that the graph has something to do with personal responsibility. It's still very much the system if wages haven't increased in the entire timespan the graph represents, while the cost of everything else has.
 
2013-09-06 12:17:11 PM

HeadLever: Yep, subby. All the system's fault.  Has nothing to do with this.  Personal responsibiltiy is only for others, amiright?


Frontline had a great show that talked about retirement/401K.

They pointed out 2/3 of gains are typically swallowed up in fees by the Wall Street companies that run the 401ks.
 
2013-09-06 12:18:35 PM

You're the jerk... jerk: Yes, let's return to the magically sustainable world of pensions. That will solve everything.


There has been talk of the government nationalizing all 401ks and replacing them with government bonds that pay a predictable interest.
 
2013-09-06 12:21:55 PM

HeadLever: Yep, subby. All the system's fault.  Has nothing to do with this.  Personal responsibiltiy is only for others, amiright?

[www.creditwritedowns.com image 570x371]


How does cost of living and wages figure into that?
 
2013-09-06 12:23:12 PM

mcreadyblue: HeadLever: Yep, subby. All the system's fault.  Has nothing to do with this.  Personal responsibiltiy is only for others, amiright?

Frontline had a great show that talked about retirement/401K.

They pointed out 2/3 of gains are typically swallowed up in fees by the Wall Street companies that run the 401ks.


The employee must be getting a very large kickback if the only plans available in then 401k have high fees. The 2 funds I put my 401k money in have maintenance fees of less than .2% and there are a couple of options with less than that.

Also, the biggest gain the the employee contribution. For example, my employee matches 100% up to 5% of my paycheck so I'm only using the 401k for that 100% return on my investment. The market return on top of that is just icing on the cake.
 
2013-09-06 12:23:12 PM

AirForceVet: Because businesses want to give more money to shareholders, executives, CEOs rather than the employees who make the businesses run?


Some of the worst performing and must underfunded pensions are in the public sector.  Also don't forget that private pensions are insured, while public pensions are generally not.  Also, I belive that private pensions need to be funded upfront, whereas public entitites can promise whatever thier alligator mouth spouts, regardless if they are supporting a hummingbird ass or not.
 
2013-09-06 12:25:48 PM

HeadLever: AirForceVet: Because businesses want to give more money to shareholders, executives, CEOs rather than the employees who make the businesses run?

Some of the worst performing and must underfunded pensions are in the public sector.  Also don't forget that private pensions are insured, while public pensions are generally not.  Also, I belive that private pensions need to be funded upfront, whereas public entitites can promise whatever thier alligator mouth spouts, regardless if they are supporting a hummingbird ass or not.


Public sector pension funds have been raided by politicians for various reasons and that's the biggest reason why there are underfunded. Also, private sector pension funds have been disappearing faster than wage increases.
 
2013-09-06 12:31:05 PM

rumpelstiltskin: Yeah, it's The System's fault you can't save any money.


While this may be true, it will end up being your problem.  Rather than saying FU, I got mine, you should be looking for solutions.
 
2013-09-06 12:33:16 PM
When Obama launches those 200 cruise missiles at Syria, thats 91,000 monthly Social Security payments. Not a problem to launch those missiles. Fix Social Security? Man, it's broken beyond repair. Wars are easier to fight, then dealing with domestic problems.
 
2013-09-06 12:36:30 PM

Pick: When Obama launches those 200 cruise missiles at Syria, thats 91,000 monthly Social Security payments. Not a problem to launch those missiles. Fix Social Security? Man, it's broken beyond repair. Wars are easier to fight, then dealing with domestic problems.


Typical lib.  Rather than defending America from terrorism it's all "gimme gimme gimme my government money check."  You need to take some personal responsibility for your own retirement rather than relying on the government to take care of you.
 
2013-09-06 12:38:27 PM

ddam: Public sector pension funds have been raided by politicians for various reasons and that's the biggest reason why there are underfunded.


That is part of the issue, but not all.  Some of it is just poor planning and promises that they could not keep.
 
2013-09-06 12:40:50 PM

ddam: Also, private sector pension funds have been disappearing faster than wage increases.


That is true as well.  It is part of the ongoing struggle that we are having trying to be competitive in the world economy.  The pressure put on small and medium sized buisnesses (and by extension the middle class) is huge.  The on-going belt tightening does not bode very well for private pension plans or 401(k)s
 
2013-09-06 12:43:24 PM

HeadLever: AirForceVet: Because businesses want to give more money to shareholders, executives, CEOs rather than the employees who make the businesses run?

Some of the worst performing and must underfunded pensions are in the public sector.  Also don't forget that private pensions are insured, while public pensions are generally not.  Also, I belive that private pensions need to be funded upfront, whereas public entitites can promise whatever thier alligator mouth spouts, regardless if they are supporting a hummingbird ass or not.


That insurance on the private pensions is, as of November of 2012, a possessor of $85 billion of assets with $112 billion of liabilities.
 
2013-09-06 12:45:08 PM
"But the 401(k) system has been a dud for the vast majority of Americans, with women, young people and minorities among the broad groups whose financial well-being is at risk because they're not saving enough. "

I think I'm seeing the problem here...

"For middle-income earners, the median balance in 401(k) plans as of 2010 was a lowly $23,000, according to the study. "

So assuming they're talking about people in their mid-40s, that means 15 years of savings.  $23K over 15 years is 1,500 a year or $60 per bi-weekly paycheck and that is without any interest.

Conversely, after a quick calculation, saving just $100 a paycheck in that same timeframe at 8% average yields $65,000.  Take that out another 20 years, and the total is $413,500.  It's not that the system is failing, it's that people are short-sighted.  Is there a reason why they don't teach a semester of personal finance in high school?
 
2013-09-06 12:46:46 PM
I've been saving for 25 years, have 300K and my monthly income from that is probably 300 a month. 25 years ago, the investment company and HR was telling people that if they started at 21, they'd be millionaires at 40. So, yeah. Pretty much. Once I seriously sat down and did the math, I started paying down the house. At least I won't have to make the choice of rent or cat food.
 
2013-09-06 12:49:39 PM

dsmith42: That insurance on the private pensions is, as of November of 2012, a possessor of $85 billion of assets with $112 billion of liabilities.


You wouldn't happen to have a link to that source info, would you?  I would like to get more info on the accounting here.
 
2013-09-06 12:51:03 PM

AngryDragon: Is there a reason why they don't teach a semester of personal finance in high school?


Make it manditory to listen to the Dave Ramsey radio show for a week.
 
2013-09-06 12:55:28 PM

rumpelstiltskin: Yeah, it's The System's fault you can't save any money.


Well yeah, kind of.

Even if you can they've got numerous schemes to cut a nice cut of anything you're saving.
 
2013-09-06 12:56:25 PM

HeadLever: dsmith42: That insurance on the private pensions is, as of November of 2012, a possessor of $85 billion of assets with $112 billion of liabilities.

You wouldn't happen to have a link to that source info, would you?  I would like to get more info on the accounting here.


Sure, here you go:

http://articles.washingtonpost.com/2012-11-16/business/35505545_1_pb gc -premiums-pension-plans-troubled-pension-funds

I tried to go directly to the PBGC website directly, but for some reason it would not load for me. But it seems to be working now.
 
2013-09-06 12:58:02 PM

mcreadyblue: They pointed out 2/3 of gains are typically swallowed up in fees by the Wall Street companies that run the 401ks.


They tell you what the fees are right upfront. As a general rule, stick with index funds and this won't happen.
 
2013-09-06 01:00:27 PM

mediablitz: I have SS, 401k, a retirement fund, two houses paid for and I still doubt I'm set up for retirement.

But that (of course) is because I'm lazy and don't know how to handle money. That's ALWAYS the right wing answer...


The right wing answer to someone who has worked hard enough to own two houses outright is to call them lazy on the basis they are doubting if they have saved enough to retire?  I think I'm missing the joke.  I'd think it more likely a lefty who could find lots of room to throw accusations your way and then follow up with an incredibly clever remark concerning your obvious need for a tax cut.
 
2013-09-06 01:00:28 PM

dsmith42: Sure, here you go:

http://articles.washingtonpost.com/2012-11-16/business/35505545_1_pb gc -premiums-pension-plans-troubled-pension-funds

I tried to go directly to the PBGC website directly, but for some reason it would not load for me. But it seems to be working now.


Cool, thanks.
 
2013-09-06 01:01:15 PM

dsmith42: Sure, here you go:

http://articles.washingtonpost.com/2012-11-16/business/35505545_1_pb gc -premiums-pension-plans-troubled-pension-funds

I tried to go directly to the PBGC website directly, but for some reason it would not load for me. But it seems to be working now.


A failing government program? Odd that.
 
2013-09-06 01:02:31 PM

doczoidberg: I have an awesome 401K with about 500 dollars in it.

Retirement, here I come!


You are doing fine, assuming you are 15.
 
2013-09-06 01:07:59 PM

MugzyBrown: A failing government program?


The only reason that it is 'failing' is that congress will not give it the authority to charge the premiums that is required to balance assets and liabilities.  So far, they have not had to have any bailout from taxpayers, but if they allow the asset-liability gap to continue on its current path, that will only become a matter of when.

overall, it looks to be an easy fix.  Thier hands are tied in its implementation, though.
 
2013-09-06 01:09:31 PM
The biggest problem with the 401(k) system is the average person does not make enough in the first place to set aside a meaningful amount of money to retire with.  All that is going to happen is they are are at retirement age, they are going to take the $50k they saved up over 30 years as a distribution and live off of social security and medicare for the rest of their lives.

Combine that with theability to take a loan on the 401(k) account, which destroys earnings potential, and its no wonder that Americans in general, are farked for retirement.
 
2013-09-06 01:10:59 PM

HeadLever: The only reason that it is 'failing' is that congress will not give it the authority to charge the premiums that is required to balance assets and liabilities


And this is why gov't programs fail.

They cannot react to the marketplace because they're not in it.
 
2013-09-06 01:13:55 PM
Just in case anyone was curious ... here is a 401(k) savings calculator that is handy

http://www.cchwebsites.com/content/calculators/Retire401k.html
 
2013-09-06 01:18:28 PM

Minarets: The biggest problem with the 401(k) system is the average person does not make enough in the first place to set aside a meaningful amount of money to retire with.  All that is going to happen is they are are at retirement age, they are going to take the $50k they saved up over 30 years as a distribution and live off of social security and medicare for the rest of their lives.

Combine that with theability to take a loan on the 401(k) account, which destroys earnings potential, and its no wonder that Americans in general, are farked for retirement.



I'll disagree with that.  They make plenty of money, they just choose to spend it on other things.  A 200 to 500 dollar car loan, 150 to 250 bucks a month for TV and Internet and a smart phone, 100 to 200 bucks a month in Credit Card interest, 100 bucks a month for beer, 200 bucks a month for eating out, etc.

Say I save $150 a month in an IRA at 8% for 40 years.  That is a bit more than 500K in savings. It doesn't take much to save some money in the future.  What it does take is discipline.  That is what most folks are missing - not money.
 
2013-09-06 01:20:25 PM

MugzyBrown: They cannot react to the marketplace because they're not in it.


They can react fine.  They have requested as much.  However, since they don't have the authority to make the change (congress does), they utlimtatly cannot control the situation they are in.
 
2013-09-06 01:23:42 PM
The worst part about this, as usual the people who have saved and have been responsible will have to step in and help those who blew through their salary every month without saving.

I don't make big money, but I've been able to put a nice % aside every month, and I have a mortgage and a kid.

They'll change the tax laws to keep SS afloat for the irresponsible people even though for 20 years people have been saying SS isn't enough to live off of.

Same thing with the mortgage crisis and every problem.  The profitable banks and responsible homeowners got to sit back and watch their tax dollars bail out irresponsible lenders and lendees
 
2013-09-06 01:25:00 PM

HeadLever: They can react fine.  They have requested as much.  However, since they don't have the authority to make the change (congress does), they utlimtatly cannot control the situation they are in


Uhh yeah.. that's the whole point.

Gov't programs have to deal with politicians and are using other people's money.  Same reason FDIC is a joke, and NFIP is underfunded
 
2013-09-06 01:27:50 PM

MugzyBrown: Gov't programs have to deal with politicians and are using other people's money.


Acutally, with this, they are not using taxpayer money.  Their assets are from premiums from the private pension plans.  So far they have not had to use other people's money.  However, that will likely change if they need to get bailed out if the politicans fail to act.
 
2013-09-06 01:30:08 PM
I made every effort to shovel as much as I could into my retirement fund early on. Now that I've got 2 kids I've had to dial back, and stuff like this worries me. At 6.5% over the next 30 years I can hit $500,000, which would probably be enough (combined with planned pension and SS), especially if I can have my mortgage paid off by then, but adding to everything is  the fact that the prospect of paying for college for two (or more) kids is just terrifying. The financial planner we talked to recomended saving about $600 a month, per kid, to ensure we could fully fund their college education, which is just way out of our budget right now.

I'd be much happier and comfortable with a better pension option and the knowledge that SS will be more robust in the future, the whole 401k model seems like such a crapshoot.
 
2013-09-06 01:33:22 PM

MugzyBrown: HeadLever: They can react fine.  They have requested as much.  However, since they don't have the authority to make the change (congress does), they utlimtatly cannot control the situation they are in

Uhh yeah.. that's the whole point.

Gov't programs have to deal with politicians and are using other people's money.  Same reason FDIC is a joke, and NFIP is underfunded


The FDIC is perfectly fine and weathered the Great Financial crisis without any problems. They also increased the premium that they charged banks for their insurance subsequent to that crisis. But they can act without Congressional approval.

If you want to go back to the time when banks were uninsured and you could lose all your money when it went under, feel free. I hear you can get some biatching rates on CDs from the Stanford International Bank. Or stuff it in your mattress.
 
2013-09-06 01:37:19 PM

dsmith42: If you want to go back to the time when banks were uninsured and you could lose all your money when it went under, feel free


Ya know there are tons of financial institutions that have insurance that are not under the FDIC umbrella
 
2013-09-06 01:37:36 PM

HeadLever: What it does take is discipline. That is what most folks are missing - not money.


And most people are never going to get that discipline.  So that leaves three options.

1) Let 'em starve
2) Bail 'em out
3) Take away their choice and go back to a pension like system
 
2013-09-06 01:43:33 PM
mediablitz: I have SS, 401k, a retirement fund, two houses paid for and I still doubt I'm set up for retirement.

Ohh, I can retire just fine.

BUT

I can't retire the way I WANT to retire.

// IE, my 401k isn't going to be able to buy me a Yacht. But I won't be starving on the streets.
 
2013-09-06 01:44:15 PM

mcreadyblue: They pointed out 2/3 of gains are typically swallowed up in fees by the Wall Street companies that run the 401ks.


S&P 500 Index funds are your friends.  Mine has a .25% fee.

I did work at a place that went from a company that offered an S&P500 Idex fund to one that attempted to match the preformance of the S&P 500.  The fee went from something like 1/4% to 6% over night and it was the best deal.  Fortunately that only lasted about a year and a half before got a new position.
 
2013-09-06 01:44:34 PM

12349876: So that leaves three options.


Actually, that leaves about 2,419 options.  Trying to simplify it into quaint takling points is a real disservice to what this issue really represents.
 
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