Do you have adblock enabled?
If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(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  
•       •       •

1576 clicks; posted to Business » on 06 Sep 2013 at 11:38 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



206 Comments   (+0 »)
   
View Voting Results: Smartest and Funniest

Archived thread

First | « | 1 | 2 | 3 | 4 | 5 | » | Last | Show all
 
2013-09-06 01:47:18 PM  

HeadLever: 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.


They are also missing a magic way to get a guaranteed 8%.  Safe investments are making less than 2%.  Younger folks can roll the dice, but people already in their 50s and 60s are playing it safe.
 
2013-09-06 01:49:39 PM  
Read that as pirate pensions.
 
2013-09-06 01:49:50 PM  

error 303: 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.


So you have successfully followed the 401K plan, are probably set to be comfortable in retirement, and you're dissatisfied?  I don't understand.  It sounds like your issue should be the insane cost of college that you can't continue with your successful plan.
 
2013-09-06 01:54:59 PM  

HeadLever: 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.


Feel free to list them and not just claim you have them.
 
2013-09-06 01:55:57 PM  
If a self-managed retirement account were a sensible way of planning for retirement everybody would just be a stock broker from day one.

I have an IRA and a 401k because I have no reasonable retirement-planning options (and I'm not leaving the paltry company match on the table), but even though I'm doing fine with both I think the whole idea is still farking retarded. If everybody were able to make money in the stock market everybody would be a goddamn fund manager. You shouldn't have to have two careers your entire life just so you can eat past 65.

401ks are particularly insidious since the only thing they actually accomplish is a better bottom line for the companies that get to cut their staffing costs.

On the flip side, it's workers' faults they let companies steal their pensions away in the first place so I'm a bit torn on who gets more ire, companies or their employees.
 
2013-09-06 01:55:58 PM  

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


Actually, yes, yes it is.

And if Americans actually saved what they needed to for retirement, it'd probably send the world economy into a tailspin as even more wealth sat idle.

Imagine if every working American socked away just 10% of their income each month.  That's a huge chunk of cash taken out of circulation, sitting earning interest in some account, 401K, IRA, or whatever you choose.
 
2013-09-06 01:56:14 PM  

bark_atda_moon: HeadLever: 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.

They are also missing a magic way to get a guaranteed 8%.  Safe investments are making less than 2%.  Younger folks can roll the dice, but people already in their 50s and 60s are playing it safe.


Returns are usually calculated by historical averages.  Example:

i.imgur.com

The big loss years bring things down dramatically.  Average annual return of the S&P over time is over 10%.  The key is over time.  You're saving for retirement not for next weekend's party.  That's why you save early, often, and consistently.
 
2013-09-06 01:56:21 PM  

bark_atda_moon: They are also missing a magic way to get a guaranteed 8%. Safe investments are making less than 2%. Younger folks can roll the dice, but people already in their 50s and 60s are playing it safe.


If your putting money in your retirement account from age 20 to 62, and S&P 500 Index fund will be safe for 35 of those 42 years.  It is only when you get close to when you have to actually start making withdrawals is when you have to start moving money into less volatile investments.
 
2013-09-06 01:59:48 PM  

bark_atda_moon: Younger folks can roll the dice, but people already in their 50s and 60s are playing it safe.


If those in their 50s and 60s were playing it safe, they would have been saving up money for the last 20 to 40 years.  I do agree when you you reach near retirement age, you need to be more conservative with your money.  Being behind in your retirement savings when you are 50 and 60 is not good from any angle.
 
2013-09-06 01:59:51 PM  

skozlaw: 401ks are particularly insidious since the only thing they actually accomplish is a better bottom line for the companies that get to cut their staffing costs.


So what's with all this money in my accounts, a good portion of it is from the company match?
 
2013-09-06 02:03:19 PM  

12349876: Feel free to list them and not just claim you have them.


Might want to check you hyperbolometer for a malfunction.  In any case, you simplfied talking points really dose not address the entirety of this issue.
 
2013-09-06 02:05:36 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]


Yeah, because everyone making less money while things cost more has nothing to do with the inability to save.  Were you born stupid or just raised that way?
 
2013-09-06 02:06:35 PM  

HeadLever: 12349876: Feel free to list them and not just claim you have them.

Might want to check you hyperbolometer for a malfunction.  In any case, you simplfied talking points really dose not address the entirety of this issue.


Then please enlighten me, or just keep your holier than thou attitude with no evidence to back it up.
 
2013-09-06 02:06:59 PM  

meat0918: That's a huge chunk of cash taken out of circulation, sitting earning interest in some account, 401K, IRA, or whatever you choose.


You really think that the money just sits in a vault or an account somewhere after you invest it?  Really?
 
2013-09-06 02:11:06 PM  

Kazrath: Yeah, because everyone making less money while things cost more has nothing to do with the inability to save.


It does have an impact, but it is not the entire issue here.  Things cost more becacuse folks are going into debt  more and more and have to fork over more of thier income to banks via interest.  If folks would resist the temptation of easy credit and just save what they paid in credit card interest ever month, you would see a huge uptick in that graph.

Of course, this 'easy money' mentality is a tough mindset to break.  Plus it is the last things that banks want.
 
2013-09-06 02:11:50 PM  

HeadLever: If those in their 50s and 60s were playing it safe, they would have been saving up money for the last 20 to 40 years.


It is a big challenge to get people in their 20s to sign up for in the 401k program.  They're usually starting out some their at the lower end of the income levels, they tend to have more bills since they're just starting to accumulate "stuff" plus there are probably college expenses, finally,  folks in their 20's aren't good at thinking long term.
 
2013-09-06 02:15:33 PM  

12349876: Then please enlighten me, or just keep your holier than thou attitude with no evidence to back it up.


You could provide incentives via the tax code to have folks save for retirement.  Bolster and expand the Roth programs.  Beat the banks with a big stick and enact policies in order to reduce their drug fueled addition to credit cards, make Dave Ramsey's program a High School course.

/just to name a couple
 
2013-09-06 02:17:34 PM  

Muta: folks in their 20's aren't good at thinking long term.


Yeah, I think that dicipline is usually a word that many of them don't understand until age 30.
 
2013-09-06 02:21:10 PM  

HeadLever: Things cost more becacuse folks are going into debt more and more


Or folks are going into debt more and more because things cost more and wages haven't risen in 30 years.
 
2013-09-06 02:21:11 PM  

DrewCurtisJr: So what's with all this money in my accounts, a good portion of it is from the company match?


Your personal experiences are individually irrelevant to overall trends, but, ignoring that annoying little fact, I would assume you either have a very generous company match or a very poor rate of return.
 
2013-09-06 02:22:40 PM  

AngryDragon: bark_atda_moon: HeadLever: 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.

They are also missing a magic way to get a guaranteed 8%.  Safe investments are making less than 2%.  Younger folks can roll the dice, but people already in their 50s and 60s are playing it safe.

Returns are usually calculated by historical averages.  Example:



The big loss years bring things down dramatically.  Average annual return of the S&P over time is over 10%.  The key is over time.  You're saving for retirement not for next weekend's party.  That's why you save early, often, and consistently.


You need to factor in inflation.

rpreschern.files.wordpress.com
 
2013-09-06 02:27:57 PM  

Dusk-You-n-Me: Or folks are going into debt more and more because things cost more and wages haven't risen in 30 years.


And they won't likely rise anytime soon until the rest of the world catches up to our standard of living.  With this globalized marketplace, we are in for a long slog.  I really think that this will the the new norm for the next decade or two.

However, despite that fact, household debt has fallen some in recent years.  Hopefully, this trend can continue, depsite many economist praying for increased consumer spending and loosening credit.
 
2013-09-06 02:28:38 PM  

ddam: 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.


Can you give up the name of the funds?

Here is a link to the PBS show online :

http://www.pbs.org/wgbh/pages/frontline/retirement/view/
 
2013-09-06 02:32:23 PM  

skozlaw: Your personal experiences are individually irrelevant to overall trends, but, ignoring that annoying little fact


These overall trends include people who choose not to participate in 401k programs.

 I would assume you either have a very generous company match or a very poor rate of return.

What are you talking about? The rate of return also applies to the company match.
 
2013-09-06 02:32:53 PM  
 
2013-09-06 02:34:04 PM  

HeadLever: 12349876: Then please enlighten me, or just keep your holier than thou attitude with no evidence to back it up.

You could provide incentives via the tax code to have folks save for retirement.  Bolster and expand the Roth programs.  Beat the banks with a big stick and enact policies in order to reduce their drug fueled addition to credit cards, make Dave Ramsey's program a High School course.

/just to name a coupl


Dave Ramsey's program is already taught in schools, it's called "Foundations in Personal Finance"
 
2013-09-06 02:35:28 PM  

HeadLever: 12349876: Then please enlighten me, or just keep your holier than thou attitude with no evidence to back it up.

You could provide incentives via the tax code to have folks save for retirement.  Bolster and expand the Roth programs.  Beat the banks with a big stick and enact policies in order to reduce their drug fueled addition to credit cards, make Dave Ramsey's program a High School course.

/just to name a couple


Those would probably help a bit, but I'm thinking that would be about as effective as solving alcohol abuse by forcing people into AA.  And I personally think Dave Ramsey is too restrictive for those who are financially responsible.  Like forcing social alcohol drinkers to go sober.
 
2013-09-06 02:36:02 PM  
I don't make a ton of a money for where i live, but i save 10% of my paycheck, the company matches a portion of it, and currently, its up 22% for the year.... Not sure how that's a 'dud'... Its free money, and better than what i could do at a bank or other investment plan.
 
2013-09-06 02:37:48 PM  
"...and invest too conservatively to sustain themselves through old age."

Except that those of us who did take on higher risk "because you're young and you can weather any market fluctuations!" got f*cked in the ass by Wall Street selling shiat sandwiches as "moderate risk".
 
2013-09-06 02:38:29 PM  

dustman81: Dave Ramsey's program is already taught in schools, it's called "Foundations in Personal Finance"


Yep, and it (or something similar) needs to be expanded to be manditory for HS graduation.
 
2013-09-06 02:40:17 PM  

12349876: Those would probably help a bit,


Of course they could help.  Combine that with the rest of the 2,416 other things and we might just get this problem licked.  ;)
 
2013-09-06 02:42:38 PM  

KierzanDax: Except that those of us who did take on higher risk "because you're young and you can weather any market fluctuations!" got f*cked in the ass by Wall Street selling shiat sandwiches as "moderate risk".


you only got screwed if you bailed.  Right now, the market has made back all of its losses and then some.
 
2013-09-06 02:50:14 PM  

HeadLever: meat0918: That's a huge chunk of cash taken out of circulation, sitting earning interest in some account, 401K, IRA, or whatever you choose.

You really think that the money just sits in a vault or an account somewhere after you invest it?  Really?


No, but it's not circulating in the general economy, just in the massive paper shuffling game called "Investment banking"
 
2013-09-06 02:57:42 PM  

meat0918: No, but it's not circulating in the general economy,


?

So when you invest in a company, they can't take that money and expand, buy new or updated equipment, perform needed maintenance, invest in other companies, etc.?   Methinks you don't know the first thing on how buisness and investing works.
 
2013-09-06 03:03:41 PM  
A company sponsored 401K plan usually has high fees.

The bottom line is this - YOU need to save for retirement early and as much as you can.  If you overspend on a house, car, boat, vacations, etc. that's your fault.

Take responsibility.   Don't forget that Medicare is only 80% insurance and you should have enough for a supplemental policy.

Get started!
 
2013-09-06 03:05:48 PM  

HeadLever: Dave Ramsey


Dave Ramsey is an anti-debt fanatic who advocates making no retirement contributions if you have a credit card to pay down.

Prior to creating his bible-based1 financial advice radio- and publishing system, he made money in highly leveraged real estate speculation that went so well he had to file bankruptcy.2  He appears to be self-taught as far as his education in basic financial principles, economics, management and planning go.

He also makes projections on retirement account results using assumptions that investments will return 12% (net!) and that in retirement you can draw 8% out safely every year. He appears to never differentiate between "average" returns vs "compound" returns.

1The bible is a nice enough book but not the best basis for modern financial planning.  There are other, more recent, more finance-oriented sources that may produce better results.

2It is kinda weird how frequently some high-profile finance gurus, who advocate discipline and patience and risk avoidance for others, have a history of real estate speculation and leverage (AKA "gambling with other peoples' money") as the main source of their own wealth. Weirder still, they don't seem to advocate it for others.  But I wanna be a Rich Dad too!
 
2013-09-06 03:08:13 PM  

HeadLever: Dusk-You-n-Me: Or folks are going into debt more and more because things cost more and wages haven't risen in 30 years.

And they won't likely rise anytime soon until the rest of the world catches up to our standard of living.  With this globalized marketplace, we are in for a long slog.  I really think that this will the the new norm for the next decade or two.


Try the next century or two.

And it's not that the rest of the world will catch up to our standard of living, it's that ours will fall until it matches the rest of the world, "us" being defined as the bottom 90%.

Unless the world's massively population contracts, enjoy telling your grandchildren what life was like before you became a serf.
 
2013-09-06 03:17:20 PM  

error 303: 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.


This is something I'll never understand - why would you pay for your kids college? Let em get bootstrappy and pay for it themselves - they'll appreciate their education more and thank you later for not delivering everything to them on a platter.
 
2013-09-06 03:26:04 PM  

El Pachuco: Dave Ramsey is an anti-debt fanatic who advocates making no retirement contributions if you have a credit card to pay down.


Yep,  He subscribes that debt is bad and that your income is a path to wealth so long as you can quit forking all of it over to the big banks, Sally and Freddy.

It kind of makes sense.


It is kinda weird how frequently some high-profile finance gurus, who advocate discipline and patience and risk avoidance for others, have a history of real estate speculation and leverage

Yep, he will tell you exactly how stuipid he was when he did this.   He seems to have learned from his mistakes.
 
jgi
2013-09-06 03:26:08 PM  
 
2013-09-06 03:27:28 PM  

rumpelstiltskin: Yeah, It's The System's fault you can't save get a job and earn any money.

FTFY.

 
2013-09-06 03:29:41 PM  

El Pachuco: He appears to be self-taught as far as his education in basic financial principles, economics, management and planning go.


While he has a degree in Finance from UTenn, he will admit that most of his knowledge comes from screwing things up the first time.
 
2013-09-06 03:32:44 PM  
Sometimes it's better to pay off debt when the interest on the debt is higher than the return on your investments.
 
2013-09-06 03:33:51 PM  

HeadLever: El Pachuco: Dave Ramsey is an anti-debt fanatic who advocates making no retirement contributions if you have a credit card to pay down.

Yep,  He subscribes that debt is bad and that your income is a path to wealth so long as you can quit forking all of it over to the big banks, Sally and Freddy.

It kind of makes sense.


It is kinda weird how frequently some high-profile finance gurus, who advocate discipline and patience and risk avoidance for others, have a history of real estate speculation and leverage

Yep, he will tell you exactly how stuipid he was when he did this.   He seems to have learned from his mistakes.


I was skeptical at first, but when I went to the "Dave Ramsey is a Demi-God" seminar I somehow changed my mind after 17 hours of thought modification.
 
2013-09-06 03:36:39 PM  

HotIgneous Intruder: rumpelstiltskin: Yeah, It's The System's fault you can't save get a job and earn any money.

FTFY.


But yet 87% have currently have jobs (if we use the U6 unemployment number).  The system must really hate that 13%.  It couldn't be the economic condition we currently find ourselves or the deficiencies of said unemployed.
 
2013-09-06 03:40:58 PM  

rnld: Sometimes it's better to pay off debt when the interest on the debt is higher than the return on your investments.



For a savy individual this is a needed decision point but most people are not savy.  I would suggest not accruing any more debt, find your budget excess, apply that 50/50 to investment/savings and debt reduction.
 
2013-09-06 03:41:31 PM  

The_Gallant_Gallstone: Dave Ramsey is a Demi-God


??

Maybe he is different in person.  He is pretty self-deprecating when I have listened to him.  He tells some pretty amusing stories of how dumb he has been.

For the most part his plan is pretty simple and makes sense.  I don't get the self-importance at all.
 
2013-09-06 03:55:23 PM  

HeadLever: For the most part his plan is pretty simple and makes sense. I don't get the self-importance at all.


Me neither... I prefer to go "Full Copeland" for my Prosperity Gospel Needs.

Did you know that if pray to Jesus just right, I'll get a Porsche.  Some guy on the Internet is going to send me the Five Steps to Lucrative Praying.
 
2013-09-06 03:55:41 PM  

mcreadyblue: ddam: 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.

Can you give up the name of the funds?

Here is a link to the PBS show online :

http://www.pbs.org/wgbh/pages/frontline/retirement/view/


About 60% of my 401K is in Fidelity LifePath Index 2045 Fund Q which has an expense ratio (gross) of 0.12%
I have about 30% in Fidelity Stable Value Fund which has an expense ratio (gross) of 0.03%

If you have your 401K invested in any fund that has fees and expenses higher than 0.20% then you better lood for an alternative or ask your company to switch investment firms. Some is getting a kickback if all available funds have fees in the 5-6% range or higher.
 
2013-09-06 03:56:12 PM  

rnld: Sometimes it's better to pay off debt when the interest on the debt is higher than the return on your investments.


From a purely financial standpoint yes. However I've seen many cases of people putting of participating in retirement plans until (credit cards are paid, student loans, saving for down payment, etc...) then something unexpected happens and there's always something, and they delay it even further because retirement is so far off.
 
Displayed 50 of 206 comments

First | « | 1 | 2 | 3 | 4 | 5 | » | Last | Show all

View Voting Results: Smartest and Funniest


This thread is archived, and closed to new comments.

Continue Farking
Submit a Link »
Advertisement
On Twitter






In Other Media


  1. Links are submitted by members of the Fark community.

  2. When community members submit a link, they also write a custom headline for the story.

  3. Other Farkers comment on the links. This is the number of comments. Click here to read them.

  4. Click here to submit a link.

Report