DOW is down to 11,796.24

[KSB2424 3,173]

I doubt this guy will show back up but let us compare/contrast for shiits and giggles.

 

Assumptions: Worker makes 100K per year and invested 4% of his salary ($4,000.00) in 2008.

 

Let us assume that his gov't retirement account is tax deferred and has a fixed rate at 8% (it is more than likely much lower). $4000*.08 = $320 That means that he put in 4k of his money and at the end of 2008 had $4,320.00 in his account.

 

In a 401k the person puts in $4,000.00. The company has a 4% match (fairly standard). That is a total of $8,000.00 in his retirement fund. This fund lost 30% due to the markets (should be lower if well diversified).

$8000 * .3 = $2400.....$8000 - $2400 = $5,600.00. That means that I put in 4K of my money at the end of 2008 had $5,600.00.

 

5,600 > 4320

 

game.set.match

[LOD01 199]

I doubt this guy will show back up but let us compare/contrast for shiits and giggles.

 

Assumptions: Worker makes 100K per year and invested 4% of his salary ($4,000.00) in 2008.

 

Let us assume that his gov't retirement account is tax deferred and has a fixed rate at 8% (it is more than likely much lower). $4000*.08 = $320 That means that he put in 4k of his money and at the end of 2008 had $4,320.00 in his account.

 

In a 401k the person puts in $4,000.00. The company has a 4% match (fairly standard). That is a total of $8,000.00 in his retirement fund. This fund lost 30% due to the markets (should be lower if well diversified).

$8000 * .3 = $2400.....$8000 - $2400 = $5,600.00. That means that I put in 4K of my money at the end of 2008 had $5,600.00.

 

5,600 > 4320

 

game.set.match

 

Oh my gawd. You are a retard. You failed to read or comment on my last post becasue it destroys you. You are blowing ###### out of your ass.

 

In the last 10 years you have not put enough in your 401k to retire. Somehow your rotting braincells (plural is being generous) can't comprehend that.

[KSB2424 3,173]

Oh my gawd. You are a retard. You failed to read or comment on my last post becasue it destroys you.

No, I was posting while you were dumbass.

 

Do me a favor. Go to your retirement fund and see what the balance was on 1/1/08 (X) and then see what it was on 12/31/08 (Y).

 

Subtract X from Y and then divide that number by X. What is that percentage? TIA

[LOD01 199]

I doubt this guy will show back up but let us compare/contrast for shiits and giggles.

 

Assumptions: Worker makes 100K per year and invested 4% of his salary ($4,000.00) in 2008.

 

Let us assume that his gov't retirement account is tax deferred and has a fixed rate at 8% (it is more than likely much lower). $4000*.08 = $320 That means that he put in 4k of his money and at the end of 2008 had $4,320.00 in his account.

 

In a 401k the person puts in $4,000.00. The company has a 4% match (fairly standard). That is a total of $8,000.00 in his retirement fund. This fund lost 30% due to the markets (should be lower if well diversified).

$8000 * .3 = $2400.....$8000 - $2400 = $5,600.00. That means that I put in 4K of my money at the end of 2008 had $5,600.00.

 

5,600 > 4320

 

game.set.match

 

 

Based on 30 years, my retirement would be $48000 a year. Your 401k doesn't even come close to creating enough wealth to withdraw $48k a year in retirement. Run the numbers jackass before you spout off and look so ###### stupid.

[Recliner Pilot 61]

Sure. The amount I get yearly is based on the # of years worked times the average of my 5 highest gross income years times 1.6%. It has NOTHING to do with what the market is doing. It's a guaranteed benefit. If we need $ to fund it we will raise your taxes...but we don't have to. I did my research years ago. I realized that 'eating from the trough' was the way to retirement. Next time you hear that phrase, you will know what it means.

 

Will I be retiring. Yes.

 

Oh yeah, a couple of little bonuses you have no idea exist.

 

1. ALL of my unused sick time gets converted into $ at retirement. 50 cents on the dollar. You don't get that.

 

2. DROP. I'll let you look up what that is. Quite the little bonus.

 

So when you run you calculations, understand that I will be receiveing DROP for 5 years and a lump sum of cash for sick time.

 

What happens to all that money if you get crushed by a bus the day after you retire?

[LOD01 199]

No, I was posting while you were dumbass.

 

Do me a favor. Go to your retirement fund and see what the balance was on 1/1/08 (X) and then see what it was on 12/31/08 (Y).

 

Subtract X from Y and then divide that number by X. What is that percentage? TIA

 

 

It's official. You have no comprehensive skills. There is no 'retirement fund'. I am paid a fixed amount with COL raised based on yers of service x 5 highest grossing years x 1.6%.

[LOD01 199]

What happens to all that money if you get crushed by a bus the day after you retire?

 

I believe the same thing as the person with the 401k. I don't spend it.

[LOD01 199]

oh.

 

GAME.SET.MATCH!!!!

 

[KSB2424 3,173]

There is no 'retirement fund'. I am paid a fixed amount with COL raised based on yers of service x 5 highest grossing years x 1.6%.

So you are paid money as a benefit? Well that is a pension plan. A defined benefit. That is just money given to you. That is not the same thing as an investment. Great, good for you. Some companies may have a pension, but nothing like that.

 

You are just getting a suped up version of Social Security.

 

Why would you be even comparing the two and degrading a 401k when it is apples to oranges?

 

Most people that do not work for the gov't are not just given money with out cetain risks involved. Bottom line. If your company doesn't just give you money like they do gov't employees then a 401k is the way to go.

 

ETA: You came in this thread stating that 401k's are stupid because you have a better gov't pension plan. Those are two totally seperate things. Most people do not get a huge benefit like that. For those that do not get that big version of FICA, a 401k is the next best thing. HTH

 

comprehensive skills

 

WTF is comprensive skills?

[Recliner Pilot 61]

I believe the same thing as the person with the 401k. I don't spend it.

 

I can leave my 401K to my wife and kids.

 

 

And you?

[Recliner Pilot 61]

Anyone else have this image of Lodo frantically reading through the fine print of his "superior" Gubmint pension plan?

 

 

[TheBlade 3]

Sure. The amount I get yearly is based on the # of years worked times the average of my 5 highest gross income years times 1.6%. It has NOTHING to do with what the market is doing. It's a guaranteed benefit. If we need $ to fund it we will raise your taxes...but we don't have to. I did my research years ago. I realized that 'eating from the trough' was the way to retirement. Next time you hear that phrase, you will know what it means.

 

Will I be retiring. Yes.

 

Oh yeah, a couple of little bonuses you have no idea exist.

 

1. ALL of my unused sick time gets converted into $ at retirement. 50 cents on the dollar. You don't get that.

 

2. DROP. I'll let you look up what that is. Quite the little bonus.

 

So when you run you calculations, understand that I will be receiveing DROP for 5 years and a lump sum of cash for sick time.

LOD, are you employed by a state or county entity in Florida??? I'm just curious to see if other states have the advantages of the DROP program.

 

I am also part of a government (state) retirement system, which is one of the top-3 funded retirement systems in the country. I get 3% per year of service on the average of my high-5 (there's legislation being proposed this year in Florida to lower that to the average of your high-3, which will be awesome). I can also sell back up to 500 hours of vacation time and get paid a lump sum which will is also added to my high-5 average. Plus, at the end of DROP, I can sell back my sick time at $.50 on the dollar, which will be another $40+K. The best part about my retirement, though, is that since I'm in the high liability category, I can walk away after 25 years of service and collect my pension check starting the next month, regardless of age. I can retire at 49 (54 if I do the DROP) and be making close to what I am at the time I leave.

 

FWIW, I understand where KSB is coming from, but a 401K will not beat our retirement benefits before we factor in DROP and deferred comp, let alone after taking those "extras" into account. Oh, and KSB, I don't pay a dime into this program. It's all funded by the agency I work for (I wasn't sure if LOD made that clear in his post).

[TheBlade 3]

I can leave my 401K to my wife and kids.

And you?

In Florida, you have four options for your retirement pension. Option 1 is the highest payout, but benefits stop upon my death. Option 2 reduces the payout somewhat, but my wife gets continued benefits from the time of my death up to a total of 10 years after my retirement (i.e. if I live for 6 years, she gets continued benefits for another 4 years). Option 3 reduces the payout a little bit more (it's based on my wife's age and life expectancy), but pension benefits are paid continuously until we both die. Option 4 is an option to for pension benefits to be paid to a dependent child if you do not have a spouse.

 

We have another option, which is to switch over to an investment plan. This would work similar to a 401K, in that it would be subject to market fluctuations, but I still wouldn't have to put any money into it. It's totally funded by my agency. In my case, I can retire after about 30 years of service with roughly $1.5 mil in my account. That money can be left to anybody that I choose to leave it to on my death.

 

My situation is even sweeter, though, 'cuz the wife also works for the county and has the same retirement benefits. We have a ton of options available to us, and we'll be sitting very pretty regardless of what we choose.

[KSB2424 3,173]

FWIW, I understand where KSB is coming from, but a 401K will not beat our retirement benefits before we factor in DROP and deferred comp, let alone after taking those "extras" into account. Oh, and KSB, I don't pay a dime into this program. It's all funded by the agency I work for (I wasn't sure if LOD made that clear in his post).

See this is the disconnect. In the very beginning (page 1 in this thread) this LOD character stated this quote and has been arguing it ever since:

401k's will be proven to be a farce

The reason he says that is because he is privied to a great gov't pension plan that will benefit him enough upon retirement. What he is failing to recognize is that a pension plan is not the same as a retirement fund. For some reason he thinks everyone has the choice. Most people do not have the option from there company of receiving a huge pension like that. Some companies have pensions, but they are not big enough for someone to retire on, so they supplement it with a retirement investment fund like a 401k.

 

Therefore a 401k is the next best option. Just because it is not as good (free money given to you like a pension) doesn't make it a bad investment tool. And therfore no where near a farce.

 

If he would have just said a year a focking ago: "Sorry you people with 401k's have to worry about the markets. Luckily I do not because I am lucky enough that the gov't supplies us with wonderful pension plan instead." we never would have had this conversation. Instead he came here and said people were stupid for using 401k's as if we all worked in his same gov't office or something and had the option between the two.

[nobody 2,883]

Hey jackass. Answer this question: Based on his fabulous 35% (fictitious) gain, is his investment making enough to retire.

 

 

All I know is that I contributed x amount of money in my 401k. I have every W-2 I recevied. I can read it straight off of there. I took the amount of money I have now and divided by the money I put in. It came out to be 1.36.

 

But since you know better than me, tell me how much money I have and how much I put in. Must be great knowing about everyone's finances.

 

Don't worry about it. The only reason I asked why you kept saying it is because I thought you might know what you are talking about. I see that you don't, so I don't really care any more. I think you are just worried that someone might be getting something you aren't, so you over-compensate by railing against everyone else's stuff. I think the kids call them haters.

 

I'm not saying there is anything wrong with pensions by the way. I'm just saying there isn't anything wrong with 401ks either.

[The Moz 71]

I didn't put money into a 401K really before - I invested myself and we have a pretty solid pension plan here as it is. I am currently looking to start putting money in the 401K option now though - as you have to think this would be the time to do it.

[RLLD 4,275]

The thing to keep in mind that that cycles DO exist, and this cycle is simply a deep trough for the markets. Yes the markets were WAY above their true intrinsic status and were in something of a bubble, and right now are course-correcting.

 

I would submit that investing is very much like gambling, and when your portfolio looks strong it simply an illusion unless you cash it out to buy something else that is depressed. You are not rich or wealthy simply because your investments are currently up, because that can change pretty quick.

 

If you are investing then I suggest you emphasize stocks with strong dividends, at least get some cash return on your gambles. And investing should also stillr remain a long term gamble as well.

 

Investment in a 401k is merely part of what should be a sweeping strategy.

[LOD01 199]

LOD, are you employed by a state or county entity in Florida??? I'm just curious to see if other states have the advantages of the DROP program.

 

I am also part of a government (state) retirement system, which is one of the top-3 funded retirement systems in the country. I get 3% per year of service on the average of my high-5 (there's legislation being proposed this year in Florida to lower that to the average of your high-3, which will be awesome). I can also sell back up to 500 hours of vacation time and get paid a lump sum which will is also added to my high-5 average. Plus, at the end of DROP, I can sell back my sick time at $.50 on the dollar, which will be another $40+K. The best part about my retirement, though, is that since I'm in the high liability category, I can walk away after 25 years of service and collect my pension check starting the next month, regardless of age. I can retire at 49 (54 if I do the DROP) and be making close to what I am at the time I leave.

 

FWIW, I understand where KSB is coming from, but a 401K will not beat our retirement benefits before we factor in DROP and deferred comp, let alone after taking those "extras" into account. Oh, and KSB, I don't pay a dime into this program. It's all funded by the agency I work for (I wasn't sure if LOD made that clear in his post).

 

You got it.

 

My original statement is that people who think they will retire via 401k are in for a rude awakening.

[Strike 6,020]

You got it.

 

My original statement is that people who think they will retire via 401k are in for a rude awakening.

 

You really don't understand the strategy regarding investing vs. getting a pension do you? Your statement is such a broad generalization as to be laughable.

[LOD01 199]

No I can't give the $ to my wife. She's has her own state retirement. I got her out of a bank job a few years back. Her 401k that she had there has been decimated and I told here the same thing. 'If you want to retire, you better take the gov't. job when you get the chance.'

 

For 'nobody', once again I post one of the articles now coming out having to do with the reality of a 401k. You must have misssed it last time I posted it. I saw this coming years ago.

 

http://articles.moneycentral.msn.com/Retir...o-question.aspx

[LOD01 199]

You really don't understand the strategy regarding investing vs. getting a pension do you? Your statement is such a broad generalization as to be laughable.

 

Read the article above before you say 'laughable'. I know exactly the difference. That is why I don't have a 401k investment which is an option I have. Only fools in state jobs take that option.

[LOD01 199]

You really don't understand the strategy regarding investing vs. getting a pension do you? Your statement is such a broad generalization as to be laughable.

 

Oh yeah, how have you done since 1997? Markets are flat over that tiemframe. You need not answer because I already know.

[Strike 6,020]

Read the article above before you say 'laughable'. I know exactly the difference. That is why I don't have a 401k investment which is an option I have. Only fools in state jobs take that option.

 

No, it's still laughable. Just because idiots who can't manage a portfolio are going broke doesn't mean ANYONE who has a 401k is going broke. You have to use the same investment strategy with a 401k as you would if you were buying stocks. It's actually less risky because typically you have access to mutual funds and other mixed risk investments. Most employers offer a variety of risk levels for the investments their 401k's go in to. The alternative to investing in a 401k would be stocks/mutual funds, a mattress, or a CD/savings account. Ask any investment adviser and they'd tell you the first two options (401k, stocks/mutual funds) are the way to go. Any of those options would be subject to the same volatility of a 401k. The bottom line is anyone with a decent amount of cash SHOULD have had at least some of it invested in the market one way or another, and probably lost some value during this recession as a result. Using that as an indictment of a system which typically gives a person between 2/3's and 100% profit right off the bat is simplistic and dumb.

[cbfalcon 827]

I finally just read this entire thread and I am confused. Is money good or bad?

[KSB2424 3,173]

Read the article above before you say 'laughable'. I know exactly the difference. That is why I don't have a 401k investment which is an option I have. Only fools in state jobs take that option.

If you can still keep your pension at 100% (as it is now) AND you are given a tax deferred matching contribution from your employer (a 401k) you should do both.

[LOD01 199]

No, it's still laughable. Just because idiots who can't manage a portfolio are going broke doesn't mean ANYONE who has a 401k is going broke. You have to use the same investment strategy with a 401k as you would if you were buying stocks. It's actually less risky because typically you have access to mutual funds and other mixed risk investments. Most employers offer a variety of risk levels for the investments their 401k's go in to. The alternative to investing in a 401k would be stocks/mutual funds, a mattress, or a CD/savings account. Ask any investment adviser and they'd tell you the first two options (401k, stocks/mutual funds) are the way to go. Any of those options would be subject to the same volatility of a 401k. The bottom line is anyone with a decent amount of cash SHOULD have had at least some of it invested in the market one way or another, and probably lost some value during this recession as a result. Using that as an indictment of a system which typically gives a person between 2/3's and 100% profit right off the bat is simplistic and dumb.

 

 

Not going broke. NOT GOING TO RETIRE OFF OF IT. A 401k is touted as a replacement for a pension. Companies did this because it was IN THEIR BEST INTEREST. Not yours. It's flaws are being exposed now as for the last 10 years the market gains are ZERO. Tell me where to put your money that would gain you the returns needed to grow the 401k as touted? 10 years have been lost so far for the average 401k.

 

Now anyone just starting a 401k over the last couple of years will benefit if conditions improve and the market goes up from here. Anyone just starting in the workforce and has the 401k option has no choice but to pour the max in if they plan on retiring. They will however have to worry about this happening again down the road. Current baby boomers on the verge of retiring (especially early) are finding they can't because their 401k's have been decimated. They are staying on the job.

 

As far as investing (gambling really), my 2 holdings in the market are UYG @ 2.14 today and SSO at 23.67 last week.

[LOD01 199]

If you can still keep your pension at 100% (as it is now) AND you are given a tax deferred matching contribution from your employer (a 401k) you should do both.

 

I have a 457b which I opened in November after the 1st meltdown. I contribute a small amount to that and will continue to do so as long as the market is down big.

[Strike 6,020]

Not going broke. NOT GOING TO RETIRE OFF OF IT. A 401k is touted as a replacement for a pension. Companies did this because it was IN THEIR BEST INTEREST. Not yours. It's flaws are being exposed now as for the last 10 years the market gains are ZERO. Tell me where to put your money that would gain you the returns needed to grow the 401k as touted? 10 years have been lost so far for the average 401k.

 

Now anyone just starting a 401k over the last couple of years will benefit if conditions improve and the market goes up from here. Anyone just starting in the workforce and has the 401k option has no choice but to pour the max in if they plan on retiring. They will however have to worry about this happening again down the road. Current baby boomers on the verge of retiring (especially early) are finding they can't because their 401k's have been decimated. They are staying on the job.

 

As far as investing (gambling really), my 2 holdings in the market are UYG @ 2.14 today and SSO at 23.67 last week.

 

This is their own fault. As I already mentioned most companies that offer 401k's have a variety of investment options. What one is SUPPOSED to do is invest aggressively when one is young and move to more and more conservative options as one approaches retirement so as not to be affected by fluctuations in the market. If one stayed in the super aggressive investment options even as retirement was approaching they made their own bed. It's worth noting that one of the bigger issues cited in articles such as the one you linked to above isn't that 401k's suck but whining about people without investment knowledge having to make those choices. It's a valid point but again it doesn't invalidate the benefit of investing or 401k's.

[nobody 2,883]

I just plugged all the numbers into a 401k calulator as if I was just joining my company. I used 3.28% as the worst case average annual return over the life of the 401k (average is about 10). Hypothetically starting at 22 and retiring at 65. The worst case scenario would only leave you with about 2 million if you invested the max every year.

[LOD01 199]

I just plugged all the numbers into a 401k calulator as if I was just joining my company. I used 3.28% as the worst case average annual return over the life of the 401k (average is about 10). Hypothetically starting at 22 and retiring at 65. The worst case scenario would only leave you with about 2 million if you invested the max every year.

 

I did that once and was quite excited. Then reality hit. I bolded the key word. You are correct. Those numbers are accurate. The problem lies in what is currently happening. Ups and downs in the market are one thing. This is a whole different ballgame over the last 10 years....and we aren't even at the end of it. 10 years that the gains are nothing but what you have put in (for those who have 401ks tied to the market (majority) and have been investing since 1997).

[TheBlade 3]

This is their own fault. As I already mentioned most companies that offer 401k's have a variety of investment options. What one is SUPPOSED to do is invest aggressively when one is young and move to more and more conservative options as one approaches retirement so as not to be affected by fluctuations in the market. If one stayed in the super aggressive investment options even as retirement was approaching they made their own bed. It's worth noting that one of the bigger issues cited in articles such as the one you linked to above isn't that 401k's suck but whining about people without investment knowledge having to make those choices. It's a valid point but again it doesn't invalidate the benefit of investing or 401k's.

There-in lies the rub with 401Ks. Most of these plans are run by an investment company like The Hartford, etc., and you have a variety of funds to invest in, but there is a limit as to how many choices you have and they usually involve having a choice between funds. All of the 401Ks that I've ever heard of (which is admittedly somewhat limited), there was not an option to pick and choose individual stocks, bonds, etc.

 

As an example, I have also invested in a 457 plan (deferred comp). It works very similar to a 401K/IRA, except I don't get a match by my employer. My agency's plan is administered by The Hartford, so if I choose to invest in deferred comp I have to go through them and can only choose between their family of funds, which there's prolly 50-60 to choose from. The last statement I looked at, every single, solitary fund was down for the quarter and 12-month period. Every one. The only other option is the "guaranteed" account, which is currently paying 4%. Most people were not in this fund. Luckily for me, I saw this coming and moved all the coin I had in my account into the guaranteed account back last January, before the DOW fell off of the cliff. The problem is, in many instances, people don't have a "guaranteed" option and they're taking in the shorts no matter what they've invested in.

 

The point LOD is trying to make, to a certain extent, is that 10-15 years ago companies sold the general public a bill of goods with 401Ks. It was more beneficial for the company because they could reduce their responsibility to a small amount for a match and totally cut out any future liability. It was good for the company. They sold it to the public by showing people how huge their accounts would be in 25, 30, 40 years in a perfect world and everybody bought it. Now, the reality of this type of retirement/pension system is coming to light, and the average joe is suffering while the companies made out like bandits. I'm very happy that I have a law enforcement job with a traditional pension. I may make less than some during the good times, but I have tremendous job security and a very solid pension that will last for the rest of my life, and the life of my wife if I choose that option.

[TheBlade 3]

BUMP for Strike and KSB, if you have an opinion on my last post.

[Strike 6,020]

There-in lies the rub with 401Ks. Most of these plans are run by an investment company like The Hartford, etc., and you have a variety of funds to invest in, but there is a limit as to how many choices you have and they usually involve having a choice between funds. All of the 401Ks that I've ever heard of (which is admittedly somewhat limited), there was not an option to pick and choose individual stocks, bonds, etc.

 

As an example, I have also invested in a 457 plan (deferred comp). It works very similar to a 401K/IRA, except I don't get a match by my employer. My agency's plan is administered by The Hartford, so if I choose to invest in deferred comp I have to go through them and can only choose between their family of funds, which there's prolly 50-60 to choose from. The last statement I looked at, every single, solitary fund was down for the quarter and 12-month period. Every one. The only other option is the "guaranteed" account, which is currently paying 4%. Most people were not in this fund. Luckily for me, I saw this coming and moved all the coin I had in my account into the guaranteed account back last January, before the DOW fell off of the cliff. The problem is, in many instances, people don't have a "guaranteed" option and they're taking in the shorts no matter what they've invested in.

 

The point LOD is trying to make, to a certain extent, is that 10-15 years ago companies sold the general public a bill of goods with 401Ks. It was more beneficial for the company because they could reduce their responsibility to a small amount for a match and totally cut out any future liability. It was good for the company. They sold it to the public by showing people how huge their accounts would be in 25, 30, 40 years in a perfect world and everybody bought it. Now, the reality of this type of retirement/pension system is coming to light, and the average joe is suffering while the companies made out like bandits. I'm very happy that I have a law enforcement job with a traditional pension. I may make less than some during the good times, but I have tremendous job security and a very solid pension that will last for the rest of my life, and the life of my wife if I choose that option.

 

This is a generalization. I don't like generalizations because it assumes that's the norm and, as soon as I point out a company that didn't do it that way, you're gonna say well that's not the norm. It's wrong to assume that's the case and, like LOD, you have a traditional pension and I doubt you've actually researched this issue. You're basing your opinion off of what you are exposed to and that's fine, except you're making assertions as if they were facts when in reality they're just an opinion based upon very limited information.

[TheBlade 3]

This is a generalization. I don't like generalizations because it assumes that's the norm and, as soon as I point out a company that didn't do it that way, you're gonna say well that's not the norm. It's wrong to assume that's the case and, like LOD, you have a traditional pension and I doubt you've actually researched this issue. You're basing your opinion off of what you are exposed to and that's fine, except you're making assertions as if they were facts when in reality they're just an opinion based upon very limited information.

You're right, it's a generalization. But, I have a finance degree, worked in the securities industry for a time before getting into law enforcement, and in less than 10 minutes found THIS WEBSITE with a pro & con debate about 401Ks as an investment option. The author clearly knows more about securities and investing than I, and probably most on this bored, do based on a Google search of his name.

 

PRO - Control of Investment Options

 

Your company sponsored 401(k) allows you to take a proactive stance with your retirement account. You are provided with the investment options you want to take with your 401(k) funds, which usually include a choice of high and low growth mutual funds, bonds, and typically a choice of investing in your company’s stock portfolio. If you are proactive, you will keep tabs on the mutual fund and other retirement options and their annual and quarterly returns, and you will make adjustments when necessary in order to keep your 401(k) diversified.

 

CON - Limited Investment Options

 

Though you are allowed control of directing the options of investing in your 401(k), the choices are usually limited to maybe a dozen or two options. These options are chosen by your company or the investment company hired by your employer to manage the 401(k) funds. If you wish to put your retirement funds in securities other than mutual funds or your own company’s stock, you will need to eventually roll your 401(k) over into a self-directed IRA account with the help from a respectable retirement asset management company like www.iamllc.biz

 

 

ETA: I missed your bolded part the first time. My assertion about companies selling their employees a bill of goods, although an opinion of mine, has a solid basis in reality. If you polled a statistically relevant number of baby boomers who elected a 401K plan over a pension plan and have retired, I'm pretty sure you'll find an overwhelming majority of them have taken a gigantic haircut in their retirement nestegg. No, I haven't done any research, but I find it very hard to believe that a retiree who has recently lost 50% of their portfolio value wouldn't have been better off with a pension plan where they knew how much they were getting every month. I may be wrong, but I highly doubt it.

 

401Ks (i.e. defined contribution plans) are better for the company by a long shot; pensions (defined benefits) are much better for the employee.

[LOD01 199]

401Ks (i.e. defined contribution plans) are better for the company by a long shot; pensions (defined benefits) are much better for the employee.[/i]

 

Which is why they moved away from pensions and why I ran to a gov't. job. Do I make as much? Nope but not by much and I don't have to worry about recessions. Will I retire. Yep.

 

If a 401k is the only option, then you have no choice. Like TheBlade said, the majority if not all of the people that have 401k's, would gladly trade that in for a pension....especially now.

 

Companies should offer both but it's not in their best interest and the best interest of investors of the company (wall street).

[Strike 6,020]

ETA: I missed your bolded part the first time. My assertion about companies selling their employees a bill of goods, although an opinion of mine, has a solid basis in reality. If you polled a statistically relevant number of baby boomers who elected a 401K plan over a pension plan and have retired, I'm pretty sure you'll find an overwhelming majority of them have taken a gigantic haircut in their retirement nestegg. No, I haven't done any research, but I find it very hard to believe that a retiree who has recently lost 50% of their portfolio value wouldn't have been better off with a pension plan where they knew how much they were getting every month. I may be wrong, but I highly doubt it.

 

401Ks (i.e. defined contribution plans) are better for the company by a long shot; pensions (defined benefits) are much better for the employee.

 

I think this is the error in your thinking. Pensions are usually part of your standard benefits if you receive one. You don't have to choose between it and a 401k. If I were faced with that choice I would almost definitely choose a pension - the whole bird in the hand is worth two in the bush type of thinking. 401k's are usually either the only choice or, as in where I used to work, an optional supplement to a pension. So when discussing a choice, the choice most people are faced with is between a 401k and nothing. Given that choice, a matching 401k is a no brainer.

 

As to your comment about people losing part of their nest egg, this is fallacious thinking as well. First of all, and I explained in a previous post as well, if you talk to any financial adviser (during normal economic times, not now) about what to do with savings they'd tell you to invest in the market, either through mutual funds or stocks directly. So, anyone who had some money laying around and was using it properly would likely have lost money due to the current economic environment. However, if those people had invested the money in a 401k with a decent match it's doubtful they would have lost so much that they would have been better off not investing in their 401k. The match is key. That's your (and LOD's) problem - you're looking at the total they had before the meltdown compared to the total they had after the meltdown and that's not a fair comparison. What you need to compare is the total they had after the meltdown to what they would have had had they not invested in their 401k period.

 

Lastly, I looked at your link and, while it's a short piece, his cons are pretty weak.

[TheBlade 3]

I think this is the error in your thinking. Pensions are usually part of your standard benefits if you receive one. You don't have to choose between it and a 401k. If I were faced with that choice I would almost definitely choose a pension - the whole bird in the hand is worth two in the bush type of thinking. 401k's are usually either the only choice or, as in where I used to work, an optional supplement to a pension. So when discussing a choice, the choice most people are faced with is between a 401k and nothing. Given that choice, a matching 401k is a no brainer.

 

As to your comment about people losing part of their nest egg, this is fallacious thinking as well. First of all, and I explained in a previous post as well, if you talk to any financial adviser (during normal economic times, not now) about what to do with savings they'd tell you to invest in the market, either through mutual funds or stocks directly. So, anyone who had some money laying around and was using it properly would likely have lost money due to the current economic environment. However, if those people had invested the money in a 401k with a decent match it's doubtful they would have lost so much that they would have been better off not investing in their 401k. The match is key. That's your (and LOD's) problem - you're looking at the total they had before the meltdown compared to the total they had after the meltdown and that's not a fair comparison. What you need to compare is the total they had after the meltdown to what they would have had had they not invested in their 401k period.

 

Lastly, I looked at your link and, while it's a short piece, his cons are pretty weak.

A couple of things:

 

1. I am enjoying the debate, thank you.

 

2. I don't think I'm communicating very well. The only thing I meant the link for was to support my position that typically, companies only have a limited number of choices to invest in. People usually can't pick a whole portfolio of individual stocks and bonds, which leaves people much more at the mercy of the market.

 

3. I totally agree that investing in a 401K is better than not investing/saving for retirement at all. That was never my assertion, I was simply supporting LOD's position that people with only 401Ks as their retirement savings/planning vehicle are not leaving the workforce (i.e. retiring) anytime in the forseeable future.

 

4. You're right, most people don't have a choice between investing in a 401K or taking a pension, but you would be surprised a just how many people would have considered taking the 401K/investment option over the pension option a couple of years ago. I watched it happen around my agency. We have the one-time option of electing to switch our retirement over to the investment option (401K-type of retirement). You can elect to switch at any time in your career, but once you make the switch, it's permanent. There were many people who were very vocal about switching over because of all of the money you can make in the investment side, blah, blah, blah, and because you can leave the money to your kids when you die. My pension will stop when both my wife and I die, which is one of the biggest detractors when debating a pension plan, but every one of those guys has had to delay retirement by at least 4-5 years because of the hit that their accounts have taken in this bloodbath. I'm talking about people that have enough time on the books to walk away and be bringing very close to what they're making now under the pension option. That's truly a shame, IMHO.

 

5. I'm old enough to remember the hype surrounding the "new-fangled" retirement plan(i.e. 401Ks). Companies did a tremendous sales job on their benefits and people bought into it. Many people prolly did not have a choice, but were forced to switch to a 401K instead, but the PR machine was in full force to try and assuage the working populace. Where I think the 401K movement has a HUGE advantage is that it allowed many smaller companies that could not afford to offer pension plans to offer a retirement planning option for its workers. Many more people have access to 401Ks now than would have ever had a shot at a pension-type retirement, and I think that is an awesome thing.

 

I'm not bashing 401Ks specifically. I'm just supporting LOD's view that people with 401Ks are not going to be retiring anytime soon with all of the market instability.

[Strike 6,020]

I'm not bashing 401Ks specifically. I'm just supporting LOD's view that people with 401Ks are not going to be retiring anytime soon with all of the market instability.

 

1) LOD's view is that "401k's are a farce." I'm pretty sure his stance is that you shouldn't invest in a 401k, which would be wrong. So, not sure you really want to align yourself with his "stance."

 

2) From your own link:

 

You are provided with the investment options you want to take with your 401(k) funds, which usually include a choice of high and low growth mutual funds, bonds, and typically a choice of investing in your company’s stock portfolio. If you are proactive, you will keep tabs on the mutual fund and other retirement options and their annual and quarterly returns, and you will make adjustments when necessary in order to keep your 401(k) diversified.

 

The key is to keep tabs on your investments and adjust accordingly as you age. I'd bet that in most cases those people you're referring to who are having to delay retirement, or delay by a significant amount of time, didn't diversify and get more conservative as they aged. That's not the 401k's fault; that's on them.

 

3) I don't disagree that people lost money and, in some cases it's going to adversely affect their retirement. But guess what? That applies to ANYONE with investments in the market. It's not specific to 401k's. It's unfair to indict 401k's when people lost money in the market in many ways - directly investing, having their money managed by crooks like Madoff, 401k's insufficiently diversified, etc....

[LOD01 199]

Yet another year and 1/2 and 401k's have done jack ######. No retirement for you.

 

http://finance.yahoo.com/news/Retirement-on-Hold-American-cnbc-2085207793.html;_ylt=AsO1QLFgYoesH8_R66BhBl27YWsA;_ylu=X3oDMTE1aTFuOWE3BHBvcwM3BHNlYwN0b3BTdG9yaWVzBHNsawNyZXRpcmVtZW50b24-?x=0&sec=topStories&pos=4&asset=&ccode=

 

Another article shows that you will die while still working. Sucks huh?

[nobody 2,883]

Is everyone still confident that the government isn't going to start defaulting on their pension obligations? I've only added 25% to the my 401k over the last year or so. Still praying I'll be able to retire.