Comments on: Counterparties: Retiring the 401(k) A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: QCIC Fri, 15 Mar 2013 15:39:23 +0000 2 of my 3 surviving grandparents worked into their 80s. It is possible if people take pay cuts once they get out of their prime. You just need to scale back the price a bit, which can be hard.

By: TFF Fri, 15 Mar 2013 14:51:01 +0000 Let me raise one additional question…

As numerous recent articles have pointed out, many people today are working into/through retirement. My parents are already in their 70s, and intend to continue working through the age of 72. Even then, their “retirement” is likely to involve activites that others might describe as “work”, just in a flexible and less-than-full-time capacity. I work with another older gent in a similar situation. He has a pension and could easily live off that, but prefers to continue working/contributing in a reduced position.

If somebody chooses this course, why should we force them to save for an idle retirement that they don’t want or need?

I wholly agree that we need to guarantee a minimum subsistence living, but Social Security already does that. (People can and do live off Social Security alone, albeit not well.) Why should the government involve itself in decisions beyond that?

A greater concern, in my opinion, is the overall lifetime earnings for those without advanced degrees. Those who support mandatory savings plans are typically those who have no concept what it means to raise a family on $40k-$60k. Stealing another 12% of their income to sequester in a retirement plan would be enough to push many/most of these households over the edge.

Sometimes the masses are more rational than the economists.

By: TFF Fri, 15 Mar 2013 01:26:34 +0000 Looked back through my records — From 1/01 to 6/04 my 401k funded with $400 bi-weekly contributions (invested in Fidelity mutual funds) gained about $2k, less than 4% of the final balance. Those money managers made a heck of a lot more than I did!

When I quit, I withdrew my pension and 401k contributions, and put that into an IRA — which has since tripled without further additions. If I were stuck in the old 401k, I would never be able to retire.

By: TFF Fri, 15 Mar 2013 01:07:53 +0000 Rusty, I don’t know about your 401(k), but the plans I’ve seen are grossly overpriced. Fund management fees ranging anywhere from 0.5% for an index fund to 2% for those marketed to naive young workers. It isn’t unusual for the fund managers to end up with greater profits than the account owners.

And every plan I’ve ever seen permits retirees to make bad decisions — most significantly, selling out of stocks in early 2009 and waiting four years to buy back in. Most bad decisions do not involve picking individual stocks, they involve foolish attempts at market timing.

By: rustyrustbelt Thu, 14 Mar 2013 22:56:39 +0000 Ah, apparently someone doesn’t understand 401(k) accounts.

In the typical 410(k) account the worker has a menu of mutual funds (between 5 and 15 funds, generally in one family) and chooses funds ranging from risky to safe.

The worker cannot choose a financial professional or try to beat the market. There are probably exceptions.

AFTER employment, when the money is usually rolled into an IRA, the retiree can make lots and lots of bad decisions.

By: ChuckMiller Thu, 14 Mar 2013 21:35:49 +0000 Automatic 401(k)s… where employees can only opt out of plans and auto escalation… where savings into the plan goes up when pay goes up… and asset allocation funds as the plan default take most of the need for education out of the equation.

The problem with 401(k)s isn’t that the plans are crappy, it’s that worker net pay is, and has been, crappy. It’s hard to save more when your pay rate is flat for 10 years or more. This may be corrleated to the explosion of healhcare costs, where raises mostly went into insurance premiums.

And your timing has to be right. Those who planned on retiring in 2009 likely had to work a few years longer to make uo the losses when the market went south.

By: Moopheus Thu, 14 Mar 2013 20:26:38 +0000 “eHarmony’s new business probably involves breaking Federal employment law”

Is this just you guessing/assuming what sorts of information they might be sorting through to make matches? The article you linked to didn’t say.

As to the issue of saving for retirement, it seems pretty clear at this point that the 401K is a scam. You’re probably better off just keeping money in the bank, or at least you would be if you could get a little interest. My wife and I include as part of our “savings” paying off our mortgage as fast as we can afford to. Part of our retirement plan is to live as debt-free as we possibly can.

By: dWj Thu, 14 Mar 2013 02:53:00 +0000 Indeed, that eHarmony’s new idea may run afoul of federal labor laws nicely illustrates how ludicrous federal labor laws are.

By: TFF Thu, 14 Mar 2013 01:06:42 +0000 Strych09 is onto something — and Barro wants to make this state of affairs mandatory. Take away all self-determination in the matter (since people make bad decisions). Hire professional money managers to do the job (ignoring the fact that they also make bad decisions). Pay them handsomely, so that the money managers make much more off the system than the stakeholders do (since clearly they deserve to be well-compensated). Is Barro in the pocket of Wall Street?

Will note, however, that this is yet another gamepiece in the debate about how to distribute the nation’s production. Investing in the financial markets has little connection to investing in the future — when people invest in the stock market it mostly serves to drive prices higher (and forward returns lower). We are already seeing a record proportion of the GDP go to capital rather than labor. How much further can you squeeze the working population before they keel over?

By: rjs0 Wed, 13 Mar 2013 23:48:43 +0000 Retirement Saving Is No Longer a Priority for Many Americans –

“58% don’t have a retirement plan; nearly 40% don’t know what an annuity or mutual fund is; and 20% expect to rely purely on Social Security for their retirement needs. More than half don’t trust anyone’s advice.” -americans-given-up-on-saving-for-retire ment/