David Bach

The stock market turmoil of the past few years has spooked many of you looking to invest and save for retirement.

But it’s time to get unspooked, advised David Bach, personal finance expert and author of numerous money management books, during a live web chat Wednesday where he took readers questions about retirement planning.

He had a spirited exchange with one reader who saw little value in stock market investing at this point, and had little confidence in financial planners or the U.S. economy.

Jeff wrote:

What if the stock market just goes side ways for the next twenty to thirty years and compound interest ends? Have fun saving for retirement then. All of these models financial planners have blow up. And the reality of it is most American will be totally screwed. Then what?

Bach said:

The reality is, Jeff, that the plans haven't totally blown up. In fact, according studies, people that have stayed the course since the stock market crashed after the recession are now UP, and have seen their 401(k) accounts go from the mid $40,000 levels to the mid $70,000 levels. The Dow Jones Industrial Average is up over 100 percent in the last four years from the bottom. We've just lived through one of the fastest stock market corrections in our lifetime. The bond market continues its historic bull market, and has produced annual returns of double-digit proportions. Municipal bonds last year were up over 15 percent. So, good financial planning and consistent savings have helped Americans survive and prosper through this recession. If you believe the stock market is going to stay flat for thirty years, then you should be focusing all of your savings on paying down your debt (specifically your mortgage).

And Jeff countered:

Over the last ten years the market has been side ways. Yes, pick the low point to the current run up to distort reality. Look at Japan. That could well be the future of the U.S. Good luck saving enough for retirement with out compounding.

To that, Bach added:

People save weekly and monthly and quarterly and annually. You my friend are the one distorting the facts. People didn't pile into the stock market ten years ago and then never add to their retirement accounts. And bonds have done extremely well. So has gold, silver and on and on. People are making money investing. If you don't believe it to be true, then don't invest. You can simply spend everything you make, live paycheck to paycheck and then get on live chats like this one and just complain the world is always going to be a terrible place. Sounds like a tough way to live however. I would rather bet on myself to win and bet on America.

Bach’s frank money advice touched upon everything from when to start taking disbursements from retirement plans, to whether you should raid your retirement fund to pay for your kid’s education.

Here’s a transcript of the web chat:

You can follow Bach, author of “The Automatic Millionaire" and "Debt Free For Life: The Finish Rich Plan for Financial Freedom,"  on his Twitter account, or check out his website.

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A lot of you are scratching your heads about your 401(k), when you bother to think about it at all.

Most of you just don’t want to be bothered by your 401(k) plans even though you’ve signed up for them.

Although employers have been giving employees lots of paper work on these plans, providing education about them, and in many cases matching what workers put in, most workers aren’t taking full advantage of 401(k)s at work, according to two studies released this week by Schwab Retirement Plans Services.

About 54 percent of workers aren’t getting the most out of their employer-sponsored retirement investments, found one study by CFO Research Services, commissioned by Schwab, which surveyed 200 senior finance and human resources executives at large and mid-sized companies.

What’s driving the 401(k) apathy?

“Retirement planning is off in future, therefore it doesn’t get the time or attention it needs,” said Dave Gray, vice president of 401(k) client experience at Charles Schwab.

Many employees feel too busy and too financially ignorant to manage 401(k)s, found the other Schwab study, conducted by Koski Research. The study polled more than 1,000 workers enrolled in such plans nationally and found:

•  More than half (52 percent) say they don't have the time, interest or knowledge to properly manage their 401(k) portfolio.
•  Nearly three-quarters (73 percent) spend less than eight hours per year managing their 401(k) plan account.
•  Many (56 percent) do not review plan-related education materials they receive.

"It's not a good idea to neglect your 401(k) but you don't want to micromanage it either," advised Greg McBride, senior financial analyst for Bankrate.com.

"The 401(k) is the primary vehicle for retirement savings for a majority of people working today," he explained. "This is long-term savings and it does pay to regularly revisit the account for purposes of rebalancing investments and making sure your investment strategy is still consistent with your goals and time horizon."

To combat the investing indifference, employers plan to boost their outreach to workers, including everything from printed materials to workshops, the CFO study found.

Are you in danger of losing unemployment benefits?

Clearly, not paying attention could do you future financial harm. Nearly one third of those surveyed said they didn’t even know about the fees they’re being charged in association with their plans.

You might think it’s better just to pull the plug on your 401(k) because you’re not getting the most out of it, or you could end up making poor investment choices, but Gray warned against that.

“I think any savings is better than no savings,” he maintained.

So, are you managing your 401(k), or is it on autopilot?

Farnoosh Torabi

Some people think about saving for retirement in their twenties, others start contemplating rocking chair resources after they hit the big 40.

With a recent report that Social Security funds are dwindling, folks of all ages are wondering if they'll have enough to retire comfortably. 

What ever age or type of saver you are, the key is coming up with an action plan, advised personal finance expert Farnoosh Torabi, who was on hand Wednesday to answer readers' retirement money questions during our weekly live web chat.

A poll of readers who participated in the chat found only 11 percent are sure they'll have enough funds to enjoy those golden years; while 33 percent said they definitely won't have enough money, and 56 percent weren't sure.

How much should you be socking away? asked one 40-plus reader.

“Had you been consistently saving since your twenties, I'd say 10 percent would be enough,” maintained Torabi, author of “Psych Yourself Rich: Get the Mindset and Discipline You Need to Build Your Financial Life”, and host of "Financially Fit" on Yahoo. “But if you've just begun saving in your forties, you should be as aggressive as you can be by putting about 15 percent towards your employer's 401(k), or more, and opening up an IRA or two to supplement the 401(k).”

For the 20-something wondering how she should start and worried about paying hefty commissions, Torabi had this advice:

“I would 100 percent recommend doing two things: Invest in your company's 401(k). Contribute 10 percent or at least enough to benefit from the full match your company may provide. Second, open a Roth IRA. You can open one up at any brokerage - Fidelity, Vanguard, Charles Schwab. The cheapest way to open one is probably going to a local credit union or your existing bank and opening a retirement account there. I have one with ING Direct, as well. No brokerage fees!”

Here are some more highlights from the Q&A with Torabi:

Bobby asked:

“Hi, I'm 68 years old with no retirement or pension funds, just $20,000 I've saved up over the years in the bank. I just got fired from my job as a factory worker because my entire left side got paralyzed after a stroke and I have no education at all besides a high school diploma, so what should I do with my money to maintain myself? Should I invest it in stocks or gamble it away in Vegas, because they're both just as risky aren't they?”

Torabi’s advice:

“Vegas is beautiful this time of year, but I would encourage you to continue to save that $20,000 and -- are you collecting disability? Check out this site to learn how to get compensated: http://www.ssa.gov/disability/.”

LaTonya asked:

“I am not sure if I am putting enough away for retirement. My husband and I both have jobs with pensions and health benefits at retirement (30 years). In addition to our pension contributions we have a Roth IRA that we contribute the max to each year. Is it safe to depend on our pension and not contribute more to private retirement accounts?”

Torabi’s advice:

“I never like to put all my eggs in one basket! And while you still have a pension (and that's so amazing!) I would try to diversify my savings -- you never know what could happen to those pensions or whether they'll be enough. It's always best to have a separate IRA to, again, diversify your savings and allow for multiple income streams in retirement.” 

For a full look at out web chat with Torabi go here:

TODAY Money financial expert Jean Chatzky joined us for a live Web chat Wednesday to answer your questions.

Here’s one of her answers to questions from the live chat. (See below for the full Q&A and video of Jean’s appearance on TODAY Wednesday morning.)

Laura asked:

“Since the market dropped, I cut back on my contribution to my 401K. Do you think it's a good idea to contribute to an IRA or a Roth IRA with any extra money I have?”

Jean replied:

“I don’t understand why you would do that. A 401(k), typically, is an account where you are allowed to invest the money in a menu of choices. You could move the money around -- but not contributing doesn't make sense to me. Also, the fall in the market is precisely the wrong reason to scale back contributions (unless you need the money in the short term), it's a way to buy low so that later you can sell high.”

Here’s the full chat archive:

If you have a question for our TODAY Money experts, submit it here.

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Worried you're not saving enough money for retirement? You’re not alone.

Roughly seven out of eight Americans believe that the nation’s retirement system is broken, and they worry that a weak economy and volatile stock market make it impossible to keep their own retirement plan on track.

Even as some state governments consider trimming public employee pensions, most Americans also support the idea of government incentives to encourage employers to provide traditional defined-benefit pensions. Anti-pension statehouse protests aside, three out of four Americans blame the decline of traditional pensions for their retirement insecurity, according to a survey by the National Institute on Retirement Security (NIRS), a group of financial services companies, retirement plan sponsors and trade associations.

Four out of five respondents told NIRS that they think Washington is clueless about the problem and should make a higher priority of rebuilding the private pension system.

The high level of retirement anxiety shouldn’t come as a surprise. As Congress mulls cutting in Social Security benefits to balance the federal budget, many American households have little or no savings to fall back on. Even those who have set up their own 401(k) account are likely to come up short: half of those aged 60 to 62 with a 401(k) account have stashed away less than a quarter of what they’ll need to maintain their standard of living in retirement, according to NIRS.

High anxiety is also reshaping the idea of what it means to be “retired.”

About one-third of survey respondents said they figure a “secure” retirement means just being able to live comfortably into old age. Only one in ten expects retirement will include travel, going out to restaurants, hobbies or leisure activities.