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Subscribe to RSSIf you're like most Americans, the financial meltdown of 2008 took a big bite out of your retirement savings. But don't give up on that 401(k) account just yet.
It turns out that people who stuck with their company-sponsored retirement savings plan last year saw average gains of 32 percent, according to a study by the Employee Benefit Research Institute and the Investment Company Institute.
Some 4 million so-called "consistent participants" tracked by the study closed out last year with an average account balance of $109,723 – up from $83,161 a year earlier. Since most retirement savers still keep the bulk of their money in stocks, the survey found, the 23 percent gain in the Standard & Poor's 500 Index for 2009 helped make up for the 38 percent drop in stock prices in 2008. So far this year, the S&P 500 index is up 6 percent. (The 32 percent gain for 2009 included worker and employer contributions as well as investment gains.)
About 60 percent of working-age Americans have access to a 401(k) savings plan at work; of those, some 88 percent participate in these plans, which typically match employee savings and allow investments to grow tax-free.
But despite the high participation rates, the current level of savings still falls far short of providing for a decent retirement. Though the average 401(k) account posted an annual growth rate of 14.7 percent between 2003 and 2009, the median balance was just under $60,000 at the end of last year.
That means tens of millions of American workers will be woefully unprepared to pay for even the most basic expenses when they retire, according to Jack VenDerhei, research director at the Employee Benefit Research Institute.
"I'm not talking about luxury items," he said."I'm not talking about maintaining your standard of living. I'm talking about just basic expenses plus uninsured medical costs. About 50 percent of households are falling short."
The recession hasn't helped. Tough times have forced more savers to tap into that nest egg. Some 21 percent of those whose plan offered loan options had dipped into savings as of the end of 2009 – up from 18 percent the year before.
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I hope those people that are "woefully unprepared" aren't counting on Social Security checks! They might be disappointed. No thanks to our brilliant politicians and their ransacking of Social Security surplusses of 40 to 50 years ago.
Don't panic!
There is no immediate danger to Social Security. Eventually, it will suffer a shorfall in 20 to 30 years time that will (if nothing is done to fix it) result in a partial curtailment of benefits.
401k balances may have recovered, but they are still abysmally low. So my guess is, we will find a way to save the Social Security program, by tinkering with the tax rates, pushing the full retirement age back a bit, and perhaps raising the cap on wages subject to Social Security taxation (which would make the tax less regressive.)
Remember, Social Security was restructured once before, under the Reagan administration. It is a popular program, and the voters will demand, and get, a fix.
Tom, You are living in a dream world.
SS was to be losing money by 2016 and but it appears this year is the first time it paid out more than it took in. Your date, 2037, is when SS will be completely unable to pay out benifits to the newly retired.
They system is not sustainable even near term.
If the government had not diverted SS payroll deductions (remember your employer pays the same amount as you) into the general fund with payroll tax deductions we would have enough surplus to deal with the baby boomers and then some more for raises.
Instead we spent it on things like studying the sexual behavior of females on college campuses and a new plane for Nancy Palosi with an open bar.
Some of you folks want me to consider myself lucky to be financially set for my senior years. Luck had very little to do with it.
I never carry a balance on credit cards.
I pay myself first.
I started an IRA when I was 23 years old and making 14 grand. I'm 56 now and I have a 401k that I have maxxed out every year. Not always and easy thing to do.
I raised two college graduates who worked hard in college and got jobs immediately.
I stayed married.
We took vacations that we paid for in cash (or we didn't go)
I take extra good care of my car/trucks. I pay them off and save for the next time I need one. They usually last 8-10 years.
I mow my own lawn.
Our home is almost paid off.
We don't have a vacation home, boat, motorcycle, snowmobile, season tickets to anything, (you get the point) but we still have a ton of fun.
Excuse me... but you may wish to check with "google" as to when and who started diverting the Social Security Balances.... don't always just rush to Fox/Beck/Murdoch..... they sometimes don't get the truth "quite" correct....
Scott,
If you had a clue of what you were talking about you might be able to engage in an intelligent conversation. Monies taken from the Social Security trust does not alter the amount of the trust fund. The problem with the fund is the declining number of younger workers vs. the number of recipients. If you are concerned about wasted money. The cost of the war in Iraq cost nearly a trillion dollars in pursuit of WMD that never existed. Not to mention the lives lost and the countless casualties we will forever care for.
SS is a ponzi scheme. When begun, there were 14 workers per recipient. Now it's 7:1. Soon to be 2:1.
This is easy math. Two workers can't support one retiree. Little advice to folks nearing retirement: learn how to garden. Take a basic first aid course. Exercise and eat healthy foods. Learn how to repair your own car, roof, and electric.
The government can keep raising taxes, but with more and more people retiring I'll just have to raise my rates just to keep up with taxes and no one is likely to complain.
Stop the retirement at 62, move the retirement age to 70 but at at the age 67 rate. Baby boomers had kids later in life than their parents. These kids are now entering the job market. What is needed are more Americans with jobs. Penalize companies that send there jobs out of the country and give large tax breaks to the companies that add jobs here!
Surfin, you are calling me stupid and you think there is a SS FUND? LMFAO!!!
There is no fund, the checks are drawn against the general fund that your tax withholding and SS/Medicare deductions goes into. There is not one dollar held in reserve.
If you want an intellegent conversation, you obviously can not include yourself.
Kevin, excuse me:
It changed in 1965 by the Social Security Act of 1965, part of President Lyndon B. Johnson's "Great Society" program. Social Security was changed to withdraw funds from the independent "Trust Fund" and put it into the General Fund for additional congressional revenue. They just made it official in 83.
As far as I know, it was all democrats at that time.
Rediculous article. This is the problem with all financial articles. You mush contributions into gains. They are not gains. 32% drop with 23% increase is still a net loss. The contributions you and your employer have added have been intrest free loans to the institutions and their inside cronies churning the market. How can the insiders make a profit with turnover on mutual funds when you and I would lose our shirt doing that ?
We know that! We will never get the money back. Even a 100% gain on your current balance is still excluding the profit you would have made on the money already lost.
Maybe it's just me, but why do my investments seem to rise on fall in ways that are synched with the politic background in ways that are opposite the prevailing wisdom. In the past 2 decades, a Republican president has been disastrous for my IRA. Democratic Presidents have recovered most of the lost money and moved me ahead.
Of course, I'm not among the wealthy elite, who I'm sure do so much better under Republicans . . you know, with all those corporate windfalls that are so integral to getting Republicans elected. But, like I said, I'm among the middle class, who I'm told don't need SS, Healthcare, fair banking practices, a healthy environment. You know, the socialist agenda that the average American demands. We're just killing America.
Economic cycles have nothing to do with politics and even less to do with the president. We are a Republic run by laws not a democracy run by people. So to compare the economy to the congress you would need to look at each law that past. Most of the laws take effect years after they are passed. Look at the big health care law that was past last year most of the items in that law do not go into effect till 2014. Companies will change based on the new law and you may not see those till 1-2 years after 2014. Bill you need to understand high school economics. I would certainly not adjust my 401K from stocks to bonds based on the president in power.
That's because even though the GOP would like you to believe they policies are good for economic growth, they aren't. Their policies run up deficits and destroy jobs.
Really? You wouldn't be saying that if today were January 1, 2008. I'm not sure this is something that can be blamed on one political party or the other. Instead, I think it's more a problem of human nature.
Actually there is a very interesting fund that invests only when Congress "isn't in session"... seems the market does quite well when they are not in Washington... and it also doesn't seem to matter if it is Rep or Dem... they have a prospectus... (I cannot remember the fund).... but it was great reading it.....
There are going to be a lot of seniors eating dogfood because they didn't prepare for their own retirement...I sure hope the guvment doens't try to send the rest of us the bill for supporting these poor savers in their twilight years.
what a callous statement Rick. A good portion of this country has no savings through virtually no fault of their own. When one works paycheck to paycheck, it's a little tough to invest in a 401k or IRA, etc.
That's what Social Security was created for, so at least these aging seniors can live their lives out with dignity, but I suppose you see no reason for that.
Your post reminds me of the SNL skit wherein one of the actresses play Suze Orman giving investment advice to Dick Dunkendirk
Suze: I think it's time for you to bust into your emergency savings account. Sorryyyy!
Dick: Uh, Suze, I-I don't think that you heard me right. I have NOTHING! I-I took a sponge bath this morning in a TJ Maxx bathroom. It's grim, Suze.
Suze: Okay, then I hate to say it, but it's time for you to take the penalty and cash in a small percentage of your pension. Okay, my dear? All better?
Dick:Nnnno! Not okay. Not all better. You know, yesterday I caught a roach and I thought about selling it to someone in a nursing home as a pet. So, let me repeat: things are not good!
Suze: Okay, then, now I get it. This... is... serious. The very first thing you need to do is combine all your checking and savings accounts, and put them into a Roth IRA immediately!
...
ad infinitum
Just because you are one of the lucky ones in life to have made enough money to have a pension, 401k, whatever, etc. doesn't mean most Americans are in the same boat. Try to not be so callous, that karma is a bitch and will come back to bite ya...
Hey Rick.... I hope you're adequately prepared if you get cancer before age 66 and can't work. Your COBRA benefits will run out in 3 years, then you can't get medical insurance.....you'll need an extra $350,000 to $1,500,000 for your cancer treatments.
I maxed out on SS contributions for 25 years before I hit the above scenario. No fault of mine, blood cancer.......Hopefully new medical revisions will help in the future but it's too late for me now.....So much for saving for retirement.
Somewhere between Rick and DrowningGrover, the truth certainly lies.
Sure, some people did not earn enough income to save meaningfully. I certainly would prefer to supplement their benefits through higher taxes than confront them as panhandlers on the streets every day. (Hey, at some point, I too, will be old, and I won't be able to run away from them -- my current method for dealing with panhanders!)
BUT, there are many people who DO earn enough to make 401k and IRA contributions, but who elect instead to spend the money on McMansions, monster SUV's, $5,000 flat panels, annual trips to Disney, premium cable, and a host of other silly indulgences. (You KNOW who you are!)
I don't blame Rick one bit for not wanting to use his hard earned savings to support a bunch of spoiled spendthrifts, either.
Rick is dead-on for some of the population. For example, my wife and i make plenty of money to put away for later but we don't. We spend and spend and spend (I guess I'm helping the economy in this down time). It's really embarrasing to make what we do and to know that people that work for me, making far less, seem to have so much more in their savings. The don't drive as nice of car and don't have TV's hooked up to dishes but they talk about putting away for later.
We both contribute to 401k but our savings account is basically just a protection for overdraft (we never use it but it's nice to know that it's there). I'm not proud of this and do plan to change it but I'm over 40 years old and do know better, I just haven't acted on this knowledge. I know I'm not alone and to see some of these posts, I'm sure there are people that are in denial about their ability to save. I'm not in denial, I have the ability, I just have done nothing.
It would (will?) be shameful for people to have to support my wife and I for not saving when we had a chance to do so ourselves. I am going to change that and start spending less, saving more. Can you be honest with yourself and do the same? Make a change today, not for anyone but yourself. Join me.
Look... at lot of seniors have money... some got money passed on by the parents (some of whom did very well in the real estate market)... and had decent jobs and pensions. Many of us bought our homes in the 1960's or early 1970" when they were not all that expensive... some have decent defined benefit plans (teachers, public workers and some "old line" mfg jobs), most don't have "big" 401(k) balances as they only started coming on line in the late 1990's... and some did VERY well in the stock market from 1982 to 1999... what we have a problem with is "liquidity".. Let's say you have $200,000 in CD's (or bond market) or whatever you want to call it... this is the day of 4% taxable return if you get lucky... that works out to $8,000 per year.... and if you include draw down of the balance.... you run into problems.... you might have a home worth $500,000 (I don't).... but it works the same way... move into a $200,000 aprt or senior center or whatever... and draw that down... Seniors don't want to spend assets (but then who does)... but with medical coverage etc.... it's getting tough... and that's from the middle class "who has something"... what about all tose that don't".... I don't have an easy answer....
I think that there is a good chance that the upward market trends are just a second attempt to grab the rest of people investments the financial instututiopns didn't get on the first ballon. I just don't see where these firms are creating any real sustainable value unless they have succesfully tapped some international markets. The economy in the US is still down, the same for Europe. How do you create real value when economic growth is so low?
DrowningGrover...You wrote "That's what Social Security was created for, so at least these aging seniors can live their lives out with dignity, but I suppose you see no reason for that."
I'm not sure how you can come to that conclusion. When Social Security was started the "Eligibility Age" was 65. Life expectancy was 57 for men, 61 for women. At best it was to help the few folks that outlived their retirement savings. The Government never intended to be sending checks to hundreds, then thousands and now millions of people every month. Folks just kept living longer and longer......Sooner or later all Ponzi schemes collapse when you run out of enough people to keep putting money in.
This is good news and bad news. It's good that people who actually stuck with throwing in that money into the 401(k) every month are starting to see their balances come back. The big problems are that (a) there are lots of people who can't or won't save, (b) it's too late for those who are close to retiring to start, and (c) those who are retired have to draw off a significantly reduced amount of money.
Everyone who is for privatizing Social Security needs to take a look at the history of 401(k)'s compared to pensions and other savings vehicles. You can't base a country's entire retirement system on investments that have such wild swings between economic cycles. Social Security can't provide everything for people's retirement, but should be there to prevent people who can't save on their own from having a totally miserable retirement, and balance out these huge swings by having a fixed monthly payment component. True, there are some financially ignorant people who have good jobs and don't save for retirement, but don't forget that there are plenty of families working $10/hr jobs throughout their careers, making it impossible to save. As we continue to kick out the stabilizers under the middle class, these people in the $10/hr category are going to keep increasing, simply because this new world of "knowledge work" isn't meant to employ everyone. I'm very lucky to have a good job, but I realize that there are tons of people who don't and have no prospects for anything better.
I'm actually for a return to traditonal pensions in place of the 401(k). Let people who actually know what they're doing invest money for you, give them 40+ years to screw up and recover, and guarantee a payout for life. You have to put less in over your lifetime, the money grows in a huge fund, and you draw a stable, predictable retirement payment at the end of it all. Lots of people hate this idea, thinking that they're financial geniuses and can do better than a pension fund. Maybe, but what happens to all those people who turned 65 in 2008? When it comes to being able to feed myself after retirement, give me stability over total return any day!!
Pensions and Social Security is what is killing our country. These funds should only go to the lower class. Everyone else shame on you for not saving. Maybe the rule can be if your average salary over the last 10 years of working was less than 40K per year you can collect a pension or SS. Everyone else hope you saved. Everyone still puts into the kitty but only those who need it collect.
I've read some pretty stupid posts here but all wrong deserves a prize. A 401K is a defined contribution pension, a way to SAVE for your retirement.
All Wrong: And here all this time I thought it was the greed of the CEOs who "earn" over 350 times what the lowest paid workers in their companies earn, and the financial whiz-kids with their bizzario "investment" vehicles (i.e. get rich quick by stealing other people's money schemes) that crashed the world economy, and all the folks (including the federal government) living beyond their means that were ruining the country! Glad to learn that pensions and Social Security are the real culprits.
EricT-1575127...Google {Galveston,TX opted out of Social Security}....I bet those folks are quite happy to not get Social Security. They average 6X's the comparable SS payment. Congress closed the loophole...I wonder why ???
You have it all wrong wrote "Pensions and Social Security is what is killing our country. These funds should only go to the lower class."
If everyone else is paying 12% of their wages (6% personal, 6% employer) as a FICA tax, why should this money go only to those that didn't contribute? The lower classes don't pay federal tax, either. In fact, 47% of US households don't pay any federal tax.
Don't panic and keep plugging away. I have recovered all of my losses (of course, that includes my additional contributions not just earnings), Ignore the noise, don't worry about making it all back at once and you'll be fine. It doesn't matter who's president. Invest in what you know, don't jump around to the flavor of month, and don't react to "expert" opinions. As an average American, it is phenomenal the kind of nest egg you can build over 30 or 40 years if you simply ignore the hype.
Good call Ice-1604584. This is what I do and it has worked wonders for me as well.
Ice has it dead on.
By the way, if you can afford the payments for a 15 year mortage, that will help you, immensely. Do NOT listen to the financial experts who tell you to keep a thirty year and "invest the difference." A 15 year mortgage forces you to build equity in your house, and FAST.
We got one in 1993. I am retiring this year at 52, after a 26 year career.
In addition, paying your mortgage 1/2 every two weeks is almost as good as a 15 or 20 year mortgage in interest savings. Many banks have programs for this, or you can just do it yourself.
well some of these statics are suspect. the 'avg' is based on what? what range of ages are included? all eligible? What would be a MUCH better state is a breakdown per age of the average amount saved. comparing a 24 year old with a 56 year old is stupid. of course they don't say. As for social security. the current worst case scenario is that the old people will ONLY get 3/4 of the current check. Its not the end of the world. not even close
But not very good if that's all a person has to live on. I don't know how anyone could do that.
RevDr.
We definitely need to fix it.
But I think rossesmithii is saying we should not write the program off, because the shortfalls are not as extreme as some would have us believe. That's all.
This comment is from the Investment Company Institute, co-author of the report, 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2009.
Rossesmithii is correct that account balances will vary with age. Job tenure has an equally large, if not larger, effect, because American workers are so mobile.
If you're interested, the full report contains copious detail on account balances and asset allocations by age and job tenure, both for the full sample and the consistent participants. You can find it at: http://www.ici.org/pdf/per16-03.pdf
The average account balances mentioned in the story above are averages for "consistent participants" - 4.3 million workers who have had 401(k) accounts consistently with the same employer between 2003 and 2009 - or for the full sample of 20.7 million workers who had accounts at year-end 2009.
One key to understanding the results for the full database is the fact that this study only looks at the balance in the current 401(k) account of active participants. If you have a 401(k) account with a previous employer, or if you have rolled your prior 401(k) balances into an IRA, those funds are not counted.
The database therefore tends to underreport the actual assets an individual has available for retirement. An individual might be in the 2008 database with a six-figure account balance; change jobs in 2009, and show up in the 2009 database with a new $5,000 balance. The individual still has a six-figure balance available for retirement, but most of those assets are no longer in the database. That's a major reason why we look at the "consistent participants" subsample to get a better idea of how accounts behave over time.
--- Mike McNamee, Senior Director, Public Communications, ICI
My wife and I have experienced what Social Security provided for her parents and one aunt, versus my parents who saved via a 401K. Her parents lived into their mid 80's and so did mine. The difference in their life styles the last 10 years of their lives was night and day, which is why my wife and I put together the following advice for our kids which I share with you:
ACT YOUR WAGE (something to share with your kids)
Live beneath your means!
Pay yourself first – put 5-10% of your take home pay into tax deferred retirement funds.
When you get a pay raise, pay yourself first (up your level of tax deferred retirement funds).
Buy less car than one can afford, but buy one with good gas mileage (you end up paying less in road taxes via the tax on gasoline), a good safety record, and a good maintenance record. Consult Consumer Reports or other reputable source.
Buy less house than one can afford. (bought mine and paid for it in 10 years). Smaller houses mean less property taxes! (who’s not in favor of less property taxes) Smaller house means less space to heat and cool, which translates into less money owed to the utilities (also translates into less taxes on utility bills). But when you buy, buy good quality with energy efficient furnace/ac & water heater, well insulated, with low maintenance finishes. (less maintenance means time for other things)
Budget all your expenses for the year. (Note you’ve already paid yourself first!)
- Savings for home down payment / Mortgage / rent money (Once you pay off the mortgage add that money to your retirement savings!)
- Car payment
- Tithe to your church / charity
- Budget weekly money for Groceries
- Budget weekly expense money
- Budget money for utilities (elec., gas, water, telephone, cable)
- Budget money for insurance (home, car, liability, health, long term care, life)
- Budget money for vacations
- Budget for any other recurring expenses
- DO NOT charge more on Credit Cards than can be paid in full at the end of the month.
By budgeting your expenses for a year you’ll know how much you need to live on and your ready to calculate a rough number on how much you need for retirement. Multiply the annual budget number times the 50 year consumer price index average inflation for each year you’ll be retired. (If you know how long your grandparents, great aunts/great uncles lived (take the highest number) and subtract the age at which you’ll retire.) This will give you a rough approximation as to how much you need to save for retirement. Your option as to whether you want to take into account Social Security, generally I don’t believe it’s sustainable without upping the retirement age to at least the average life expectancy.
All of this left my wife and I more money to invest in our retirement account where we only invested in stocks / mutual funds / bond funds that had a long term growth record (began 25 years ago and did not chase any flash in the pan ones). By doing this, my wife or I’s ‘principle’ (money we invested) retirement funds stayed in the black during the 2008 recession. In my fifties I read an investment book called "The Millionaire Next Door". It advised that one should do exactly what I was already doing. Talk about positive reinforcement of one's beliefs.
Oh! Did I mention live beneath your means!!! By JustOlJoe
You and your wife sound like my in-laws. They lived their whole lives the same way and now don't have to worry about financial issues. One is a retired electrical engineer and the other a retired school secretary.
amen joe
All of your investment/spending advice sounds great JustOlJoe, but I think there are many people who know and understand everything you said and STILL can't make it because their income is not high enough anymore. Wages have stagnated for the last 30 years but the cost of goods/services/homes has skyrocketed!
It sounds great on paper, but more and more, only a very small fortunate few will have to the opportunity to invest with your great strategy.
Furthermore, to GoUSA:
that's awesome for your in-laws, I hope to retire too one day. But in the modern American economy that is being constructed as we speak do you really think in the future school secretaries will be able to retire comfortably? Probably not. Im' sure she had a pension (what school employee doesn't) but those are going the way of the dodo bird. The engineering degree is still really valuable, but becoming less so over time as more H1B visa's get churned out and tech companies move overseas.
Note, I'm not disputing anything either of you said, I agree 100%, just trying to point out that for many many Americans, the things you suggest are just becoming harder and harder to achieve every day. I am not a member of that group, but I recognize they're numbers are growing. It's sad really...
I'm actually one of those poor people making less than 40k a year...and i've got a mortgage...putting 11% in roth & 401k...so its definately possible to save for retirement and still have a life....I may not be paying for 2 or 3 new cars...(which i don't want). however, its a matter of choice for most people/families.
I agree with Just OlJoe. My wife and I have tried to live by virtually the same advice. It is true that we both had moderate income and worked consistently for 30+ years, when my wife retired. I'm still at it after 38 1/2 years after 8 years of higher ed. Wife was a teacher, I am a pastor who has served small congregations at low pay. We have been fortunate (blessed), and have had good health. But the strategy works. Live below your means. Save a greater % than other people, and give generously to a cause that is greater than yourself. It works.
Joe, that is good advice.
Some other obseravtions, from personal experience.
1. I like whole life insurance. People said it would perform poorly, but it looked like GOLD in September of 2008 when the markets crashed. I'm not saying to put the majority of your investments in life insurance, but you can certainly put a small portion here.
2. Don't forget to bike to work if you can. That's right, PEDAL! It's good for you, and the parking is cheap.
3. A cheap motorcycle or a motor scooter when you are young is a great way to save money (assuming you don't drive like Evil Knievel.) I had one in grad school - Honda that cost my 500 bucks. She went 20,000 miles before she gave up the ghost.
4. Do it yourself when you can. Help a buddy with his project, and he'll help you with yours.
5. Don't borrow a fortune to go to college or grad school if there are good, in- state alternatives. I know people graduating with $100K and more in student debt these days.
For those who thought the only way my advice would work was if you made a lot of money I'm posting this follow-up.
My first year out of college I made enought to qualify for food stamps, which shows how little I made initially. Over the next 35 years I progressivley improved my financial situtation by investing in my own continuing education. While still barely making ends meet, I bought my first personal computer in 1982 for $2,200 and with that I leveraged a better paying job two years later for the company where I still work. I'm still a firm believer in continuing education no matter what type of job you might have as it's the only consistent way to get ahead in the game of life.
The summary of the report in this article is misleading. It says "average gains of 32 percent", indicating a performance return. In fact, the study describes a greater account balance of 32%. This increase could be related to performance gains, but also employee and firm contributions to the accoutn.
.
Accounting law changes in the 1980 and 1990's dealt the death blow to pensions as they needed to recognize future benefit payments as current liabilities.
There is no going back to defined benefit pension plans unless you go to a pay-as-you-go system. Unfortunately pay-as-you-go does not work either as the social security system will find out in 2037 when it will only be able to pay 80% of its promised benefits to retirees.
All you whiners about not having enough money probably still have cable TV (for that flat screen TV), cell phones, and high speed internet. All which could easily put a $100 a month or more into a 401(k) or IRA, but that would take thinking. If you don't save...please go die without leaching off society.
We are so broke. No one knows how far we have to fall. Who will bail us out, The Chinese. Massive government layoffs. The dollar becoming worthless. The schools pumping out people that are worthless. Doctors moving to Costa Rica to get paid. Maybe more taxes, higher minimum wage, more unions, and $5 gallon of gas will save us. Just 3 more years to WWIII. Check out WWI and WWII. Then who is going to care?
You have it all wrong sez:
Sorry, "You Have It All Wrong", YOU have it all wrong, at least if you want to believe people who know what they're talking about. Obama's stimulus program saved the economy, according to leading economists INCLUDING John McCain's 2008 campaign adviser on economics, Mark Zandi.
Conservatives never will give a Democratic president any credit for what's going right, but they're eager to blame hiim for what's going wrong. While they prattle about the business cycle to avoid giving Obama the credit he is due for the recovery of the stock market out of one side of their mouths, they're blaming him for the high unemployment rate out of the other side -- an unemployment rate that would have been much higher by now if not for the stimulus package and auto industry bailouts.
Republicans even had the gall to accuse Obama of causing the 2008 stock market crash despite the fact it occurred BEFORE he took the oath of office. Republicans have no ideas and don't know how to govern, but they do have plenty of gall. You gotta give them that.
Because I'm sure you gave Bush credit for what he did.....highly doubtful.
What country do you live in???????????????
What this article fails to point out is that 401Ks were never designed to be a persons sole source of retirement income. They were developed bonus system to high paid executives in order to give them a tax deferred bonus. With the demise of the pension system, they have slowly creeped in to our culture as the "new" retirement savings aco@!$%#. However, it is simply not realistic for anyone to live off even the maximal contribution to their 401K.
I would have to agree with RJM that ALL WRONG is confused. A 401K is a savings account with your name on it. SS is not. SS is funded by currently working people to provide a minimum safety net for old age and disability. As such, it could be construed as a possibly unearned entitlement. Theoretically, however, those collecting were once in the work force, and so are truely entitled to collect. The idea doesn't work if more people are collecting than contributing, though. It also doesn't help that congress pilfered all the money some time ago. Maybe we should look at the idea of getting all the tens of millions of illegal aliens legalized and paying into the system. They are here already, and we won't make much effort to send them back. Use a problem to fix a problem.
The Tax rate on 401's and IRA's will make them mostly useless in the future, my opinon is go into a roth , the new tax rates will be exhorbantant, and that is not including State and Local taxes on income!
I heard John Kerry our hero, say that congress, liberals consider the excess money in 401'S to be THEIR m oney since they wrote the legislation!!!! THEIR m oney just like SS is Their money, our money it THEIR money!!!! we will not have any, they will have it all in the end,
A 401 will have to earn at least 25% a year every year to keep ahead of liberal taxes for the future, it is where all the wealth is, and it is not theirs so they will make it theirs, the 40!'s will be paying the debt off in the future, get ready boomers your broke and dont know it.
I agree with RJM that ALL WRONG is confused. A 401K is a savings account with your name on it. SS is not. SS is funded by the currently working to provide a minimum safety net for old age and disability. As such, it could be construed as an unearned entitlement, but theoretically, those who are benifitting were once in the work force themselves, and so are actually entitled to draw benifits. The problem comes when more people are drawing benifits than are paying into the system, such as the baby boomer's large increase. Perhaps we should legalize all these tens of millions of illegal aliens, and have them paying into the system, instead of being a phantom load on that same system. We don't seem to be making any credible efforts to send them back, anyway. Use a problem to fix a problem. Win-win.
EXACTLY how is it UNEARNED, since we ALL pay into it, and originally it was , WAS set up as a savings account! then the AH's in DC saw all that money and raided it for Gen. purpose funds, and they are the ones To BR it, not us Tax payers! unearned my Axx! we earned it! and they are stealing it.
As was said, if Wall Street and the other thieves in the stock and money markets had not convinced the government and especially the Reagan administration to let people start pulling money away from Social Security and putting into 401s, the Social Security would not be in finacial problems. Maybe Social Security didn't have the potential to bring big dividends, but at least it did not lose it as what happened to the 401s. 401ks were a stupid greedy idea from day one. It is too bad we can't recoup that mistake.
Tom's Right! Don't panic! Just because you stayed in fixed interest, never withdrew a single penny and still the GOPukes running your 401k steal $4,600 from you in 2008/2009 and call it "Market Value Changes." go ahead and listen to idiots like Sharron Angle who tell you to TRUST Wall Street with your Social Security, too! Wanna buy a bridge?
Earnings vs. expenditures dictate ones wealth. How those earnings were spent/saved over the coarse of ones life determine how you live when working is no longer a viable option. Circumstances of life determines if you win or lose. You can plan for what you know today but may not be feasible tomorrow. Basically, it is a crap shoot. To all who have been blessed with good fortune, congratulations. For those who have not, good luck!!! It is just how life works........
I am 56 years old and when I got out of college and got my first job there were no such thing as a IRA or 401k plan for that matter. The first to come about was under the Regan Admin where you could buy a tax deferred investment $2000/yr, but you had to qualify.
One year, I could not qualify because I made too much money. So, I bought an Annuity. Then came the 401k some years later and many companies just did not have them. So, I am expecting something from SSA. I put money into the system ad it was working.
The fact that it was STOLEN is my strongest objection of all. The money should never have been placed into the general fund and used for such things as welfare. It was NOT theirs to take and I understand it was the Democratic party that was mostly responsible.
I have a significant amount in my 401k and I will have to adjust my lifestyle because other did not. I am also not in the stock market as it is crooked and frankly I think were headed into a real "Depression" after all of the government sub-prime lending, bailing outs and all the ridiculous entitlements.
Welcome to the new Socialist World Order, with government pension plans and those folks are also exempt from the new Healthcare Reform Bill. WTF!!??
I have been reading these last 19 posts and am impressed with all the opinions.
I have been investing in my 401k for 18 years. I have gained all of my losses and then some. When i first started the pundits said it was a scam and would not work.
If i had listened to them i would not have $270,000.(granted $140,000 came from me). My wife and I are also putting $11,000 in roths per year. How? We don't buy toys and crazy vacations. Like most say , live within a small world, but make sure your happy. If you feel wealthy, you are /or will be. If you feel poor, you will remain poor and not try.
You are one of the smart or fortunate ones. Many ended up putting their money in investments that basically went broke. Some of these people were frugal workers. Perhaps, this is their fault. But, at the same time these people will need something when they are no longer able to work. To try do that in 10 years or less, is probably impossible.
My wife sterted 9 years ago at a place for $9 and hour and started a 401K with 5% of her earnings put into it. Yesterdays balance was $26785.00.Would the author of this silly article let us no what a better investment would have been?
One of the guys at work who started about the same time where I work didn't sign up for our company 401K. You no how much he has saved? Zero.
Dave, good for you and your wife. You didn't mention anything about you. I started at $7 an hour at 8%. Make sure she keeps it up and increase it every raise 2-3%. You won't miss the money after 2 weeks. The level of your money will start climbing around 30k. You wil be 100k in no time. Time is the great thing. Vanguard has cheap funds for roths. When we finnally get to retire our tax rate is going to be very high to pay off debt. A roth will help offset your tax burden of your 401k.
I wish the writer would write for us common people. All those numbers and percentages, make no sense for me. Why don't you just give a concrete example?