401Ks are a disaster: Column

[phantom power]

Over the past few decades, employees fortunate enough to have employer-based retirement benefits have been shifted from defined benefit plans to defined contribution plans. We are now seeing the results of that grand experiment, and they are frightening. Recent and near-retirees, the first major cohort of the 401(k) era, do not have nearly enough in retirement savings to even come close to maintaining their current lifestyles.

Frankly, that's an optimistic way of putting it. Let me be alarmist for a moment, because the fact is the numbers are truly alarming. We should be worried that large numbers of people nearing retirement will be unable to keep their homes or continue to pay their rent.

According to the Center for Retirement Research at Boston College, the median household retirement account balance in 2010 for workers between the ages of 55-64 was just $120,000. For people expecting to retire at around age 65, and to live for another 15 years or more, this will provide for only a trivial supplement to Social Security benefits.

And that's for people who actually have a retirement account of some kind. A third of households do not. For these people, their sole retirement income, aside from potential aid from friends and family, comes from Social Security, for which the current average monthly benefit is $1,230.

http://www.usatoday.com/story/opinion/2013/02/05/social-security-retirement-benefits-column/1891155/

[liberal_at_heart]

1. We will have a greater need for social security in the future than we do now because

of our transition from pensions to 401(k)s.

[Skittles]

2. those folk had the rules changed on them mid-game

a lot of them used to have pensions

[liberal_at_heart]

4. my husband and I started out with a company 401(k)

and we have very little in it. Wages have not kept up with the cost of living or the cost of healthcare, so the majority of people cannot contribute enough to reach retirement.

[Skittles]

8. 401Ks were meant to supplement pensions and social security

but rich bastards saw the opportunity to ditch pensions and claim 401Ks would take their place - it's all bullshit of course, designed to enrich the 1%

[Johonny]

18. The 90s boom faked ppl out

The market went up huge in a short period of time and companies used it as an opportunity to get people to go all in on the market. It amazes me that when my company offered a pension to younger workers they still opt for 100 % 401Ks. 10-20 years from now you are going to have a lot of pension funds and few living survivors on those funds. Then we know where that money will go...

[HiPointDem]

49. actually 401ks were promoted so that they *could* ditch pensions.

[marybourg]

54. Skittles is right. They were originally meant to

supplement pensions and called "profit sharing". Only later, when a rising stock market and general prosperity was causing these plans to grow, did large employers start to substitute them for actual pensions.

[HiPointDem]

58. they were promoted to the general public so that pensions could be ditched.

because that's what happened. they were promoted when the market was rising because if it was falling, the promotion would have failed.

large corporations do things to save themselves money, not to help employees. and they plan these things.

[marybourg]

59. Maybe I have a longer memory than you.

[HiPointDem]

60. i doubt it. maybe you are just more naive.

The section of the Internal Revenue Code that made 401(k) plans possible was enacted into law in 1978.

In other words, legislation made them possible; and in the late 70s (the beginning of the neoliberal turn). Most legislation doesn't just spontaneously appear because legislators come up with a good idea; legislation is typically promoted by interest groups.

It was intended to allow taxpayers a break on taxes on deferred income.

By the 80s, ordinary employees were being put into them and pensions were being dropped.

The history isn't so old, or obscure.

[marybourg]

68. Actually personal experience, and age.

[HiPointDem]

73. i also have personal experience, and age. most people do, in proportion to their years. i have

many years. i remember very well when 401ks came in, and the hype surrounding them.

i knew they were fraudulent then simply by the hype, which was clearly fraudulent ("you can be a millionaire when you retire!!! these are so much better than stuffy old pensions!!!). the years have not changed that opinion.

[question everything]

69. The reality is that many corporations that promised pensions

later went out of business, as did their obligations. I am thinking of steel and airlines. I think that they declared bankruptcy and the way to get out of it, once the executives got their millions, was to ditch or "modify" the obligations.

So 401(K) should have replaced them. Most employees, however, did not put this as their first priority and employers matched very little and suspended matching during the great recession.

I think that employers should have been mandated to match 10%. What difference would it make? They would still deduct it.

Several years ago changes were made so that each employee was automatically enrolled, had to make an effort to opt out.

I don't know whether the ones who chose not to really were facing hardship. It was just easy to drop it.

I know that for us, when offered, we contributed the maximum allowed. This was our first priorities. Paying credit cards could wait..

[HiPointDem]

72. they purposefully bankrupted themselves in order to ditch pensions, in many cases. i can't

prove that, but the evidence points that way.

for example, us steel went bankrupt -- but, voila, it still exists!

401k's were the bait-&-switch for the neoliberal turn in the 80s.

[sendero]

210. Not so much 30 years ago

... but now this (bankruptcy to ditch pension obligations) is pretty routine.

[HiPointDem]

221. bankruptcy for profit has been going on for eons. you can see the shape of it back in the time

of the old 'joint-stock-companies'.

[Skittles]

87. I have the same memory as you, maryb

the 401K was never originally promoted as a pension replacement

[marybourg]

93. That's probably because we're old enough to remember

the birth of the 401K from the tax code.. Some on this forum are still young enough to think history started on the day they were born.

[Skittles]

148. CORRECT!

YEE HAW!

[ProgressiveProfessor]

196. They were also promoted as the a portable pension approach

The idea that one would work at one place for 30 years these days does seem laughable.

[LiberalFighter]

83. That was how I considered my 401k. A supplement.

No way would I have enough without a pension. It would only last about 50 months. If I was 70 this year minimum monthly withdrawal would only be 377 a month. If my rate of return equals or exceeds what I earned last year I might get up to nearly 800 monthly. Hopefully, it will allow me to do things without too much sacrifice.

IMO I was lucky to be where I am now with my 401k but it would not allow me to retire with an adequate retirement income if I didn't have a pension. As it was, my employer did not match my contributions.

[Egalitarian Thug]

143. Exactly. The 401(k) was introduced in the 70s as a supplement for the executive class

as a tax shelter and was later adopted as an alternative (cover) for the ever gutted ERISA law which had caused both companies and unions headaches due to the habitual underfunding and looting of pensions.

[suffragette]

204. Excellent point about the stagnation of wages and inability to contribute to plans

That combination, plus the calls to reduce Social Security makes me fear for what will happen when it comes time for people to retire. I'm in the same situation.
It's really a recipe for a terrible storm.

[Nay]

144. And even those who dutifully contributed to their 401Ks saw their $$ go straight to hell at least

twice in the past 20 years. Retire? The middle-aged workers were robbed by the stock market, and somehow it's all their fault for 'not investing wisely' or what the fuck ever. That person who had only $120,000 probably had 250,000 before the stock market swindles.

[laundry_queen]

3. It sure is a big win for corporations

but not really for anyone else. No suprise, they stiff the workers, again.

[jonthebru]

5. That would be me.

[HughBeaumont]

6. 401(k)s only work if you're an amazing prognosticator.

And if not, well hey, pull yourself up by your bootstraps and learn a thing or two about market timing!! If you're not making a killing in this economy, it's nobody's fault but YER OWN!!

[duffyduff]

24. They only "work" if you are extremely highly paid; after all, they were set up originally

as supplemental savings plans for executives.

They were NEVER intended to be retirement plans, let alone substitutes for pensions.

Thank Congress for this mess for allowing companies to ditch pensions in favor of these scams.

[FreeJoe]

66. I don't really agree

My understanding was that they weren't really intended as retirement vehicles in the first place. I read that they were created as a tax break on deferred income and that clever benefits consultants figured out how to use them as retirement plans.

[duffyduff]

96. That is basically what I said. They were NEVER intended as that,

but companies exploited loopholes in ERISA to ditch the pensions altogether and provided these DIY savings plans as retirement plans, which they are NOT and can never be. They did it to save money, not to help employees.

These defined contribution programs were originally for high-paid managers and executives, but during the Reagan years eligibility for these plans was opened up for millions of workers. They are a raw deal.

You'd have to have literally hundreds of thousands of dollars, if not over a million, in one of these defined contribution plans to get any substantial monthly benefit in retirement. You have an income stream only as long as there is money, while in a pension, you get a monthly benefit for as LONG AS YOU LIVE.

You tell me which is the better deal?

[FreeJoe]

99. They are somewhat interchangeable

If I've got a bunch of money in an IRA, I can use that money to buy an annuity. I can buy one that pays me X dollars until I die. I can buy one that includes a spousal survival benefit paying my spouse 50%, 75%, or even 100% of my benefit. There are lots of options.

My company has a pension plan. When I retire, I've got a bunch of options I can choose as to how the money gets paid out. The options are various flavors of annuities or I can just take the whole kaboodle as a lump sum and roll it into an IRA.

Yes, you need to save a LOT of money to have a good income stream. That is especially true today, because interest rates are very low. Using the retirement calculator my company provides, if my pension lump sum was $1,000,000, I could take that or a monthly income of $5,337 for the rest of my life. Which is the better deal? In general, they are worth the same. Which is better for you? It depends on how secure you think the annuity provider is, what you think will happen to inflation, how you plan to invest the lump sum, and a bunch of other factors.

It doesn't take more money to provide a comfortable retirement in a defined contribution plan compared with a defined benefit plan. The dollars saved vs dollars paid out are the same in both cases. There are differences in the risks. With the defined contribution plan, you face investment risk. With the defined benefit plan, you are exposed to solvency risk of the pension provider (somewhat mitigated by pension insurance). Both face inflation risk, although in different ways.

My main point is that they are really very similar. Where I think many people got screwed is with the transition. If a company was paying 8% of your salary into their pension program and then switched you to a 401K where they matched 4% of your contributions, you took a roughly 4% pay cut without it being obvious.

[zipplewrath]

112. Not in reality

I've been in a 401K since I was 30. I'm about 5 -10 from retirement. The reality is, despite putting in the max most of that time, and getting a match (varied over the years between 25 and 100%) I don't have nearly enough cash in there to retire with 60% of my current income. Fortunately, I still have a defined benefit plan as well, although the company terminated the newer employees from participating. One would have to save at the very least around 800K in current dollars.

Now, admittedly, a huge part of the problem is that over that period of time I've lived through 2 fairly major down turns in the markets that cause huge losses in the investments. Ultimately they returned to previous values, but after several YEARS. Which basically means I lost that many years of growth. Had the markets been more stable over the years, it probably would have compounded much higher than it has.

But I am well compensated, so my 401K grows faster than many. The economic realities are that many folks aren't well paid over their entire careers. Many of them bounce in and out of the job market through down turns in the economy. Contributions start and stop. Saving enough is very hard in that environment. With defined benefit pensions on the other hand, often you only needed about 10 "good" years towards the end of a career to get a decent benefit. They can do this because it is a "shared" benefit. Everyone pays in, but people will get payouts for various lengths. Which means that some will see very little at all (die too soon) and others will recieve a large payout because they live so long.

You can't really buy an annuity on those terms. I haven't seen "collective" annuities yet, although I think the coming 401K crisis might create them. You give them all of your 401K, and they pay you monthly until you die. Then they keep it all. Some will do well, some will pay hundreds of thousands and only receive a few months of checks. But the monthly check will be better than what one could get by buying their own annuity.

[FreeJoe]

133. My experience is different

I've been in a 401K for 20 years (since my late 20s). I've contributed the federal maximum every year ($17,500 this year). I've also put in the maximum into a Roth IRA for myself and my wife every year. In the few cases where I have left a company with a pension, I have rolled the pension funds over into an IRA rather than leave them with my former employer to manage. We have invested it steadily and prudently in low cost US stock index funds, international stock index funds, and bond index funds. We have accumulated well over $1,000,000 and are happy with the retirement income it should provide when we start withdrawing funds from it in another 12 years. Yes, we have had some serious dips, but during those times our money went much further when buying stocks. As I told my compatriots back during the boom days in the 90s, things might be great for people selling, but I'm buying and I'd prefer to buy at a discount, not a premium.

I agree that the system does not work well for the intermittently employed. Neither did the pension system. That's why I advocate a combination of a modified version of SS as a core safety net and federally managed individual investment accounts. The former makes sure that no one starves and the latter helps to ensure that people who do earn decent wages save that money in a safe and effective fashion.

I'm not sure why you don't think you can't buy annuities like that. My company obviously does or they wouldn't offer those as options to employees. I can also go to a site like this (https://www.newretirement.com/services/annuity_calculator.aspx) and shop for annuities. I've never looked at them as I prefer to manage my own funds, but my impression is that the market is fairly large and competitive.

And as to your final comment about some dying months after buying an annuity, they have an option for that. There are annuities that guarantee 5 years or 10 years of payments even if you die. Obviously, they pay somewhat less than those that don't offer the guarantee, but that only seems fair.

[zipplewrath]

171. I notice you said "we"

That's a key feature. Two people combining their efforts can do much better. It's the point about collective systems like defined benefit plans. It is a way for people to combine the risk, and the rewards.

As for the intermitently employed, the advantage of the most of the defined benefit programs was that to be "fully vested" often didn't take all that long. Many defined benefit plans would be paying 40 - 50% of the maximum within 10 years of employment, as long as it was the LAST ten years.

I'm not saying it CAN'T be done. I'm saying the data demonstrates that it ISN'T being done on a wide basis in the lower income stream jobs that use to benefit from the pension system.

[FreeJoe]

209. I think that we basically agree

We both agree that regardless of whether you can save enough to retire using today's retirement vehicles (401Ks, IRAs, Roth IRAs), a low percentage of people actually do. I don't think it matters as much who gets the blame (greedy companies, lousy savers, crooked investment advisors, the government), as it does that we find a better way. We need something that none of those people can routinely F up.

As for the "We" part, it is definitely easier to save as a couple than a single. It is much more efficient to go through life sharing resources than doing things individually. In my case, my wife has no income, but she still helps by providing additional methods for tax deferred savings, lowering my tax rate, and boosting my income by freeing me from tasks that would take me away from my job.

[uppityperson]

215. So the solution is lose your home now so you can retire later?

I don't have enough saved for retirement as I'd like to be able to survive now. There are too many people in my position and lecturing us does not help. Yes, there are those who overextended, but lots of us who simply have been struck down by the recession and would like to survive for now.

[llmart]

224. OK Mr. 9 posts who joined DU yesterday.....

We get it. You're just amazing! Wow! Wish we could all be as smart and savvy and aw, shucks, just as financially secure as you are.

So you're income last year was less than $50K? That tells me it was probably $49. Try saving and having a house and toys and vacation on $25K a year. Oh, maybe I missed it, but you didn't say if you had children or not. But then, if you don't, well, it's probably because you were just oh so smart about that too.

Let's hope you don't get hit by a car tomorrow. All your wonderful retirement savings don't/won't mean diddly squat when they put you in the ground and you have no control over that.

I'd rather have balance in my life. I saved some for retirement but I also enjoyed my younger years and did some of the things you can no longer do when you're older or no longer want to do.

You better learn a little empathy.

[FreeJoe]

222. I don't think you meant to reply to me

It looks like you mean to reply to someone else.

If you think about it, though, that is an "advantage" of a 401K over a traditional pension plan. With a 401K, you could take money out in the event of an extraordinary emergency. With a traditional pension, you can't touch the money at all until you retire, regardless of whether spending it would save your house. I guess with some plans you could quit your job and then get at the money, but I'm not aware of a convenient way like borrowing against a 401K. It's one of those ambiguous situations where you want to give people access to their retirement savings if they really, really need it before retirement, but you don't want them to access it for things that they want but don't really need. How do you balance freedom and paternalism?

[WinkyDink]

7. "Recent and near-retirees"---Wait! I thought the Baby Boomers were living the Life of Reilly on the

backs of Gens X, Y, and Millennial!

[JustABozoOnThisBus]

11. Well, we are indeed living the good life ...

... oh, crap, I had to use both hands to type, and the umbrella blew out of my drink. Yoo-Hoo, Cabana Boy, another Pina Colada please!

Oh, wait, that was the PLAN, not the reality.

[Skittles]

12. yup

that's just the 1% pitching the generations against each other - because it is easier to blame a generation than to blame the rich thieving bastards who are REALLY living the Life of Reilly

[WinkyDink]

14. It's been a long-range plan, mon ami, from ca. 1935.

[Sherman A1]

9. Precisely

As a supplement to a defined benefits plan I think they are useful, as a replacement they are absurd. I am lucky to have both defined benefits and a 401k to which I can contribute a goodly number, that said I picked some funds and hope for the best as I have no real knowledge of the workings of the market.

[barbtries]

10. i'm kind of glad

that i never have seriously believed i'd ever be retired.

[Skittles]

13. me too, barbtries!!

I could see the writing on the wall a long time ago; I also live a very low key life so the fall after retirement will not be as far

[barbtries]

16. exactly.

i'm 57 now and ready for anything that comes my way. including dying at my desk.

[NBachers]

81. Yup, die at work, that's what I say- That way, there'll be someone around to deal with it

I'll be 64 this year. I'm blessed with a job I like and a little rent-controlled apartment. My company just raised their matching 401k contribution from $500 to $750. I'm contributing 15% each paycheck. The rules say I'll never be able to afford retirement.

"Oh yeah, he was that guy who dropped dead over in aisle 13."

[awoke_in_2003]

27. And once they get their hands on SS...

and they will, that will be all she wrote. Die on the job or taking a motorcycle off the Grand Canyon- those are my choices.

[RagAss]

38. Well, if you're going the Grand Canyon route....

then take one of those pension stealing bastards along for the ride

[socialist_n_TN]

40. Yep that would me my inclination too..........

I'd want to take one of those capitalist assholes with me.

[awoke_in_2003]

71. Definitely. nt

[libtodeath]

15. They are a union busting trap

instead of a good pension they were a bill of goods sold telling people "see,no need for a union and contract".
401K money is nothing but fish food in the wall street pond.
You sprinkle some in and the really big fish through speculation,insider trading,manipulation gobble it all up.

[Lydia Leftcoast]

22. I remember when they were introduced

People were told that they could be millionaires when they retired.

[HiPointDem]

50. i remember that too. we had one of those information sessions and were supposed to choose

which plan we'd use to 'invest' our new 401k (which actually meant choosing one of 6 or so options that let someone else 'invest' our money).

after a speech about how now we had all this freedom and these phoney figures showing us how we could be millionaires at retirement, we had to sign up for a plan. i choose a plain interest-bearing money market account. the guy who signed me up was incredulous. "you want to retire, don't you?" i told him people had retired without 401ks & i'd go their route.

this was before i understood that the ptb were going to close off other options.

[brooklynite]

164. You're aware that you can shift your investments, aren't you?

Unless you live in the 1960's where a passbook account was enough for everyone, or are retiring tomorrow, there's no reason to keep all your investments in money market.

[spinbaby]

97. Now a million isn't enough

I remember the line about being millionaires. We've the maximum in our 401ks since they were available to us in the early 90s. We have nowhere near a million and the "experts" are telling us we need at least three million to retire in comfort.

Meanwhile, DH worked for a company with a pension plan for over 20 years in the 60s to the 80s. They dissolved the plan and sent him a check for $30,000. He worked for another company that had a pension plan since the late 80s. They "froze" the plan some years ago and will eventually send him a check. We don't know for how much but it's a sure bet we won't make that million or have a secure retirement. Right now the plan is for him to retire this year and for me to keep on working until I drop.

[Art_from_Ark]

141. I remember hearing that "millionaire story" too

and I thought, "No way!" Maybe some people who got in early made out like bandits, but it sounded like just another ponzi scheme.

[Le Taz Hot]

190. I remember when they were introduced as well.

My first reaction was, "But unlike pensions, your money isn't protected." Anytime the geniuses at Wall Street claim some scheme or another is going to be "great for the small investor," run far far away.

[ReRe]

35. That's about the best analogy....

...that I have heard...little fish in a big fish tank,etc....

[riverbendviewgal]

41. thankfully my husband worked a union job

He was in the railroad. Worked the job 28 years. He had terminal cancer. His company let him take a buyout knowing he was dying within months. We thought that would better he did that in case I died early and then our older son would benefit. Our younger son died 18 months before my husband died from cancer. My husband died five months after he got the buyout.
He was 54.
The company matched what he put in his pension. I had almost 400k and could invest it all anyway I want. I put it in RRSPs plus i got life insurance from the company on him. THE UNION DID THIS! The unions made life good for us.

[moondust]

63. And a hostage for Wall Street.

"Give us whatever we want or we disappear the country's retirement money."

[dawg]

189. Right.

The 1%'ers love 401(k)'s because they see them as a way of making working people believe that their best interests are aligned with those of big business. I don't know how many right wing articles I have read that point out that all the "evil" corporations like Exxon Mobil and Monsanto are part of our 401(k)'s so we should stop complaining and realize how much we benefit from their practices.

[Jakes Progress]

17. It was just another attack in the class war.

The rich were tired of just taking each other's money, so they came up with a fool-proof way to take money from the poor and middle class.

We are seeing it again right now. The stock market is going back up, and their lackeys for the rich are telling us how important it is for us to get back in the stock market now. Then in a year or two - wham. They take the suckers again.

[lastlib]

25. They wanted to privatize Social Security in favor of a 401(k)-style plan....

and they wanted us to put it all in the hands of the same Wall Street "genius" vultures who crashed the market in 2008. Screw that--if we go for it, *WE* are screwed! Most Americans can't manage their checkbooks, let alone tens of thousands of dollars in stock market investments. Even though I've spent twenty years working in the financial services industry, I don't feel competent to manage my own money in a 401(k). I've done pretty well, but like too many others, I took a bath in the bubble-bursts of 2000 and 2008; no recourse, that money's gone, and I'll be another decade just hoping to make it up. Retire? More like die at my desk--like thousands of others.

[awoke_in_2003]

29. It doesn't matter whether we go for it or not...

they will get the money eventually.

[Ratty]

19. I'm often surprised by the amount of anti-pension sentiment here on DU

I work for the state and have a nice pension to look forward to when I retire. I wouldn't have it any other way. I hear a lot of resentment from people here in the private sector toward public pensions. Many people right here are mad about public pensions when they should be mad that their employer - along with most others nowdays - no longer offers them. Their anger is misdirected.

Their have been abuses in the public pension system and many if not most of those abuses have been addressed in the last economic downturn. Limits on vacation leave are more widely enacted now. Most places forbid retired workers from returning for half time appointments (double dipping). Most of the gross abuses have been addressed.

[YoungDemCA]

21. Exactly

Well said. You should make an OP on this.

[mike_c]

30. me too, and I agree completely....

I have one of the last great defined benefit pensions left, for California public employees. Every election cycle it seems conservative groups manage to get initiatives on the ballot that call for demonizing public employees over our benefits, either directly or indirectly. They've got it entirely wrong. EVERY working person should have the same benefits I enjoy. Every single one.

[awoke_in_2003]

31. It shouldn't surprise you...

there is a lot of anti-union sentiment here, too. Hell, even our party has no use for unions anymore.

[abelenkpe]

33. I wish I had a pension nt

[DCBob]

44. Well.. its because we as state taxpayers are paying for your "nice" pension..

and we dont have anything that remotely compares.

[Gidney N Cloyd]

65. Taxes paid for govt workers' compensation, of which pensions are one deferred part.

[Bigmack]

70. I was waiting for somebody to post something like this....

For years, my shitty little teacher pension plan was a big laugh to my friends working the the private sector. They had real, serious pension plans thru their company.

We fought like hell for every penny, and although our pensions have - for all practical purposes - no COLAs, we managed to hold on to a small defined benefit pension. We gave up stuff to keep that pension... work hours, conditions, pay...

(We did get a one-time COLA a few years ago. We got a bonus of 5 cents per year of service per month. Lemme see... 5 cents X 30 years=$1.50 per month. I bought an executive jet with my COLA.)

Then, the war on the middle class heated up, and - one by one - those wonderful pensions dried up... blew away... were summarily canceled.
Friends, with shell-shocked expressions, told how their companies.. big, prosperous, national companies fucked them but good.

I'm not jumping on you... well, not jumping on you too hard, anyway, but simply because the rest of the pay/pension situation went down the shitter in this country, is no reason to even question our pensions.

They are contracts. Contracts are enforceable by law. Several cases have come to the courts, and the courts have enforced the pensions. And they will continue to enforce them.

So.... gently... it's not the fucking teacher/public employee pensions that are breaking the system. Corporations are paying the lowest corporate taxes in decades. Corporations are making the highest profits in decades. Corporations have $Trillions in surplus funds. Corporations have offshored $Trillions of profits in tax havens, banks are sitting on $1.3 Trillion in money beyond their reserve requirements... drawing interest from the Fed.

Does that give you a hint as to who is screwing whom?

Public pensions are simply a shiny object dangled in front of low-information folks to distract from the reaming they're taking. And some people are dumb enough to be distracted.

[Nevernose]

137. Hell, yes.

What YOU said!

[Starry Messenger]

161. +1

This would be a great OP.

And gee, the last time I looked, I am also paying taxes...

[Live and Learn]

199. +1 nt

[Jakes Progress]

82. So you've fallen for the script?

You eat the lies the rich tell you about how it is public employees that took their money. The rich took it and laugh at you.

They tell the young it is old people that are making them unhappy. They tell white people that it is the brown people. They tell black people it is the white people. They tell southerners it is people from New York. They tell lies and stupid people believe them. Their best lie was to convince the middle class that unions were the enemy. With that one they killed the only strength that the worker had. They convinced the weak minded that they could get rich in the stock market, then stole their money, and convinced them to blame each other.

It works too. Just look at that stupid, uninformed post you just made. They are laughing at you right now.

[DCBob]

90. Is it also "stupid" to note that states are going bankrupt trying meet their pension liabilities.

Also, is it possible for you to discuss this topic without resorting to personal insults?

[Jakes Progress]

94. Yes.

It is falling for the same line of crap over and over. Repeating these silly things just cause you read it on the net is naive.

Avoiding personal insults would require you to stop using the stupid catch lines for the rich to blame others for the problems of those who didn't want to join unions because they didn't want to pay dues.

It depends on whether you are gullible or culpable. Do you really believe that the local teacher is responsible for the crashing of the economy and the erasure of 401K plans? Do you really believe that your local fireman is the reason the corporations are ducking the pension plans that would have provided you with the same benefits that smarter organizations and unions preserved? Do you really want to blame other middle class workers for destroying our financial safety net?

Brother. Your money was taken by the very rich. Just read any of the dozens of sources that will tell you how much richer the rich have become while the rest of us got poorer. That money they have shoveled into their accounts in the last 15 years came from you. It didn't go the kindergarten teachers or mail carriers or county clerks. It went into the overstuffed accounts of the very rich. You didn't stop it going, but the least you could do is stop abetting the thieves by blaming the blameless. Point your anger and indignation toward the politicians, corporate thieves, and banksters who really did take your money.

Stop being so gullible. That is the best that can be said. If you haven't fallen for the rich man's propaganda, then you are not gullible, but guilty of spreading their lies willingly. I choose to believe you are simply uninformed. I will willingly undertake your education with a list of readings about the fall of the union movement and the financial realities of the post Reagan era where wall street and tax laws have become rigged games for the wealthy. It has worked for them. The top one percent have increased their wealth more in the last decade than at any other time in modern history. That wealth came from you, and demanding that those whose retirement is protected give that up so that the rich can have some more is just silly. Sorry if that sounds personal. But you blaming postal workers for taking care of their future and protecting their retirement income from the rich predators is personal. Join a union.

[DCBob]

95. Well at least you didnt directly call me stupid..

thanks!

[Jakes Progress]

103. At least you didn't call working American's thieves.

You suggested it. But fell short of calling public workers greedy thieves.

Thanks.

[DCBob]

104. "greedy thieves" WTF??

I never said that, never implied that and I dont think that. My point is simply that the state pension system is a huge burden to state budgets and to taxpayers especially now during an economic crisis. Critical government functions and services are being cut all over. People like you are incredibly naive to think this is not a problem.

[Gidney N Cloyd]

117. The pension obligation shortfalls are certainly a burden but the pension systems didn't cause it.

Pension funds are short because contracted-for contributions the state was supposed to make to the funds weren't made. Instead the gov't re-directed that earmarked money to general funds so they wouldn't need to raise taxes on everyone. In almost every case like this, the actuaries looked over the contract numbers, the unions and employers agreed the numbers were workable, and it looked like a win-win. After that, the workers paid in their share but the governments put off paying their shares.
So to turn around now and imply it's the workers' fault we're in this mess is to ignore the real theft that's taken place. Governments needed to raise taxes to meet general obligations like roads and schools years ago but because that would have angered tax payers they instead skipped payments to the pensions. Now the bills are coming due and there's only one way to pay them: raise the taxes they should have raised in the first place. Otherwise you're picking the pockets of the pensioners to save everyone the real cost of running the government.

[Jakes Progress]

121. Still not getting it. Or just refusing to admit.

When you spout the corporate line about how burdensome pensions are, you carry their water. Those pensions are a pittance and they were contractually set. If you think that states should renege on pensions because they are burdensome, then you must agree with the corporations that declare bankruptcy, dump their pensions, and then go right back to paying their executives millions in bonuses. You are doing them a favor by coming on a Democratic site and mouthing their lines for them. It is not because of pensions that government services are being cut. Try the tax slashing republicans and the privatization craze. Then they get naive and gullible shills to dither about how that extra $75 a month to the mail carrier who worked for thirty years or that half percent bump in the retirement for the teacher who spent 40 years educating your children is what is causing the problem. Don't do that. It is harmful to making the nation a better place to live.

Are you really so short-sighted and uninformed that you don't see that you are being used. It is not people like me, but people like you who refuse to think before they vomit up the corporate line that are the problem. I just hope you are naive and willfully uninformed. The alternative would not be good for your soul.

[DCBob]

123. I think there are many Democratic governors who agree with my statements.

This isnt about corporations or politics or blaming workers.. its just basic math.

[shanti]

134. no, it's bullshit

my state pension is not paid by the taxpayers (of which i am one too, btw). half of my pension is from my own pocket, the other half is from the pension fund that administers it. NONE of it comes from the state general fund. you sound like the freepers who scream about this in my local (state capital) newspaper!

[tblue37]

150. DCBob, you need to understand that a pension is not a "gift" or "bonus"

"added" to the employees salary. It is PART OF the employees negotiated compensation that the employee doesn't get up front but has to wait for because it is deferred.

The employee's compensation package includes a certain amount that does not get paid to him. Instead, it gets deferred. That is his pension. During contract negotiations, the employee and the employer workout what his compensation will be and what his work obligations are. He then does the contracted work for the years up to his retirement, but when he retires, that money in the pension fund is his, because it was always his, even though he didn't get to access it until retirement.

When he retires, the money he gets as a pension is not "extra," but rather money that he EARNED back in his working years but never got to access as cash because it was being tucked away for him in his pension fund.

So the taxpayer is not funding the state employee's pension, except in the sense that taxes support the government's services and functions, so the salaries of state workers are paid by taxes. But it is the employee's own compensation that he earned during his working years that is funding his pension, not any extra taxpayer funds on top of his contracted compensation.

[DCBob]

152. Well there wouldnt be a problem if it worked the way you described.

State unfunded pension liabilities now total in the trillions across the country. Its not the workers fault but its still an enormous problem that we cant simply ignore.

[tblue37]

157. When my sister’s 3 kids were very young, from infancy to elementary

school age, her husband didn’t want to understand how expensive it was to provide for them—food, clothing, supplies, medical expenses, etc. She often had to ask me for financial assistance to provide absolutely essential things. For example, he refused to believe how often a child’s shoes and clothing must be replaced simply because of growth spurts. Although I was in rather dire financial straits myself at the time, I would rely on credit so that I could use my actual cash to help her out. I ended up in significant debt because I was providing for my own 2 little ones as well as his 3 at the time that I was earning very little as a divorced mother of 2.

American taxpayers are like my sister's husband. They don’t want to know how much it costs to pay the salaries of the workers who provide the services they demand. So the salaries and wages are kept artificially low on the surface by deferring part of the employees’ pay for decades. Then, politicians use that deferred money, which belongs to the employees, not the taxpayers, since it is part of the employees’ pay, as a slush fund to pay for other governmental costs, so they can tell the taxpayers that they are keeping their taxes low, so they should keep electing them.

Then, when the employees, who have not yet received that part of the pay they were contracted to get, are ready to retire, which is when they are supposed to get the pay that they agreed to wait for, the politicians and taxpayers are appalled at the very idea that those greedy workers expect to be paid such enormous sums!

Of course, if the taxpayers were willing to pay for the services they demand, then the workers’ salaries and wages would be higher, so they could put away some money for themselves in savings, because they would have something left over after paying for their own living costs. But since deferred compensation allows their employers to keep the workers’ compensation artificially low in real time, most of these workers run pretty close to the wire financially, so they usually don’t have enough money to accumulate much in savings over their working lives.

Also, of course, expenses pop up unexpectedly, and so do temptations, but because the money that is deferred into their pension funds is not accessible until they retire, that is a way to enforce savings over the long-term—if only the employers (the government) would actually pay the money they have contracted to pay rather than taking it for other services the taxpayers want but are not willing to pay for, because the politicians want to avoid risking their cushy sinecures by asking the taxpayers either to actually pay for the services they demand or else reduce their demands to the level they are willing to pay for.

[Jakes Progress]

182. You've gone way past the level where you could be considered just uninformed.

This level of corporate mendacity is just appalling.

[JanMichael]

154. The poster you are responding to

would be pretty shocked if he saw the amount taken out of those paychecks for state/ fed/ local employee's pension funds. I am always amazed when I read that "taxpayers" are footing "pensions."

What a load of crap; it would be nice if people didn't fall for the bullshit, but they do- even on DU.

[Jakes Progress]

183. They fall for it or they support it.

It's hard to tell here. But the repeated way the poster spouts the "line" is truly nasty.

[duffyduff]

187. Exactly. n/t

[Jakes Progress]

181. Ooooh. Yet another corporate line and lie.

You should ask for pay.

[duffyduff]

188. People think that because they have taken a hit or that they never had a pension,

those who have pensions should have to suffer because of the criminality of the one percent.

Well, screw that. Nobody put a gun to your head and said you couldn't take a public sector or union job with a pension.

Pensions for all is what we should be aiming for.

[Jakes Progress]

198. We were heading toward that

before the union movement got undermined. Too many here drink the 1 percent kool-aid that unions are bad. Killing unions was one way for the rich to get their hands on the retirement money for millions of people. Stupidity and greed killed the unions.

[LondonReign2]

160. They are going bankrupt

ONLY becuase they failed to fund the pensions in the first place! For year and years and years, through economic booms and downturns, states failed to put adequate money in the plans. With the Great Recession, both interest rates and equities dropped simultaneously, giving the funds a double hit just as a great wave of people were nearing retirement age.

Had they properly funded the pension plans in the first place instead of kicking the issue down the road they wouldn't be in this situation.

[Ratty]

170. That funding point it certainly true for my pension

For decades many employees paid nothing into CALPERS because it was completely self-funded. The investment returns were more than adequate to keep the fund in good shape. With the great recession it suddenly found itself in the red. This is an example of a pension abuse: not adequately planning for economic downturns. We all certainly pay into out pensions now and I'm happy to do so. They were other shenanigans that occurred with CALPERS when the longtime head was ousted by a board beholden to corporations, after which the fund never regained the success it had achieved in years past. Someone made out like a bandit and it wasn't the workers. But that's another old story.

Republican Gov. Pete Wilson borrowed 2 billion from CALPERS to close California's budget gap and Republican Arnold Schwarzenegger tried to do the same.

Admittedly the pension system isn't perfect but that doesn't mean it should be chucked. Like anything you improve it until it gets better and better and you learn from your mistakes. And the alternative can be much worse. Yes, people have gotten wealthy from their 401Ks. I had an argument with my RW sister in law about pensions. She was a banker and had the knowledge, the motivation, and the disposable income to manage her investments and now in her retirement she is very well off (her husband, a state employee collects a nice pension himself). Naturally since her experience with 401Ks was a lucky one she disparaged the parasites who suck up tax-payer money for their monthly cash bonanza. I made her mad by asking if what she was saying is that people who are too stupid to manage their investments deserve to be destitute and out on the street.

Many if not most people don't have the knowledge to manage their investments. They don't have the motivation - they have bigger more immediate fish to fry, like feeding and clothing their families. They don't all have tons of disposable income like my sister in law. When their 401Ks fail they are destitute with few options. Those people who love their 401Ks and have done well usually forget about them.

I heard a quote once about social security that has always stuck with me and I think it applies to pensions as well. Social security was never intended as a get rich scheme. It was always intended to keep old people off the streets.

[tblue37]

191. The part that bothers me most, though, is the lie that

Last edited Sat Feb 9, 2013, 02:53 PM - Edit history (2)

it is "taxpayer money" that pays our pensions. It is NOT the taxpayers' money. It is the employees' money.

The taxpayers' taxes fund government functions and services, just as an employer's money pays for the work of his employees. But once the employees do the work and get paid, the money is no longer the "employer's money"; it is the EMPLOYEES' money.

The following scenario might help people understand why it is misleading to say that taxpayers’ money is used to fund these pensions. That is like saying that the paycheck a worker deposits into his bank account is his employer’s money. It isn’t. Sure, the employer’s money is used to pay the worker, but once the worker is paid, that money is his money, not the employer’s.

If the worker does the contracted work, but the employer doesn’t pay him his wages, or doesn’t pay him part of his wages, the money the employer withholds is still the employee’s money, and by withholding it, the employer is helping himself to an interest-free loan for however long he keeps that money—while depriving the employee of the interest that money would have earned if it had been in the employee’s bank account.

And if the employer never pays the employee the money at all, then the employer is stealing the employee’s money.


Here is the analogy:

Say my employer notices that I have trouble saving money or avoiding temptations to spend unwisely, and he worries I might need some savings cushion in the future. Meanwhile, he sometimes has cash flow problems; even though he has money enough to pay my wages, sometimes he must cover other expenses that run him short temporarily.

Imagine also that he has a partner who has a lot of power over but little understanding of the business side of their business.

My boss works out an arrangement with me. He will pay me the agreed upon wages, but not all at once. I accept the idea of being paid only, say, 85% or 90% of the money I have earned in each paycheck, but he promises to deposit the withheld portion in my bank account, though sometimes he will have to TEMPORARILY postpone a deposit if he runs into a serious cash flow problem.

Meanwhile, he keeps his ignorant partner happy by showing that he is getting my work at a below-market price (since he is actually paying me only 85%-95% of what he owes me at any given time), and he encourages his partner to admire and even reward his financial savvy for doing so. For years, his partner accepts the lie and remains ignorant of how much I am contracted to be paid for my work.

But usually, when the cash flow problems are not pressuring my boss, he doesn't bother to deposit into my account the money he still owes me, since our arrangement has locked me out of my account for a few decades, because we agreed that would help me resist the temptation to blow my money rather than saving it as I need and want to do, so I cannot get to my withheld wages until the agreed upon time. But he keeps using MY MONEY, THE MONEY HE STILL OWES ME, to pay for his own stuff and his partner's stuff, even when they have plenty of their own money to use.

In other words, he keeps using the portion of my pay (MY MONEY) that he is supposed to be depositing in my bank account as an interest-free loan (which also means, of course, that he is not only using my money, but also depriving me of the interest I would be earning on that money if he were depositing it into my account the way he is contractually obligated to do). Not only is he not paying me the money he owes me, but he is also causing me to lose a lot of money that my withheld pay would have earned in interest over the years and decades if it had been sitting in my bank account as it was supposed to be doing.

Then when it is time for me to start accessing my own money in my own savings account, I am told there is little or no money in there after all, because the portion of my pay that was withheld was never deposited in my account after all, even though our signed and legally enforceable contract promised that it would be.

When I insist I should be paid the money that I earned but that was supposedly only temporarily withheld from my paycheck, the ignorant partner starts screaming about my greedy attempt to get "extra" money out of their business after I no longer am even working for them.

And my other boss, who knows better but who likes having MY money to spend for his own and his partner's purposes, encourages his partner to continue thinking that it is THEIR money I am demanding, not MY OWN money that they have been using for years rather than paying me directly or depositing for me in my temporarily
locked account.

Now that interest-free loan that they have been using my money for turns into outright theft, because they do not intend ever to give me that money at all.

The pension money IS NOT THE TAXPAYERS' MONEY. It is the EMPLOYEES' MONEY that the taxpayers have been for years allowing the government to spend for the benefit of either the taxpayers or, even more often, the politicians and their cronies.

I suppose you can tell from my post that I am a state employee.

Edits: I originally typed this (very clumsily) on my Nook, so it was riddled with typos.

[Egalitarian Thug]

193. That's simply wrong. The state pensions were funded by deferred earnings of state workers.

In turn, the states economic woes are overwhelmingly due to the republicrat policy of dumping federal obligations on the states but keeping the money in DC to fund their gigantic corporate welfare programs.

The republicans fundamentally and permanently changed the American economic model in less than 6 years and they were only able to do it because a significant number of Democrats helped them to do it to us. By forcing the 401(k) on the average worker, they effectively captured trillions of Main Street dollars into the stock market to the exclusive benefit of Wall Street.

We've been paying for that betrayal ever since.

[Hippo_Tron]

195. No, you're paying for a functional government...

Functional governments require competent employees who are easier to find when you have attractive compensation packages. If you don't think you're getting something in return for paying for a government employee's pension, then I suggest you do some research into how government effects your everyday life, rather than buying into the Republican mantra of "We built that".

[lancoholic]

206. no i'm pretty sure it's because of something that actually causes that

its because we as state taxpayers are paying for your "nice" pension..

and we dont have anything that remotely compares.

You're experiencing a very common misconception, you see, to be "because" of something, a thing actually has to be caused by that thing.

For example, what paying taxes to ensure that public employees are reasonably compensated for their labor actually causes, is for people to:it actually isn't paying taxes that causes you to feel that way, because what paying taxes to ensure

1. be happy that they are paying taxes to ensure that public employees have pensions
2. rationally hold their own employers for failing to provide similarly fair compensation to themselves.

So as should be clear, your irrational hatred of state employees is actually not because of that, and instead, is because of things that actually cause that, such as pathetically obedient worship of the wealthy and powerful, refusal to acknowledge the behavior of the supremely selfish and cruel individuals you idolize, and desperate need to psychologically transfer the blame for the enormous harm they do to yourself and everybody else to some other party, regardless of the total lack of any logical basis for that transfer.

[FreeJoe]

67. Funding

The biggest complaint I hear about public pensions is with their funding levels. I guess I hear some complaints that they are too generous, but I tend to ignore complaints like that. The funding issue, though, is real in some cases.

In the old days when company pensions were more prevalent, we also had problems with companies not adequately funding those pensions. If the company went bankrupt, the pensioners lost. We fixed that by requiring minimum levels of funding and adding what amounts to pension insurance (although that only covers low to moderate income pension levels).

The rules for public pensions aren't nearly as strict. After all, public entities don't often go bankrupt. Sadly, some areas are using this as a way to "pay" public employees more without it showing up on their budgets. They promise good pensions but, like companies of old, they don't set aside enough money to pay for those pensions. This will lead to much higher government costs for future generations that will result in some combination of higher taxes and/or lower services. It really isn't fair to expect future taxpayers to pick up the costs of current employees. We should require that government agencies fund pensions at the same levels that we require from companies so that taxpayers see the true cost of their civil servants and can make more informed decisions on what level of services they are willing to pay for.

[SheilaT]

86. Bingo.

I can recall reading way back in the 1970's that public pensions were a time bomb just waiting to go off.

If the money isn't set aside -- and of course plenty of businesses never put aside the money they were supposed to in their pensions -- then there will be hell to pay down the road. I fully understand how often public employees earned less money because of the promise of a good pension down the road. But, since in the end it comes down to taxpayer money, and the vast majority of folks out there seem to think that all taxes are evil and pay for nothing worthwhile, then at some point the public pensions will disappear. And, correct me if I'm wrong, but isn't part of the deal on public pensions that you forego Social Security?

Although to be hideously cynical, won't it be great when all the public pensions go away along with SS?

[uponit7771]

102. after reading this report I agree with your observatiion, I thought 401k would be good for most

[Liberal_in_LA]

20. kick

[Flatulo]

23. LOL, I was at Data General in the early '80s when they rolled out their 401K program. It

was presented as the greatest thing since ice cream. We were all going to retire as multi-millionaires in our early firties.

Jokes on us.

[Starry Messenger]

26. k&r

[liberal N proud]

28. 401K programs are another get richer scheme for the managing organization.

[Teamster Jeff]

32. 401Ks and Health Savings Accounts

are companies' nice way of telling employees "Fuck You".

[kairos12]

34. The road to Serfdom...

is paved with the worthless paper 401Ks are printed on.

When the crash comes again, the 1 percent will get bailed out by the taxpayers, and the rest of us plunge into the cold bath.

[DaveJ]

36. If/When I'm at retirement age and can't...

I will tell you now. I will be very upset. Is it ok to say I'm going to explode, if that's going to be 15 years from now? Not sure how else to say it.

Anyway I take personal offense to the idea of working all one's life, and then losing everything. That is not acceptable.

[MRDAWG]

37. Pensions came from Unions, nuff said**

*

[DotGone]

39. "401Ks are great for me"

said the Wall Street leeches. They take 1/3 of your retirement money if you're lucky or gamble it all away of you're not.

[DCBob]

42. Yes, 401k program sounded good on paper..

but in reality it does not work.

[DaveJ]

48. It doesn't work, unless you are a perfect cog in the machine.

If you start out in your 20's, save 6-10% for 40 years, then mathematically you will have enough to sustain retirement at the income you are accustomed.

Problem is that half of people do not have perfect lives, even if they try. Businesses lay people off, people have unforeseen financial crises. Some people even get robbed.

Even if these problems were wiped away, I still do not think we should be living in a world where only "perfect cogs" get to retire.

[bluestate10]

43. Some people have done well with 401K and other retirement plans. nt

[Skittles]

45. and lot of people are fooling themselves

TIME got it right a few years ago

http://www.time.com/time/magazine/article/0,9171,1929233,00.html

[slackmaster]

46. There are basically two ways to do that. 1. Dumb luck, and 2. Learning how to manage investments.

1 is unreliable, and 2 is unrealistic for many people.

[bluestate10]

57. 3. Finding investment advisers that aren't ripoff artists, many exists if people take the

time to find those advisers.

[KoKo]

109. +1 That's the problem...you stated it well. n/t

[JanMichael]

92. and some people are doing well cause they bought the winning lottery ticket

and some people are doing well because they were born into wealthy families. Some people are doing well because they stole computer ideas and started up a giant computer company based upon operating systems and compatible software.

[madinmaryland]

47. I intend on working until I am 70 and then dieing shortly thereafter to satisfy the

Repukes. J/K about the Repuke part, but don't see myself living that long after retiring.

I'm 50 right now.

[DaveJ]

51. I hope you live a long happy life.

But, if you seriously think you only have 20 years, you should retire now and enjoy the time you have left.

If you can't retire after working hard, then we should really be upset about this problem and do something to fix it.

[madinmaryland]

52. And what the fuck am I going to do??? Gotta pay the bills, you know.

[DaveJ]

88. I dunno, but just sayin'

I will probably end up in jail for doing something bad if I'm too old to work, and still can't retire.

My grandma never saved but later in life one of her nephews helped her save $10k per year for 10 years. After that, she then had $10k more per year to live on, off the interest alone. Admittedly she made a good return on her investments, not extraordinary, but good.

I'm not one to lecture though I have not been able to save a very large percent of my income. But that's my goal. Even if my life goes down the tubes, I still would advise kids to do their best to start saving early for their own sake. I know people who have made several millions just because they started early. I also think there should be a social safety net to reward risk taking. This isn't a communist country where we all have to live by a set of rules.

[2on2u]

53. Thanks for reminding me how screwn I am at this point..... n't

[ReRe]

55. K&R

... We've been had. Period. Remember when the latest crash happened and the business pundits were running around with their hair on fire telling everyone to leave what little money they had left in their 401(k)s, that the market would come back? Well, I've had my ear to the ground and there's rumblings that it's going to crash again soon. The reason being that we bailed Wall Street out and very little was done to prevent them from doing the same thing again. And the market is running high again...

The market is no place for retirement funds. The market is a casino. Me? I don't like to gamble. I don't have enough to be gambling it in a casino, because, frankly, I don't have much luck at gambling. It's a game of risk, and I just can't risk it. When they started this 401(k) business up, and hubby jumped for it, I knew what was going to happen. And sure enough, whammo, it happened, again, and again, and again.

When I was young, I waited tables at a big fine hotel in a nice big city. Several of my waitress friends saved their money all year and would go to Las Vegas and gamble it all away the next year. I seen no sense in it, as none of them ever came back with money in their pockets. To me, it was like saving all year to go throw it away once a year. Duh??? Hello????

The 401(k) system has been the biggest boondoggle of our lifetime, sucking the money away from the middle class. And here we are in 2013, wondering what happened to our bankrupt country. It's like we've been living a tragic social science fiction story.

[BeyondGeography]

56. Wasn't that always the whole point?

Keeps us good and skeered.

[still_one]

61. The problem is they forced people into funds that had high fees, and not always

good track records

For many companies that has changed to self directed accounts, but those who had no choice got screwed

[FreeJoe]

64. I guess I've been fortunate

I've had 401Ks at five different companies. Each one offered low cost index funds that met my needs.

I have had friends that worked for small companies that had really crappy offerings. I remember one struggling over whether it was better to take the company match (50% of your first 6%) and have to invest it in high cost funds or whether it was better to just put the money into an IRA.

[still_one]

77. I have been fortunate mostly too, but one company I worked

For the fees were 2%

[slackmaster]

74. I'm in the process of closing out one that was costing me about $100 per year as an annual fee

It's also the most restrictive account I have. I'm consolidating it at Charles Schwab.

[still_one]

78. Most cannot rollover unless they leave the company

[slackmaster]

79. True. I quit that company about three years ago but hadn't paid enough attention to the fees.

It was converted to a Rollover IRA when I quit, and I kind of neglected it. Now I'm getting back on track and taking control.

[still_one]

84. You are correct a lot of folks when they leave a company do not

Roll it over into a private ira

[FreeJoe]

62. I have mixed feelings about 401Ks

In my early career, I had a pension. I hated it because it was very weighted towards longevity. Those that didn't stick around for 30 years didn't walk away with much. I knew that I wouldn't be in one job for very long at that point in my career, so I wanted something more portable. The 401K fit perfectly for me.

For me, 401Ks have worked great. I have a pension with my current company, but it will be dwarfed by my tax advantaged savings accounts (I lump my regular 401K, Roth 401K, IRAs, Roth IRAs, and even HSAs together). I have been fortunate to work for companies that do a 6% match for many years and have put in the federal max for decades. The plans at the companies I've worked have had good selections of funds and I've kept my money invested in very low cost index funds and have kept everything well balanced between US equities, International equities, and Bonds/TIPS. I've followed "best practices" on asset allocation based on my age and risk tolerance.

While 401Ks and other tax advantaged savings plans have worked well for me, I still recognize that they are a pretty sucky way to handle old-age pensions for society as a whole. They presume that people will be disciplined savers (few are) and that they will understand how to invest (few do). With company pensions, you don't have to be disciplined. That portion of your compensation is set aside for you regardless of how badly you may want/need to spend it today. With company pensions, the money is invested for you, with less risk that it will be eaten up by unscrupulous money managers. Even with that, I don't like company pensions.

I think we should have a dual sourced pension system. One portion should be something like social security. It should be a basic stipend to everyone over retirement age (I suggest 62), with means testing so that wealthy people don't receive it. This should be a base survival level of income so that no one lives without the basics in their old age.

The second source should be a national version of something like a company pension. These should be individual accounts. Every employer (and the self-employed), should be required to contribute something like 10% of pay to the account. The account owners should have limited ability to control how the funds are invested. The account owner should have some control over the asset allocation, but even that control should be constrained so that they have to progressively reduce the risk of their investments as they get closer to retirement. You don't want people 10 years from retirement being 100% in stocks.

So to summarize, everyone, regardless of whether they worked or how little they earned, should have a basic stipend that is enough to live on. Above that, everyone should have a pension account that is personally owned, restricted to appropriate funds (managed by a non-profit federal agency).

[llmart]

75. It bothers me a bit....

that I often hear people say, even on this thread, "I'll just work until I'm 70". or "I'll die at my desk". I know it's sort of meant in fun, but people who say these things are assuming they'll even be able or allowed to work until they're 70. Modesty aside, I have been an employer's dream most of my working life - I work like a fool wherever I am and no matter what job I'm given. It's just my work ethic. But I'm now 63 and you think someone's going to hire me? People my age who got "downsized" out of their jobs during the great Bush recession can't find jobs. I have always been extremely healthy for my age, but now I have really bad feet and I've never been afraid to do any sort of work if I have to to pay the bills, but I honestly can't see myself working a job where I'd have to stand on my feet all day. I would end up crippled.

On another note, I remember when companies were selling the concept of 401K's like they were the best thing since sliced bread and I'd say to my coworkers who were buying into it hook, line and sinker, "My parents always taught me that if it sounds too good to be true, than it probably isn't." Over my working life I could see how insidiously all the benefits that our parents' generation got would disappear and they have.

Also, another point that hasn't been brought up on this thread yet is that companies can tell you when you're hired that they will match fifty cents on the dollar in your 401K (or any other percentage), but when times get tough they can suspend their contribution and I know many large corporations that did during the great recession of 2008.

[DaveJ]

89. It bothers me, the way they say it.

When people say it with complacency, as though that's a natural life, it upsets me too. They should be pissed off about it. If people do not complain loudly enough I fear nothing will change. It would not cost society anything to make sure people past the age of 65 (or less) have basic needs taken care of without fear. There are plenty of youth to take their place in the work force. They will need food, medicine, and shelter no matter what -- it's going to happen. We should cover it without complaining and making them feel stressed. But we are a long way off from that point.

[mythology]

76. Companies could screw you out of a pension as well

At least with a 401k, you can take it when you leave a job. And some companies do a good job with the 401k. My company automatically enrolls you and does a matching policy. There are a number of plans you can enroll in and the two companies who manage the plans do onsite visits regularly.

My grandfather had to move from Washington to Texas to keep his job with Boeing and then they told him to move back to Washington with a year or so left before he was fully vested in his pension. In the end he couldn't justify moving his family for what amounted to a year or so and wound up without the pension.

[FarCenter]

80. Pensions only work if the company stays in business and if you work your whole career at one company

Pensions were designed to put the "golden handcuffs" on employees by increasing the amount of the pension benefit per year for later years of employment and by basing the benefits on the last several years of employment.

Which means that even if you stayed long enough that your pension benefits were vested, you got squat because:
- you had few years of service,
- the early years of service carried only a small percentage benefit, and
- inflation between when you left the company and when you could start to collect made the pension very small (particularly if you left in '75 and the late '70s inflation eroded half the buying power of a dollar).

And you had to stay even after you hit vesting (which used to be 10 or 15 years), since your remaining work years at another company wouldn't give you much pension to add to the vested pension. This kept people working for crappy companies.

Then the crappy companies would go bankrupt, and people who had 20 years of service and were age 45 were truly screwed.

401Ks are portable, but you have to invest in a balanced portfolio, avoid concentration in your company's stock, and contribute at least 10% of your salary to max any matching company contribution and then some.

[Egalitarian Thug]

85. Another aspect, universally ignored by the proponents of this long-con, is the percentage

of people that lose everything when they are unfortunate enough to have bad timing. To reach retirement age during a bad time, or to fall ill after 40, etc.

Last week the DJIA passed 14,000 (and then fell again) and DU was subjected to a blizzard of "Good news! I've finally made it back" threads. What few wrote, or even noticed, was the hundreds of thousands that lost everything, including their 401 (k), trying to keep body and soul together. They didn't recover anything because they had nothing with which to build up again.

Every recession, market correction, downturn, whatever you want to call it, yields these results to a minority that accumulates with each cycle. These people are lost forever, discarded like so much refuse never to be considered again. Is this really a system that is working well? One which you endorse because because you're alright?

[Common Sense Party]

91. 401k plans can and do work for many people, but only if they contribute.

Many small companies simply CANNOT afford to set up a pension plan. They CAN afford to match some employee contributions to a 401(k).

I have met hundreds of people who are very well-prepared for retirement, simply because they started contributing to their 401(k) early, they diversified, they kept contributing even when the market was bad, and they got more cautious with their investments as they neared retirement. Many of these folks never earned more than $30,000 a year. (Obviously, if you earn $8 an hour, you probably won't be able to save much, and then the 401 won't help much.)

I work in the 401(k) industry, so I'm biased. They're not perfect, but they're not the spawn of hell that many here seem to think they are.

[FreeJoe]

101. Similar experience

I don't know the retirement plans of hundreds of people, but the overwhelming majority of my close friends (all in their mid-40s to early 50s) are looking forward to good retirements based on well funded 401K plans. Because most have changed jobs several times, they are all better off than they would have been under the old pension systems.

The only close friend looking at retirement hell is a friend who's wife left him and they liquidated his retirement savings to distribute funds as part of the settlement. The taxes and penalties were brutal. As has been said elsewhere in this post, 401Ks work well for those that contribute regularly, invest prudently, and don't touch the money until they retire. If something causes any of those things not to happen, all bets are off. It worked well for me, but I don't think it is a sufficiently reliable option on which to base the retirements of the overwhelming majority of people in the country. Too many people don't contribute regularly. They don't know how to invest prudently. And they will spend some of the money well before they retire. It is human nature. We need to design a system that works for people despite how they behave.

[HomeboyHombre]

105. Problem is that just because they work some of the time doesn't mean they'll work all the time.

That's the beauty of Soc. Security and pensions. They were guaranteed income.

[Common Sense Party]

107. But there are downsides to both of those.

Social Security's downside is that it's really social insurance whose original purpose was to provide income for the very poor, the widows without means. It is NOT designed to pay for all of one's needs in retirement. Today, retirees' SS checks only cover about 40% of their basic living needs. 10 or 20 years from now, who knows what SS will pay for? 35%? 30%? Less?

The problem with pensions is that those guarantees are expensive, an many smaller employers either can't afford to set one up, or have no clue how to invest the pension assets. Many employers invested far too conservatively, and didn't project the future costs of an aging, retiring workforce. Some employers gambled the assets and lost big, and a few dipped into the kitty and robbed their employees' pension funds.

There is no such thing as a perfect system.

[HomeboyHombre]

228. Sorry, that's false.

Social Security was set up so that everybody pays in, and everybody gets back.

It was never intended to be only for the poor. Programs for the poor become "poor programs," easily expendable, and FDR knew this.

That's why he said in 1941 about why he set it up the way he did, so that even rich people pay in--

“We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program."

However, the misapprehension that Soc. Security started as a safety net for the poor is widely believed.

[Common Sense Party]

229. True, and I never said "only" for the poor.

But while everyone (with income) puts in, the poor can and should get back much more than they put in--especially in the earliest days of SS, when it was designed with the object in mind of helping poor widows and single women who did not have any savings for retirement. Many of them put in very little, but received a decent stipend for life. The fact that it provides income to everyone--though clearly not enough to meet all of one's needs--is an added benefit of the program.

[ProgressiveProfessor]

197. In what universe were pensions guaranteed?

They most often die with the company. The PGC is a bad joke.

[hughee99]

214. A key issue that seems to be glossed over in much of this thread. n/t

[lumberjack_jeff]

98. 401k worked well for me.

But I deferred 20% of my income from ages 23-38, and I cried but didn't abandon ship when it lost 50% of its value in 1999.

It was not sold as a supplement to pensions because no employer I've ever worked for has offered them.

[KoKo]

111. How have you done with the latest crash though?

Many are just about back where they were in 2007-08 in their 401-K, but that means that they still lost a lot of money they won't be recovering soon in this stagnant economy.

If one could rebalance then they might have done better than if they'd stayed in the losers like Financials in MMF.

[KoKo]

122. Tell me the truth...Did you go into the Junk Bonds for Returns?

That's the only place aside from buying the Bank Stocks and putting "Stop Losses" on and doing "Puts and Calls" that you could have made that return.

I rebalanced my Portfolio and I've made around 6-7% per year in "Safe Stiff" since the Bankster Implosion and I feel really good about that.

BUT...all that aside...Most Americans (particularly young with Family, Single Young along with Retirees who really aren't aware of the Markets might have not done as well as you and I who do read Financial News and are "Active Managers" of our 401's.

That's the problem. It takes so much time to research and review and read, read, read.. WHO HAS TIME FOR THIS?

[lumberjack_jeff]

128. I apologize, I misread my statement. My actual returns are not unlike yours < 10%

My bad.

I consolidated IRA accounts creating misleading growth.

http://www.google.com/finance?q=MUTF:VEMAX
http://www.google.com/finance?q=MUTF:Vweax
http://www.google.com/finance?q=MUTF:VTIAX

[KoKo]

136. Thanks for your honesty in revision...I can understand....

[Common Sense Party]

175. You only lose when you have to sell at a loss.

Those who were close to retirement lost, if they hadn't gotten more cautious with their investment mix.

Those who have decades to go didn't lose anything--the value of their shares went down, but they still had the same number of shares.

[uponit7771]

100. Wife and I are already talking about passive retirement, this is disgusting

[cbdo2007]

106. 99% of the posts here don't seem to understand 401ks or pensions and how they work....

no wonder we're all fucked.

Or maybe I should just go to a board where they understand finance to actually have an intelligent discussion on this subject.

[Dawgs]

113. There are a number here that get it, so don't leave just yet.

I'm afraid that many fall into the same trap as others; withdrew because of downturn in the stock market, contributing less because they "needed" to buy something, buy into articles like the one in this post, etc.

It scares the hell out me that so many fall for these distortions.

[KoKo]

142. DU has a forum for STOCK MARKET WATCH....there are folks

here who understand...but...the problem is the damned system is so complicated, (designed that way) that most folks working to deal with life and kids and famlies can't spend 24/7 reading the Prospectus of every stock they buy and watching for the reports to figure out if the stock is real or not...or if their Mutual Fund is scamming them. That's why this "extend and pretend" for the Financial system is going to end badly..(probably) for many average Americans who can't have time to research what they buy (and 2008 Implosion showed the LIES) or to find what's a "safer investment" when even the "Experts" don't know what's SAFE these days.

If you are a Saver...you get no return on your money these days and you are really getting to point of being "underwater" with the "Silent Inflation" that's eating away....and who has Money to Pay an Investmet Advisor for your "portfolio management" and WHO WOULD PAY given that so many Lost the money of their Investors by thinking the Housing Boom would never end...after putting their folks into Tech Stocks in the late 90's thinking the "Dot Com Bubble" would never end.

Whatever...too complicated to go into ...but 401-K's were for the Sophisticated Investor who had either time to do their own research (which didn't end up so good the last decade and a half) or to pay an Investment Advisor" who might have put you into High Fee Mutual Funds which many got wiped out down in the latest '07-08 Implosion.

This is too much for us Average Working folks to have to Deal with given that we work for little, have less time with Family and are already going down with what's going on in our economy. How many live in a place where they could find an "Honest Investment Advisor" who isn't working for their OWN livelihood and could care less about what you are given them to manage because they know they can take the money and use it for their own good and to hell with YOU because they will NEVER BE PROSECUTED for Stealing your money.

It's a mess. Good for the Savvy Uber Class...but not for the rest of us. IMHO

HERE's LINK TO DU: "Stock Market Watch"

http://www.democraticunderground.com/111630138

[cbdo2007]

158. There's nothing complicated about it for the average investor....

that's the problem is people THINK it's complicated and it's not. You go to your 401K website and select one of the total market funds and you're done. Check on it in 40 years and you should be all set.

Why would anyone with a 401K even need to look at the stock market???

[A HERETIC I AM]

180. Ahhhhhh yes, the venerated Stock Market Watch Thread

populated by a small handful of real market mavens.

So knowledgeable that they have never, and I mean NEVER called a bottom.

They call a top just about every day, but never a bottom.

Hell, if you say every single day that the market is going to go down and then it does, it is no miracle that you finally got it right and it most certainly not evidence you have any idea what you're talking about.

The SMW thread is a coffee klatch populated by people who don't seem to know the difference between preferred stock and livestock.

Nothing more.

[stevenleser]

108. 401Ks are no substitute for a pension. Every person should have a pension, period. There is no good

reason why this cannot be so. If you employ someone, you should have to put enough aside per year such that after 30 or so years of employment, that person can retire at 50% or so of their income with COLA increases.

I will never accept a reason why this cannot be so.

Edited to add: I have said this on TV before and I will say it again if given the chance. I think I'll do a segment on this at some point in the future:

[cbdo2007]

110. what happens when the company goes bankrupt after 10 years?

bye bye pension!

[stevenleser]

114. No, pensions are supposed to be independant of the company that paid into them.

You are referring to some companies where the pensions were considered assets of the firm. That is a bad situation but hardly the way it is supposed to be.

[bluestate10]

135. Steve. Laws are laws. Pensions are attached to the company that provide them.

Some companies behave ethically and fund independently managed pensions that end up being independent of company fortunes. But the majority, in particular since the Reagan revolution, if that disaster can be called that, took to raiding pension funds that were performing well. Other companies welshed on paying in funds adequate to provide good pensions because doing so didn't allow them to maximize profits and executive payouts.

[ProgressiveProfessor]

194. Tell that to the employees of the bankrupt airlines and other companies

The Pension Guarantee Corp covers little of what they should be receiving.

Additionally small companies will never have the resources to run a retirement plan, it does not matter how long you work for them.

[smccarter]

120. I absolutely agree with you, but....

by and large, companies don't provide their employees with pension plans. What they do provide are 401k's, 403b's, or nothing at all.

Having said that, and knowing that change is extremely slow... I'm preparing for my retirement, and not waiting for my company to re-instate the pension program. Which means that I'm putting money in a 401k, into IRAs, investing, purchasing real estate, and saving. Mine is a lower middle class household. We sacrifice, watch what we spend, DON'T accumulate unnecessary debt, save, and invest with only one goal in mind. Retirement.

The companies we work for aren't going to take care of us, so we're going to take care of ourselves.

Keep in mind... I agree that companies should be required to provide some type of pension program to their employees. But since they aren't, I'm taking action to make sure I take care of myself, and my family, when we reach retirement age.

[bluestate10]

138. The disappearance of pension plans and the decline of Unions has gone hand in hand.

Companies offered well funded pension plans to ward off Unions. As fewer americans joined Unions, companies progressively pulled back on setting up and funding pension plans.

Legislation to push companies to set up and fund pension plans could solve the problem, but I have no hope of passage of such legislation. What will change companies conduct is when a tipping point is reached and tens of millions of americans start becoming victims and start to act in defense of their best interests by boycotting products or services offered by companies that refuse to set up and fund pension plans.

[smccarter]

147. Bingo

[duffyduff]

140. Defined contribution plans are the biggest scams ever

The ONLY reason companies ditched their pensions for 401(k)s was to save money. Period. It had nothing to do with helping their employees.

[smccarter]

116. Social Security yes. But the retirement buck stops at your own doorstep.

For the past 30 years, labor union influence has been diminishing. As a result, many of the benefits that we all (those working in union and non-union shops) have received as a result of the labor unions work, have been diminishing. Like pension funds, sick and vacation time, holiday pay, overtime pay, competitive wages, etc....

Any fool could see what was happening and should have the mental capacity to make the necessary personal financial adjustments to prepare for the future... ie saving, sacrificing, planning, etc... Instead, Americans are spending way more than they earn - racking up debt as if there was no concern for consequence. Credit card debt, student loans, mortgage re-finance, and on and on... spend spend spend. And saving nothing for retirement, let alone any other future need.

Social programs were designed to help people get through tough times and to supplement savings, investments, pensions, etc... after retirement. These programs need to be left alone, but they won't be enough. If the company you work for doesn't provide a pension (which nearly none does), get off the stick and make the necessary preparations that will allow you to retire some day. If not, you'll be working until the day you die.

It's a hard cold fact, and one that I wish would change. But as long as we keep spending our dollars for goods provided to us by corporations, it will never change. As long as they are in control, nobody will be looking out for you .. but YOU.

The reason that companies hate the affordable health care act is because the government is forcing them to re-instate health care benefits. They worked hard not to have to provide that benefit to their employees and are now being forced to. So they're crying bloody murder. I'd really like to see legislation passed to force companies to fund pension plans. That would be a hoot. But until something like that happens (it won't), save your pennies for the future, or you'll be a very tired old person someday.

[stevenleser]

118. With comments like those, I'm not sure you are on the right website. nt

[smccarter]

119. Please be specific?

Which comments?

Reality is what it is. You are the master of your own destiny. Not saying that social security needs to go away, not saying that we should do away with any program. Just saying that labor is not in control any longer... instead, I'm saying that companies are, and that they aren't looking out for your interests. As an example... Instead of companies funding pension programs, we see CEOs making 131 million dollars a year. http://www.forbes.com/sites/scottdecarlo/2012/04/04/americas-highest-paid-ceos/ - truly obscene.

My comments are clear. If you want to retire, you need to prepare. I don't think any of that is out of line or inconsistent with the values of the liberal-minded.

A 401k, and a pension for that matter, is intended to be only part of your over-all savings plan which should include a 401k, investments, real estate, savings, etc... The key to my entire post is that Americans need to be more responsible. They need to stop spending so much, stop accumulating debt, and begin to act like they have sense about them.

If life hands you lemons, make lemonade. If your company does away with your pension plan, start saving your money.

[HughBeaumont]

124. And hey, when you refuse to address the real problems of America's economic woes . . .

. . . "brightsiding" and victim-blaming works wonders!

[smccarter]

125. So... you missed the point...

I'm NOT saying there isn't a problem...
I'm NOT saying that companies shouldn't provide benefits to their employees...
I'm NOT saying that any program created to help the people be abolished...

I AM saying that Americans are, collectively, irresponsible spenders....
I AM saying that Americans are, collectively, irresponsible savers...
I AM saying that the current situation dictates that if you want to retire, you're going to have to prepare....

I realize it's hard for some people to assume responsibility for their irresponsibility.

[smccarter]

129. You know, I re-read your reply.

And wanted to say something else.

Economics isn't a term that needs only be applied to the federal government. It's an individual responsibility to maintain control of our own economy... The problems Americans are creating with HUGE personal debt levels is part of the overall problem. Actually, a very large part of it.

You're minimizing the overall problem. I'm speaking to a very specific issue and you didn't pay attention to my point when you read my post. I can't be held responsible for your misinterpretation. Re-read my post and consider what I'm speaking about. It's about individual responsibility to their OWN economic position. I'm not talking about the federal government, not spewing hate all over the board... Mine was a mild mannered post, yours was irrational sir.

[HughBeaumont]

130. Uh, if anyone's missing America's real problem by a country mile, it sure isn't me.

If you want to scold America as a whole for their supposed spendthrift “ring-up-the-credit-card” ways, that just seems like a shortcut to thinking. Senator Elizabeth Warren, author of The Two-Income Trap put the kibosh on this long-believed canard in a Harvard series lecture found on YouTube:

We’re not getting hit because we’re buying too many unnecessary gadgets. Quite the opposite, actually; the price of many entertainment items/gadgets has gone down relative to inflation (which is why the right-wing talking point of “well yer not poor . . . yew have a DVD player, dontcha?” falls flat on it’s fat face).

The areas we’re getting hit on are housing, education, transportation, health care, groceries, etc. The price of necessities are glacially getting well out of reach of even the American middle class, much less the working class and poor.

In 1969, the price of an average home was 1.5 to 2 times the average household income. Think you'll find that sort of cushy ratio today? Unless you want a life of stocking shelves or “you want fries with that” jobs (not saying that’s a BAD thing if that is your thing, but it ain’t paying the rent), you NEED a college education just to even get your foot in the door to continue consuming and contributing economically and in turn, for companies to continue producing. The persons running that racket are no better than profiteering oil barons. What if you get sick? You think any American has a couple-hundred grand to pay for the bills?

What I’m trying to get at is that in all your finger-wagging towards the American people, you’re giving a complete free pass to those patently responsible for putting us ALL in this situation – the wealthy and 28 years of Republican/moderate administrations buoying them.

America's middle/working/poor people didn’t send their jobs overseas; they're the ones who saw their real-dollar wages stagnate relative to inflation and productivity since 1979. They also weren't the ones who experienced a 285 to 1000% increase in their income since 1990 (depending on which part of the upper 5% you belong to). The American people don’t have the capability of starting new industries or even inventing anything anymore; they don’t have the start-up capital, equipment or expensive attorneys necessary when a corporation tries to overtake them or sue them. America's workers didn’t shift the responsibility of paying the bulk of taxes from the rich on to themselves. America's people aren’t being forced from their homes due to an unforeseen amount of bad luck or a major illness. We're not the ones building these McCastles because there's a bigger profit to be made on these things compared to reasonable homes; many middle/working/poor classes, depending on their debt situation, can only buy a two-bedroom apartment or older house.

Why not any criticism towards bank underwriters who should be barring the middle class from any mortgage going over 35% of their total income? Why not any criticism towards the business leaders who look out for their shareholders only and show no responsibility towards the nation that provided them the paths to their wealth? Why not any criticism towards manufacturers who CAUSED the “No-Produce-but-you’d-BETTER-Consume!” economy that we have today?

Who gets the blame for our lousy state? Our government for not moving towards universal health care? The wealthy for expecting the world and giving nothing at all back? Universities for promoting the idea of college education while at the same time pricing 65% of the country OUT of one? The wealthy, again, for expecting us to make in the $40,000/year range forever and expecting us to survive on that while the cost of nearly everything is skyrocketing? Three Republican Presidents who ran 70% of our current national debt up for vanity wars of choice and enriching those who least need to be? Or the consumer wanting a 52 inch TV when his pocket can’t even afford an iPod?

What I'M saying is stop blaming the American people and give credit where credit is due, please. Stagnant wages vs. vaulting costs is the problem. Risk shifting from the rich to the middle/working/poor classes over the past 30 years is the problem. WE are not the lion's share of the problem. It’s the wealthy that need to start playing ball. We’ve sacrificed ENOUGH.

Americans can't put away what they don't have because they need to LIVE, not because they want to watch OSU/Michigan on a 3D widescreen. Since when is it now a rule that you have to live like an abject pauper to have a great life in your weak years? Sheesh.

[smccarter]

146. Again

My post was directly related to the original post in this thread.

My point.... if you want to retire, and your employer doesn't provide a pension plan, you'll need to save money. One way to ensure you have money to save, is not to over-spend. Certainly not to accumulate unnecessary debt.

[Trailrider1951]

131. Apparently, smccarter, life has been good to you and has handed you ponies and rainbows

instead of lemons. Try working full time and going to school at night, while every goddam penny you make goes to support your family and an attempt to get a leg up in this souless society that values property over people. Yes, please do tell any person in the above situation how to save for retirement when he/she is worried about the kids needing new shoes and dental care, the car needing tires and an oil change, and the electric (heating) bill is past due. Oh, I know, (as I've heard a dozen times before in those 401K meetings), "Pay YOURSELF FIRST!".
as if I need to add that. You trolls bore me.

[smccarter]

145. Funny

No ponies, no rainbows. Quite a bit of hard work and effort though.

I was orphaned at 8, on my own at 17. Don't begin to speak about hard times until you know who you're talking to. You seem to be a very angry person. Not sure why you took my post so personal.

[stevenleser]

156. Many of us took it personally because your original post in this thread was lacking in empathy

Empathy is a requirement for anyone at any arc in the liberal left spectrum.

[smccarter]

172. Point taken

[Romulox]

159. Look on the bright side: he likely is right there with ya on those drone strikes! nt

[stevenleser]

168. And he is right there with you on lack of empathy, so, we're even! nt

[Romulox]

178. Your comment makes zero sense, since YOU are the one excusing murder.

[stevenleser]

179. Nope I am not, but someone without empathy wouldnt see that. nt

[Romulox]

184. Utter gibberish. In the past I expected better of you.

Not anymore.

[stevenleser]

186. Says the person who accuses a majority of DUers of supporting murder

All because we disagree with you.

Talk about

And yes, I would characterize labeling that disagreement and how we feel about that issue as "murder" instead of acknowledging that there are legitimate reasons for believing it even if you disagree, is indicative of a profound lack of empathy.

[lancoholic]

205. try reading your own posts?

But the retirement buck stops at your own doorstep.

really? Because this guy

For the past 30 years, labor union influence has been diminishing. As a result, many of the benefits that we all (those working in union and non-union shops) have received as a result of the labor unions work, have been diminishing. Like pension funds, sick and vacation time, holiday pay, overtime pay, competitive wages, etc....

makes a pretty good argument that the buck stops at the door of the corporations, who have spent the last 30 years working very hard to stop the buck going past there and into the hands of the people who need it.

[smccarter]

227. You missed the point of my post...

I'm agreeing ENTIRELY that some form of pension should be provided, but in the absence of that..... Each one of us needs to prepare for retirement. ON OUR OWN. Or we won't be able to retire.

I'm also saying that Americans spend irresponsibly and that they accumulate personal debt irresponsibly.

Face it... you don't need 200K a year to live a modest life. You certainly don't need to spend 200K a year on a 100K salary as many do.

We've lost perspective in this country. I can empathise with any person experiencing hardship as a result of something other than personal irresponsibility. Like a factory closing, a natural disaster, illness, fire, etc... but I cannot allow myself to empathise with a person who creates their own hardship. Like a person nearing retirement age who failed to plan ahead in such a way that they are unable to retire.

Let me re-state that I REALLY WISH THE REALITY WAS THAT COMPANIES PROVIDED EACH ONE OF US A PENSION.... BUT SINCE THEY DON'T, WE WILL HAVE TO PLAN, SAVE, SACRIFICE, WHATEVER SO THAT WE CAN RETIRE.

Goodness...

[Warpy]

126. Most are expecting to work part time until they die on the job

since only by supplementing their income with part time, low wage, dead end jobs will allow them to survive.

That's if their bodies hold out. Most won't.

[patrice]

127. KICK!

[shanti]

132. wait

people really do think that they can maintain their current working standard of living when they retire? when i retired, i KNEW i would only be getting half of what i made at the time, and that is fine with me. i expected to downsize.

[duffyduff]

139. This assumes they even have a job that they can afford to retire from

There are millions of us who were forced out after age 50 and CANNOT get back into the labor force full-time. Those 401(k)s millions put their life savings into have long since evaporated and weren't worth shit in the first place.

I seriously doubt I will ever again work full-time and will be forced to do temp shit until I drop dead.

[Matariki]

149. I bet most of us are looking at the $120k number and thinking 'I wish'.

[aquart]

151. Another huge privatization failure.

[brooklynite]

153. This is an incredibly misleading headline...

You can argue that 401(k)'s are inadequate as a stand-alone retirement mechanism, but the headline suggests, without evidence, that the investment mechanism is flawed in and of itself. They're dependent on how much you contribute and into what. I personally max out my contributions and put them into responsible mutual funds. As a result, I have over $750,000 in my account with another 10 years to go.

[meaculpa2011]

155. Except...

for those that planned to retire at the time of the meltdown, the results were devastating. And they probably don't have enough time to make up their losses.

With that said, the article also fails to take into account the HUGE reduction in expenses after retirement. My wife retired last year with a good pension, but not nearly as much as her salary. When we factored in the commuting costs, wear and tear and the reductions in taxes we're actually ahead by quite a bit. She plowed a lot of her salary into enhanced retirement benefits and a 401k which, luckily, we haven't had to touch.

If I drop dead tomorrow, she and the kids will be fine. I should probably hire a food taster.

Also, where we live people over 62 can legally convert their homes to two family. The kids don't use the family room anymore so that frees up about 750 square feet that I can convert into an income apartment if needed. That about offsets the $13,000 per year that we pay in property taxes. When we were first married (Nixon was President) we bought an attached two-family in Queens. It was the only way we could afford our own home. We've had a one family since the '80s, but now the extra income can provide a much more comfortable retirement... although my intention is to keep working until they shovel dirt in my face.

Converting the family home is an option that too many people overlook.

Hey Brooklynite... I'm from Gravesend. How 'bout you?

[brooklynite]

163. Brooklyn Heights...

...and I'd never rent out part of my house. I don't want to sound un-liberal, but Real-Estate law in NYC is far too skewed in favor of tenants, even troublesome ones.

[meaculpa2011]

167. Understood...

However, when we owned our two-family in Queens there were separate regulations for owner-occupied two family homes. I never really had trouble with tenants, but if I had there were ways to evict rather quickly. Don't know if it's different now.

My neighbor had a three family... different story. He inherited a rent-controlled tenant who was paying $62 a month and called him if a light bulb needed to be replaced. When she went into a nursing home, her nephew moved in at the same rent. Nobody had ever seen him before, but he claimed that he was living there and taking care of her.

When and if we convert, I have one friend who's a real estate broker and another who's a private investigator. One finds the prospective tenant and the other does the background check. Not foolproof, but better than flying blind.

Plus, we moved out of NYC 28 years ago. Lovely home. Big backyard for the kids. View of the bay and the swans.

And five feet of water in our ground floor a few months ago!!!!

[lonestarnot]

162. Plan on dying at your fucking desk, pole, mine shaft, restaurant, forest, canyon workplace.

There is no such thing as retirement any more. Unless of fucking course you are richie rich and have stolen everyone else fucking blind.

[shanti]

200. really?

do you really think that all retired people are richie rich and have stolen everyone else blind?

[lonestarnot]

223. Look again. I was referring to those not retired yet.

[shanti]

225. your post was not clear about that

and i disagree with your theory, because my friends who still work for the state WILL get their pensions.

i do understand your frustration though...

[dmallind]

165. The idea that 401ks are beyond the wit of most workers is elitist claptrap.

You don't need to know the difference between an stock and a stock cube, let alone work out Bollingers in your head as some are implying.

Here are the very simple rules to make 401ks work, parrotted in paraphrase in every advice column, article, workplace seminar, yadda yadda yadda. There is only one reason not to do this and that's a disaster like (necessary) bankruptcy, starvation or eviction if you don't get at that last few percent of your paycheck or your 401k itself. They boil down to a very simple principle - set it and forget it unless you think you can do better than the pros (and trust me some doubtless can).

1) Take the free money - contribute up to the match at least if one is offered. More if you can afford it
2) Don't stop contributing in bad markets - that's when you buy cheap for later gains.
3) Don't touch it - don't borrow or withdraw unless that disaster above looms
4) Little or nothing in company stock unless they give you a special discount, and even then not much. You already rely on the company for the paycheck. Eggs and baskets.
5) And this is the only one that requires anything above 3rd grade level thinking, but is freely available for the asking. Pick a reasonable balanced portfolio. Many funds offer no-brainer choices like "Retirement 2030" or "Retirement 2040" where you only have to know when you'll hit retirement and they do the balancing for you. If not the only real caveat is to pick a few different funds. Most people have somebody with basic investment savvy - enough to know the difference between bonds and stocks and risk/reward is all they need - they can ask if they want to get more detailed, but even if you throw darts at the list of funds and pick the 4-5 you hit first you'll very likely be ok.
6) Do nothing else except considering increasing contributions if you get a raise or promotion or otherwise feel able. Reducing contributions? See "disaster" bit. If you learn a bit about Finance 101 or know somebody who has, balance your risks every decade or so, moving safer as you approach retirement. If not, do nothing.

If you followed those, the 2008 collapse would have not hurt you - even helped you actually due to #2 - absent that d word again.

[meaculpa2011]

169. Excellent advice!

Plus... start early.

[duffyduff]

173. Oh, please. The things are a complete fraud.

You can NEVER save enough, unless you are highly paid to begin with, to have enough in those accounts to pay for retirement. You would need literally hundreds of thousands of dollars, which is impossible for the average person to do, to pay for retirement out of your pocket that would even compare with a defined benefit pension.

I am sick of the spin. 401(k)s were exploited by companies not to help workers but help companies save money. Pension plans cost a tremendous amount of money, while 401(k)s are cheap. Companies used these plans to pass the risk to workers.

Defined contribution plans are ALWAYS inferior to pensions. They are NOT pensions, were not originally designed to BE pensions, and should NOT be used as anything but supplemental savings plans supplementary to pensions and Social Security.

[Common Sense Party]

174. Nonsense. I know hundreds of average people who will have hundreds of

thousands saved up in their 401(k)s.

Companies don't HAVE pensions anymore. You may not like it, but it's reality. YOU are responsible for YOUR OWN retirement. The 401(k) is a great way to do so if you're not a self-disciplined investor.

[FreeJoe]

211. It's the same amount

"You can NEVER save enough..."

You do realize that you have to save the same amount whether you do it through a defined benefit pension plan or a defined contribution plan, don't you? I have both where I work. My budget for my staff includes their total compensation. That's their salary, 401K matches, and pension contributions. For one of them to retire at a particular income level, the same amount of money needs to be set aside whether it is done through a defined contribution plan or a defined benefit plan. Either way, the money set aside is money that the employee earned.

The exploitation came when companies switched people to 401Ks and lowered the amount they paid for retirement. People took a big pay cut with many of them not realizing it. If the company was fulling funding their pension and instead started giving them the money in a 401K and if the employee didn't spend any of that money, they would not be significantly worse off. Well, they would be potentially worse off in that the risk of their investments under-performing would be transferred to them, but they would also get the gains if those investments over-performed.

[HughBeaumont]

176. It's not that 401(k)s are "beyond wit" . . . .

. . . it's that most workers either aren't that well compensated or didn't start early enough (the "shoulda/woulda/coulda" victim blamer's favorite "go-to"s) that this plan could even work as a supplement when retirement hits.

Here's some perspective - I got my first 401(k) and now have a second one (haven't rolled the first one over, which I'll get around to).

In 15 years of almost constant contribution to these things, both of which are balanced and run the gamut of money market funds to index funds to foreign stock funds, I have a whopping 80 thousand dollars. Even after compound interest, matches, near-maximum contribution . . . in 15 years, that's all I have. The worst part about it is that most retirees would be happy to have THAT much.

Think that in the next 18-20 years, I'm magically going to even reach half a million? REALLY? To retire by 2033, you would need at least several hundred thousand dollars minimum, even if your house is paid off (snicker), to last the rest of your life. It would take a miracle life with zero landmines, all the right moves and no stock market crashes to accomplish that. It's NOT happening. Also, I better hope I never have an uninsureable illness during this period.

What you make has everything to do with how comfortable your retirement's going to be, if you're able to retire at all. That's why no one can retire, because if they're not having to start from scratch at 53, they lost it all in unbridled corporatism's stock follies.

[FreeJoe]

208. 7%, 20 years, $400/month

If you have $80,000 already saved and you let it grow for 20 years and your total return is 7%, you'll have a little over $300,000. If you save an additional $400 per month (including company match), that will get you to $500,000.

I think it is obvious that "what you make has everything to do with how comfortable you retirement's going to be". It also has everything to do with how comfortable your life is going to be. High incomes make life much easier before and after retirement. The income someone has in retirement is proportional to the income a person saves for retirement.

[Dirty Socialist]

166. But I thought the Dow was going to hit 36,000 under Dubya

What happened?

[stevenleser]

177. It did! But they forgot to mention it was 36,000 Indian Rupees

[raouldukelives]

185. The fact is things are so bad because of 401k's, not in spite of them.

Huge infusions of cash into corporate coffers is what has led us headlong into destruction of our unions, our environment, our media, our healthcare and our moral compass.
And after they are done paying for bonuses, funding climate change deniers and lobbying congress for more lax regulations, more wars and more special favors they give you back a little for being a financial partner of those decisions.
It's a win-win.

[HughBeaumont]

192. This journal entry seems fitting for this discussion . . .

http://journals.democraticunderground.com/HughBeaumont/102

[llmart]

212. I am still not through the entire thread of your journal entry....

but I am enjoying it immensely. I will finish reading the rest of the comments later, but didn't want to wait to post.

You've heard of the saying "with age comes wisdom"? Well, not always but for some people, we do get wiser as we get older. I wonder sometimes if those of us who are now older are trying to impart our wisdom on younger people so that they may have the chance to gain at least some wisdom before it's too late. Or - is ignorance really bliss?

I don't know how old some of the posters on here are, but those of you still parroting the conventional wisdom of how you'll be well set in retirement if you just invest the max in 401's, blah, blah, blah I'm here to tell you one more time (because others on here have said this) YOU CAN DO EVERYTHING RIGHT AND STILL SOMETHING GOES WRONG.

Just don't fool yourselves into thinking that you're going to be OK because you're doing everything you're being told to do. That way if/when the fall happens, you won't be blindsided.

Some of us speak from experience.

[Warpy]

201. The disaster was predicted by the left

when the scam first surfaced. The idea was to get companies off the hook for pensions for the workers they'd used up.

The stock market is a great idea, but only if you have a great deal of money to put into it. Working class people are simply not being paid enough discretionary income to save for retirement, not even with matching stock purchases from the company. Only treating retirement as an insurance rather than investment will provide workers with enough money to live on when they can't work any longer.

Pensions and annuities suffered the same flaw: they provided fixed income in a fiat currency that had the tendency toward inflation. Social Security COLAs stretch only so far when your pension's purchasing power has been cut in half by inflation.

Voluntary parallel insurance, administered by the government as a pay as you go retirement system, is the only way I can think of to fund retirement for working class people, although a way has to be found to keep all overpayments out of the grabbing hands in Congress.

[Icecream man]

202. It's up to you

If you have relied only on a 401k to fund your retirement you haven't prepared for retirement. When companies stopped providing pensions anyone who didn't step up and start saving money in an IRA or somewhere else in addition to a 401 k has only themselves to blame that you don't have money for retirement.
I just looked at one of my mutual fund IRA's was $6000 in 1990 and today it's $45000. You have to pay yourself first.

[FreeJoe]

207. A 401K can get you a long way.

You can put over $50,000 a year into a 401K. That should be plenty for some people. You can put in $17,500 tax advantaged (either pre-tax contributions or post-tax Roth 401K contributions. That doesn't include your company match. The total of the two can't exceed $50,000. If they are less, you can continue to make after-tax contributions to the 401K if you'd like.

[duffyduff]

217. I haven't had a good laugh in years.

WHO even MAKES 50k a YEAR anymore? You are laughably out of touch.

[FreeJoe]

219. You misunderstood my post

I was referring to the prior poster's rather definitive comment "If you have relied only on a 401k to fund your retirement you haven't prepared for retirement." While I agree that 401Ks make for lousy social policy and are not the way the nation should fund its retirements, you cannot accurately make a blanket statement as he did. There really are people that put a lot of money into a 401K and retire successfully off of it. They are the minority, but they exist.

As this post (http://www.bogleheads.org/forum/viewtopic.php?f=2&t=110635&newpost=1610019) on the Boglehead's forum shows, there are some people that really do shove $50K/year into a 401K.

As for who makes 50K a year anymore, that is slightly less than the median household income in the US, so I would venture to say that half of the households do.

[duffyduff]

216. Most people don't make enough money to even BEGIN to save enough

You have NO concept AT ALL as to how much money one would have to save in these fake savings plans to even be comparable to a pension.

45K is NOTHING and won't last squat. It's nothing to brag about. You need literally hundreds of thousands of dollars in a 401(k)/IRA to even be able to save for a decent retirement, and few people who aren't already rich or have very high incomes can do it.

Defined contribution plans are scams designed to save companies on pension costs, not to make you rich.

[trumad]

203. Wow this thread was linked to by Atrios.

Come on Duncan...out yourself.

www.eschatonblog.com/2013/02/threads-elsewhere.html?m=1

[HockeyMom]

226. You have a choice of a Pension OR a 401K

Florida Public District. Guess which staff choose?