Ha, ha, ha... that would be funny if it weren’t so true. I read an article that said the 401K blueprint can now be pronounced a failure. Now that the days of guaranteed pensions from employers are gone, there is nothing but uncertainty. I never thought I would say this, but this system works for people who make enough money to set aside. For those of modest means, there is no sweaty wad of cash left over from their expenses to stash in a 401K account. Also, the average person has neither the time nor the expertise to manage an investment account. Most people leave all their money in their employer’s stock, which didn’t work out too well for the poor folks at Enron.
It’s a shame that the US didn’t follow Chile’s lead with their equivalent to social security. People are required to set aside a certain amount while they are working, but it accumulates in their own account and it’s all theirs when they retire. It isn’t a government ponzi scheme like our Social Security system.
You sound like some of my relatives.
How old is your car and how long have you owned it?
Which is why those who successfully invest pull the money out before the spending.
When 401 started I told my troops that they all just took a huge pay cut. Matching was 4% it got better a lot better in some places. Anyone taking full advantage of the thrift plan and other contributions at a large company and investing at moderate risk could become extremely well off. Some middle managers approaching 8 figures with paid off homes and second homes. With match up to 8%, bonuses invested for rainy day money, retirement accumulation and supplemental retirement accumulation plan contributions some one working for a big corp can easily salt away the equivalent of 35% of gross pay at 6 to 8% ror for years. All it really takes is to save 15% but 25% is much better. You had to save, participate and survive. Dad used to say big companies pay big money if you can stand them.
People are not educated nor prepared to manage their own retirement even with guidance. I fear most messed it up. There is just so much to know. Financial advisors also have done a number on people. A bad one can screw you up to the point you cant recover. The 401is open season for financial hucksters. 1.5% management fees are really 25% of your rate of return!!!!!
If I had known 25 years ago what I think I know now I believe Iwould be nearly double what we have saved for retirement. The medical deal is one you just cant get outside government nor is inflation protection nor the near guaratee for life. A school teacher retiring at 52 isnow probably much much better off than alot of engineers retiring at 60! Certainly better off than anyone self employed at 65 or more.
Problem is risk when you stop work and live too long. Annuity schemes are much more mature and better in europe. Not here. Not enough buyers and fed laws too restrictive.