Posted on 01/08/2009 3:40:48 AM PST by abb
The stock-market rout has ignited a crisis of confidence for millions of Americans who manage their own retirement savings through 401(k) plans.
After watching her account drop 44% last year, Kristine Gardner, a 35-year-old information-technology project manager in Longview, Wash., feels no sense of security. "There's just no guarantee that when you're ready to retire you're going to have the money," she says. "You either put it in a money market which pays 1%, which isn't enough to retire, or you expose yourself to huge market risk and you can lose half your retirement in one year."
Many retirement experts have come to a similar conclusion: The 401(k) system, which has turned countless amateurs like Ms. Gardner into their own pension-fund managers, has serious shortcomings.
snip
"That seems like such a fundamental flaw," says Alicia Munnell, director of Boston College's Center for Retirement Research. "It's so crazy to have a system where people can lose half their assets right before they retire."
Congress has begun looking at ways to overhaul the 401(k) system. At hearings in October, the House Education and Labor Committee heard from a variety of witnesses. Some proposed setting up "universal" retirement accounts, which would cover all workers. One such plan called for establishing accounts that would receive annual contributions from the federal government, and would offer a guaranteed, but relatively low, rate of return. Another proposed automatically investing contributions in an index fund that holds stocks and bonds, with the mix getting more conservative as workers approach retirement. Other witnesses proposed less drastic changes, such as providing better education.
snip
Many employers offer matching contributions exclusively in company stock, which often leads employees to invest more of their own contributions in those shares, retirement experts say.
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(Excerpt) Read more at online.wsj.com ...
ping
Right, let the government manage your retirement plans! Based on how they have managed the Social Security program, that should be very interesting.
I do feel awful about the people who have been ruined by this. I really do. But the problem is not investing or markets, the problem is corrupt companies being aided and abetted by corrupt politicians.
And low and behold, the people behind the problem in the first place are there to solve the problem for us.
I pray to God we are just not that stupid to fall for this.
Even 1% return from a money market fund is better than the -2% internal rate of return I get from Social Security.
Anyway, the solution is not a government takeover, the solution is to hedge your assets! It is especially easy to do in a tax deferred account.
Ping!
For your own reading and thoughts.
Czar,
Yes they have indeed lost their moral & constitutional authority to govern.
Yeah, what we need are guanteed investment returns! Why didn't we think of that before?? [/s]
Its the 401ks fault we have a bunch of lying crooks running the country ,they had to find a way to tap into all that retirement money ,so away with 401ks ,IRAS put
it into a Government acct. Like SOCIAL SECURITY that pays nothing so the Government can flush it down the toilet by Housing, educating,treating , millions of illegal aliens,people who refuse to work and providing mortgages to people who cant pay for them and then tell you its your fault .
But you know it is the peoples fault because we elect these Aholes
Gee; at least it's your CHOICE to do so....
Unlike Social Security, which is a TAKING of your earnings where you have NO CHOICE, and there's no 'guarantee you're going to have the money', either!
“I pray to God we are just not that stupid to fall for this.”
I think God has already spoken on that.”
Well the key is you do have to “manage” it. We did well with diversified funds, but when we sensed trouble we moved all the funds to a money market fund. We’re probably getting less than 1 percent but we didn’t lose any money, so far anyway.
Lessons are hard learned, last time (I think it was during the latter part of 2000) we lost a big chunk by not moving the funds when we saw trouble brewing, so this time we were pre-emptive and it paid off.
The government wants to manage the money and will guarantee a 3 percent yield....sure, and I’ve got a bridge in Brooklyn to sell. The funds are to be managed by the SS administration. Just an attempt, IMHO, to continue the Ponzi scheme that is Social Security. They need the funds to prop up SS.
If this idea becomes mandatory, we’ve decided we’ll liquidate, and take the penalty and tax hit...and it would be a big one, but something is better than nothing, and that’s what I think we’ll have if we turn our 401k’s over to the government. We weren’t counting on getting SS, as it will be insolvent by the time we retire, so why should I trust the government to keep my 401k funds safe until we retire.
The painful truth of the matter is that the vast majority of people are not competent to manage their own money.
Ahh yes.
Here it comes - the plan to loot private 401ks to pay for government deficits
“Congress has begun looking at ways to overhaul the 401(k) system.”
Uh Oh.
I’m reminded of those very scary words “I’m from the Government, and I’m here to help.”
...which has turned countless amateurs...
...to untrained individuals, who often don’t have the time, inclination or know-how to manage them.
...professionally managed pensions
...careless investment choices by individuals
Wow. Read this closely. You are going to hear more of these types of lines from the new CPO this spring. We deserve a gaurenteed retirement account don’t ya’ know.
Reminds me of all the Enron folks who lost "millions".
Someone who had invested $70 in their retirement account and then watched it inflate to $2 million ... only to slide back to $5K when the bubble burst ... didn't lose $2 million, they lost $65K. That's a hit, no doubt ... but it's not "millions".
Have any of these people heard of a “Stop Loss Order”?
LLS
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