Posted on 08/14/2023 9:23:38 AM PDT by ChicagoConservative27
If they were putting some money aside all the while they'd probably be able to keep on eating.
Similar to a low risk pension fund like TIAA-CREF, Vanguard or many other management companies sell. I got this information from a social security lawyer who specializes in this stuff.
“Yes, not 401k, because non-profits fall under 403b.”
Wrong. 403b organizations can have 401k plans, if they chose to.
However, as I said there are many for profit companies as well, not just non-profits, that have regular pension plans other than 401k plans.
“Why? Because I’m not comfortable with my employer’s HR dept being in charge of mine and my wife’s future. Or to use words from Tennessee Ernie Ford, I don’t want to owe my soul to the company store.”
If all your employer has is 401k plan I’d agree that your HR department and/or the principles of the company, are too involvred in deciding the possible choices for where is your 401k account and who’s managing it. But most companies with a regular pension plan have another set of directors, not the HR department, that make management choices about the plan. often using independent outside outfits to do that.
“But in my experience, most of the 85% that’s not investing anything to their future (assuming your 15% is correct) are living above their means.”
Our own anedcdotal experiences are not good judges of what the “majority”, “most”, “average” or “median” values are with any statistical measure. Your own experience cannot judge whether most, the majority, or the average of the 85% are doing with their money. You have no idea as to each case just how they spend what they have or how much they have above their bare necessary expenses. You’re right to do what you think best for yourself, but wrong to judge millions whom you know nothing about.
Some of them had pension plans that went bust (employee trusted the wrong people). Some of them had 401K plans that didn't go bust but the employee took money out or moved it around while it was down (employee's fault). Most of them were still working and living "paycheck to paycheck" and came to the group with a repentant attitude looking for tips on budgeting and saving and investing (they were at fault until they got their act together). Very few are people who were in a desperate situation and had already cut back on their expenses and were living in a budget.
Most of them who come through it have a change of heart. I show them some tools I made with Excel spreadsheets and C# apps and a TSQL database. We input their scenario (debts, payments, incomes, utilities, entertainment, etc.) and see what the future holds. Then I say, "what happens if we cut back a little on spending here and there let's run the numbers again" and show how much quicker they get out of debt (in a tool mimicking Dave Ramsey's debt snowball). Or I say "what happens if we put that extra X dollars into investments" and show how an 8% or 10% return doubles your money in 7 to 10 years. At that point most of them get excited about budgeting and cutting back expenses so they can pay down debts and start invest for their future.
Before the semester is over we talk about long term goals, retirement, portfolio strategies, withdrawal strategies, and of course the tax breaks and the rules that go with them. Using decades of closing price data from the TSQL database, I show them what a 4% annual withdrawal strategy would have looked like during both good market times and bad market times. Of course, that's when they always go, "Wait, a million dollars in investments means only $40,000 to live on the first year?". I go, "Yup. Sounds like we need more than a million before we retire. So let's get on it. Good thing our portfolio doubles every 8 to 10 years just on growth alone. All the more so if we start it sooner. So let's go back to our budgets and tighten 'em down."
Mind you, over half of the people who come through this are black because I go to a majority black church. But at the same time, most of these folks are married with kids in two-parent households living godly lives.
It says that your experience is fairly limited to those in need of your help. You suggest they represent majorities who never seek your help. I don’t know any way to prove your experience is representative.
Its a little like the cardiologists who says most of his patients have hypertension, and then he presumes they are repersentative of all those who do not see a cardiologist.
For example, look at how ESG crap has messed up pension plans lately. Whether they were managed by a state run agency or private firm like Aon. So many of them have had problems. And how much did both you and your employer put into the pension plan? If, instead, that money was directed where YOU are in charge of the investments, you're better off. Instead of THEM picking when you retire, YOU pick it. Instead of THEM picking the risk tolerance, YOU pick it. Even if they are both wise and noble, the same people don't run it forever.
Also, they don't know your particular situation as well as you do. Maybe during some years you're working you need to not invest right now because you have high interest debts you're better off paying down first. Or maybe you're in an income situation where you'd be better off making Roth contributions (no tax breaks while working, but no taxes to pay later in retirement) than tax deferred contributions (tax breaks now while you contribute to your pension, but paying taxes on it later in retirement).
With a little homework anybody can figure out best how to use that money for their particular needs and wants --- instead of the one-size-fits-all scenario of a pension plan. And if you do it yourself you're not paying the pension managers for their ability to pigeon hole you into doing what they think is best for you.
yours.......
“......for many of our Fellow Citizens, life is gonna get much harder”
mine:
agreed! we already see MANY People skipping the butcher/meat counter and putting a lot of grocery items back on the shelf when they see the new high prices...
just a couple years ago this problem of unaffordable food was not in evidence....The Federal administration is driving people onto welfare (and dependency) as fast and hard as it can
“With a little homework anybody can figure out best how to use that money for their particular needs and wants -— instead of the one-size-fits-all scenario of a pension plan. And if you do it yourself you’re not paying the pension managers for their ability to pigeon hole you into doing what they think is best for you.”
Not true. MOST people do not have the wherewithal to know what investment instruments to choose and what to avoid, even when particular goals are in mind. Most folks are better off paying an investment manager to understand what they want to do and guide the chooseing of the right investments.
I know mulitple privte company pension plans (not 401Ks) where during the period of employment the inidivual can choose %’s of their and their employers constributions to be invested in which type of investment instruments - fixed (bonds), equities, index funds, ect; and upon retirement can choose similarly as to how the sums accumulated up to retirement should be divided, so as to provide benefits weighed between total stability to different levels of risk and possible continued growth. A younger person may start out will all the contributions going into equities or a combination of eqwuities and index funds, and then as they are getting older have more put into fixed (bonds) instruments.
But 401ks are usually not managed that well and I wish that all 401k contributions left the employers hands completely and went into accounts the employee had all the say so over, by all the options open to them in the investment holding outfit (like a Vanguard) where the contributions were deposited. Employees don’t need to make specific investment instrument purchase and sell decisions themselves but do need options their investement mamnagers have can apply so as to get the mix of investment instrument types serving the short and long term goals of the individual.
If anyone insists on having a pension because he can’t figure it out on his own, he can put his money into an annuity. There are plenty of annuities sold by investment firms that are also life insurance firms. And the annuities have the same kind of options that pensions have (i.e. nothing for spouse, or 50% for surviving spouse, or guaranteed at least 10 years for spouse, etc.). You can call up one of those firms today and ask them how much you’d have to give them per month to have an annuity that will pay X amount beginning date Y with the features you want. And if you don’t like their numbers you can call another one and shop around. Many of them have the calculators on their website to help you figure it out before making the call.
“If anyone insists on having a pension because he can’t figure it out on his own, he can put his money into an annuity.”
There is no need to use annuities and they are too restrictive, because rthere is as good safety in outfits like Vanguard and others.
And even many pensions have “lump sum” options at retirment, that can be used if the benefit estimate options show the balance after the lump sum withdrawal will still provide the income they want.
Stil total do it all yourself is unnecssary and not recommended for the vast majority of the population.
And, the benefit of pensions with both employee and employer contribtutions is they force a retirement investment of some sort when so many people would make none without some form of mandatory constributions/savings. Pensions with mandatory contributions force the budget decisions you know people need to make. You just don’t like the individual giving up total control, yet as you yourself claim most will not do what they should do in the first place, even though as you claim ANYONE can be shown by YOU how do to it all themself. I do not believe majorities can be trained to do it all themsleves or left to just total voluntary contributions will set aside enough for retirement (not that they couldn’t but that they won’t).
Social security is a whole ‘nother matter because its “trust fund” is not a true trust fund, and because its monies are not iinvested OUTSIDE of the government in regular investment instruments and with each individuals account being some part of the invested whole and owned by that individual for their own retirment. Instead social secuirty has been used as a slush fund to fund general government expenditures from ss funds loaned out to the treasury which the taxpayers have to make good on (a second time) sooner or later.
This is where you and I will probably always disagree. I'm not for forcing people to do anything this side of refraining from stealing or hurting others, and maybe raise whatever babies they create. I believe that if everybody had to operate on a YOYO attitude we'd have a lot more people who would learn to handle their finances better.
I believe almost a century of social insecurity and over half of a century of the welfare state has dangled teasing carrots in front of people, telling them that they're off the hook -- they don't have to be responsible for their financial future. Don't worry, the smart connected people will figure it out for you. It's much the same argument some pro-slavery Dims made a century and a half ago: what will blacks do if free? They don't know how to handle their own affairs.
It took a generation or two for the welfare state to un-train people and it would take a generation or two to re-train them. But more "solutions" of making it mandatory (your word, not mine) for other people managing your money is not the answer. The best education is always real world results of your decisions without someone watering them down paying the price so you don't feel the effects of your bad choices. As long as we force (there's one of your words again) people into your once-size-fits-few pension solution then only a few of us know how to manage our money. That's not best for most people, but it is best for the ones skimming off the top of the pension plans you wish to force people into.
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