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Thread: 401Ks destroyed

  1. #9
    Join Date
    Dec 1997
    Location
    Cherry Hill, NJ
    Posts
    64

    Post Re: 401Ks destroyed

    PS the next morning, if I posted any thing, especially language, that offended. My apologies I tried to clean my posts up last night when I saw curses weren't being bleeped I went a little post happy, probably cause I was a little drink happy last night and letting loose after a long week :P

  2. #10
    Join Date
    Feb 2001
    Posts
    9,507

    Post Re: 401Ks destroyed

    Hope you have a blast over Halloween, Dustin!

    As for 401Ks- they've been the biggest sham perpetrated on working people in this country. When Republicans finally got a wedge into traditional defined benefit pension plans in the eighties......and snookered so many into replacing them with 401Ks.......it was the death knoll for stability for working and retired people in this country.
    They just couldn't wait to get all that money into the markets to play with- never mind that people would basically be gambling on their retirement stability!
    We can see right now how foolhardy it all was......I don't know anyone who hasn't lost a ton of money intheir 401ks recently.
    And these are the same fools who wanted to throw SS into the stock market!!
    Americans need to wake up!

  3. #11
    Join Date
    Jun 2003
    Posts
    3,781

    Post Re: 401Ks destroyed

    ahhhh... over the last 15 years, how do 401k's compare to other retirement plans? you libs sure love to jump on things when the timing is right and ignore the overall history... whatcha going to say when things rebound and once again 401k's are kicking the crap out of those old plans?....yep...you want be saying anything...

    this time the timing is perfect for the left because the electorate is stupid enough to believe the current crisis we are in is due to tax cuts... never mind the 2 years of a democratic congress....no problem though... the messiah is on the way...

  4. #12
    Join Date
    Feb 2001
    Posts
    9,507

    Post Re: 401Ks destroyed

    I'm not a gambler........so I will always take stability over a gamble, Bigeasy. And I think an awful lot of retired people would also!
    I've asked this before- how does our economy keep growing forever and ever? Considering the state of the environment, our debt level and income stagnation?
    Because your notion is predicated on the economy always growing bigger and bigger.....isn't it? How realistic is that?
    I think retired folks are better off with a defined benefit amount coming in.......and not anything dependant on the stock market.
    How much have you lost in yours lately, eh?

  5. #13
    Join Date
    Oct 2004
    Posts
    747

    Re: 401Ks destroyed

    So put your 401K into bonds. Again...if one takes taxes into consideration, not much was lost compared to what you would have if you lost if it was paid in tax. Since their inception.

    Detail:

    401K

    For most workers out there, employers have on offer a retirement plan. In the past, this used to be in the form of a pension plan guaranteed by the company. But with a lot of companies moving away from this corporate financial liability, the in vogue benefit offered to employees has become the 401(k). So how exactly is a 401(k) beneficial in establishing a retirement strategy?
    Depending on the employer, the 401(k) plan gives you a variety of mutual funds to invest in set by the company managing the accounts. Some of your wages are set aside pre-tax and placed into the 401(k) account and you choose how much of that contribution are placed into which mutual funds. In addition to the untaxed money, there also tends to be a matching contribution from your employer. The match is commonly 50% of your contribution up to a certain percentage of your wages. So if you set aside 8% of your wages, your company will kick in an additional 4% to give you a total of 12% of your wages set aside in a retirement account.
    Why is this so great you might be wondering. Couldn’t you just set aside the money yourself and invest it in whatever you feel like? Yes, you very well could, but then you will have to give the tax man his cut. And if you’ve read the compounding interest article you should know that taxes eating away at your gains will reduce your potential overall savings by a lot in the long run. When you put money into your 401(K), you get that percentage of your wages without it having been taxed and it reduces your taxable income by the amount you set aside. If done properly, you could potentially keep yourself in a lower tax bracket, saving yourself even more money.
    While the tax benefit is by itself a great reason to put money into a 410(K), there are also a few other advantages. First, you set up an amount to be automatically deducted from your paycheck. There’s no easier way to save money than to not have it in your hands to spend in the first place. Second, if you’re in a bind you can take out a loan on the balance of your 401(K) or even make an early withdrawal without penalties if under specific hardship situations. Third, you can rollover your 401(K) to another company if you decide to change careers.
    But you still need to be careful and keep track of this investment tool. At least once a year you should re-balance the distribution of mutual funds you choose to invest in to keep your money thoroughly diversified. Another issue to be aware of is the fees the mutual funds incur since those will also eat into your long-term earnings. If you change jobs often or have a major financial emergency, be cautious when handling your 401(K) since you might incur penalties and taxes if you don’t follow the rules for withdrawal or rollover.
    There are limitations to the amount you can contribute to the 401(K), but you can contribute more if you are 50 or older. After 59 1/2 you can begin withdrawing money from your 401(K) without penalties and you must begin taking distributions after you reach 70 1/2 unless you are still working. Since the 401(K) is a tax-deferred account, you don’t pay any taxes on the gains of the account, but you pay taxes on the distributions you take when you start withdrawing money. A 401(K) is best if you expect to be in a lower tax bracket in the future since the money you put in will then be taxed at a lower rate than if you hadn’t put it into the 401(K).

  6. #14
    Join Date
    Oct 2004
    Posts
    747

    Re: 401Ks destroyed

    401ks are LONG TERM investment vehicles...
    If you're young and will be making regular contributions to your 401(k) plan over a number of years, history shows that allocating all of your deferral into stocks will likely produce the highest returns.
    [Ed. Note: That's pretty much the main point of Step 2. You can go on to read a bad joke or two and a couple of graphs that show how many hundreds of thousands of dollars might be at stake by putting your money into the right or the wrong allocation over time. Boring stuff like that -- so feel free to head on over to the Living Below Your Means discussion board if you know all this stuff already. Or you can skip to Step 3, which is a good bit, and features a guest appearance by Alex Trebek.]
    For anyone new to handling her own finances, the array of investment choices provided by a typical 401(k) plan can be dizzying. Unfamiliar names jump out from the "asset allocation" sign-up sheet, including such obviously frightening concepts as "guaranteed investment contracts (GICs)" and the all-too-familiar sounding "bank deposit accounts." Sometimes there will be 20 or more choices offered, and usually employers offer little help in determining which allocation might be the right one for you.
    The chart at the end of Step 1 shows the results that can be achieved if you invest that deferred pay and achieve returns, before tax, of 8% a year on your investments. To do better than that, or at least improve your chances of doing better than that -- it helps to understand the historical performance of the usual choices.
    The typical investment choices in a 401(k) plan are likely to be:
    • Money market funds
    • Stable value accounts (guaranteed investment contracts (GICs) or bank deposit accounts)
    • Bond mutual funds
    • Stock mutual funds
    • Llamas
    Kidding. Llamas are not offered as an investment vehicle under any 401(k) plans. If your 401(k) is for some reason offering llamas, consider instead working for a company that is not run by somebody who's insane. Choosing to invest in llamas cannot possibly help your retirement. Now, back to the boring stuff.
    Money-market funds and stable value accounts:The types of accounts offer secure ways to make sure that your savings grow at a limited rate. You won't make much off any money put into these vehicles, but you don't stand much chance of losing any either as they consist mainly of certificates of deposit or U.S. Treasury securities.
    • Risk: Low
    • Reward: Likewise low, around 4% a year
    Bond mutual funds: These are pooled amounts of money invested in bonds. Bonds are IOUs, or debt, issued by companies or by governments. A purchaser of a bond is lending money to the issuer, and will usually collect some regular interest payments until the money is returned. Usually, the amount of interest paid -- the coupon -- is fixed at a set percentage of the amount invested. Thus, bonds are called "fixed-income" investments.
    • Risk: Ranges from very safe (U.S. Treasury securities) to somewhat risky (so-called "high-yield" or "junk" bonds)
    • Return: From 4%-8% a year
    Stock or equity mutual funds: Such funds are pooled amounts of money that are invested in stocks. Stocks represent part ownership, or equity, in corporations, and the goal of stock ownership is to see the value of the companies increase over time.
    • Risk: Stocks can and do lose 10-30% of their value in a matter of days. However, if you stick with big U.S. companies, you should be fine over the long term.
    • Return: 10.7% average, with years as bad as -43.59% and as good as +52.83%.
    There are any number of asset allocation models that propose putting as much as 20% of your money into cash or money market funds, and 25% or more into bond mutual funds. Those who are young and are putting money away for two decades or more should ask themselves whether the decreased volatility of such a model is worth the guarantee that it will not match the historical average annual returns of equities.
    If you have a 401(k) plan administrator, she won't tell you how to invest your money, even if she knows that, historically speaking, stocks outperform other types of investments. Generally, plan administrators won't expose themselves to any legal liability and won't offer specific investment advice -- markets, after all, don't end up behaving in predictable ways all the time. Or any of the time.
    We can't offer specific investment advice to you either, because we don't know your specific situation. (Our Rule Your Retirement service, however, does provide asset allocation models, specific investment ideas, and a place for you to discuss your specific situation with a staff of knowledgeable folks.) But if there's a sufficient reason for someone who is decades away from retirement not to take full advantage of the fantastic possibilities that stocks provide, we don't know what it is.

    Liberals want to control that too..Iam better at handling my own money than the govt. If you want that program...have it...Bush actually proposed that...are you against freedom of choice? Just don;t whine when I have more...well...you are now.

  7. #15
    Join Date
    Feb 2001
    Posts
    9,507

    Post Re: 401Ks destroyed

    Thanks alexc........we did change most of it into bonds.
    But my bigger point remains- it's still a gamble. And workers were a lot better off when they could count on a guaranteed defined benefit pension amount each month.
    Stability trumps gambling....especially when you're old, on a fixed income........and suffering through the predictable results of thirty years of Republican mis-managing of the economy.

  8. #16
    Join Date
    Oct 2004
    Posts
    747

    Re: 401Ks destroyed

    with the state of Social Secuity, you are not "concerned" that it will produce a livable wage? As far as the 30yrs of republican mismanagment, perhapsyu forget the state the economy was in 30 yrs ago under Carter...20% interest..12% unelmployment etc. Reaan ushered in an unprecedented time of productivity and wealth creation...everyones standard of living went up..forget a "gap"..if everyone is poor there is no gap.

    Risk=reward..so leverage a 401k for ow you best want to have a return, or diversify. Having the govt run my retirement is much riskier than any 401K...look at countries with state run programs...none f their people have any money. Frankly I am MUCH better off now than 8 yrs ago...so are MOST regardless of what you say. Only the last year has started to show signs of recession...and that is because of the foolishness of the subprime issues. More liberal BS and talking points with no reality mixed in.

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