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Is The 401(k) Working?

Is the 401(k) working as a retirement plan for the American public? A lot of account balances say maybe not.

Photo Illustration (Alex Kingsbury/WBUR)

Photo Illustration (Alex Kingsbury/WBUR)

Back in the day, the 401(k) – if you had one – was just a supplement to a good old-fashioned pension. An optional way to juice up your retirement. Today, for most Americans, pensions are history and the 401(k) is the main event, after Social Security. And 401(k)s are failing.

Millions of Americans are barreling toward 65-plus with very little in the sugar bowl. The stock market has tanked and tanked again and looks shaky right now. Most human nature may not be cut out for sophisticated investing. Is there a better way?

This hour, On Point: Is the 401(k) a bust? And what would be a better way?

-Tom Ashbrook


Teresa Ghilarducci, a labor economist and nationally-recognized expert in retirement security. She’s an economics professor at The New School.

David Wray,  president of the Plan Sponsor Council of America, a national, non-profit association of companies that sponsor profit sharing and 401(k) plans.

From Tom’s Reading List

The New York Times “The only thing I haven’t dealt with on my to-do checklist is retirement planning. The reason is simple: I’m not planning to retire. More accurately, I can’t retire. My 401(k) plan, which was supposed to take care of my retirement, is in tatters.”

CBS News “The state of retirement savings in America is in big trouble. According to Fidelity Investments, the average 401(k) balance among its 11.8 million accounts increased to $74,600 at the end of the first quarter 2012, a 62 percent increase since the end of the first quarter 2009. While it’s good news that balances are up, the number of accounts is alarmingly low for such an industry giant.”

Time “One of the biggest flaws in most people’s retirement plan is something that previous generations rarely worried about: monthly income guaranteed for life. But the fix is in, and before long your 401(k) may look a lot more like your dad’s pension.”

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  • http://www.facebook.com/profile.php?id=100000079713373 Jeff Seelig

    I’m in my late 20′s and know that the retirement enjoyed by my grandparents will never be obtainable for the majority of my generation. I work hard, save 35% of my pay, and refuse to have kids, but today’s deck is stacked in favor of wall street executives.

    • AnitaC1040

      I will be 58 in June. Was scared to death about being a bag lady when I was in my 20′s. I graduated from college in the 70′s during a Recession. I sent out 100′s of resume, no one ever returned with even a telephone call. I got zilch.  Then I got a job as a bank teller, went back to college, got a job at a government research facility, because I knew someone employeed there who spoke for me. I was lucky, but I resolved never to have children because, I knew my husband and I would never be able to afford them and save for retirement. We have lived a modest life, small house, I never owned a new car, paid off our morguage early, no vacations, no smart phones, etc. We are doing OK, but we both only have contract jobs. I tell you I am still scared and we are on track, financially, says our financial advisor. But I don’t believe it. Save, save save!!!!

  • Roy Mac

    401K works for those whose jobs rely on the field of sucking wages out of wage earners by lying about investment returns.  Otherwise, nobody other than the big bankers’ trust departments or brokerage dicks make any money.

  • Victor Vito

    If you mean by “working” that it is a reasonable replacement for my Grandpa’s pension from the can company, the answer is patently and obviously no.

    Maybe the difference is that my Grandpa was a union man and the top marginal tax rate in his day was more than TWICE what it is now.

    75k in your 401k?  You might as well pull that out and party it away.  The assisted living facility down the block charges 5k a month!  With conservatives sinking medicare, how long will that money pay for your meds and insurance?

    I have a rock-solid retirement plan, and it has nothing to do with saving money.

    • illegal alien on welfare

      ‘I have a rock-solid retirement plan’.

      Really?  Well, after Obama’s second term in office, that ‘rock-solid retirement plan’ of yours, if you’re lucky, might buy you two tacos and a milk-shake.

      • Steve

        Your ironic pseudonym says everything we need to know about your views on every subject. I suspect it is also an indicator of how seriously anyone will take you: not very.

  • Yar

    40 cents out of every dollar the Federal Government currently spends comes out of the value of your 401K. The other sixty cents is being stolen by inside traders for a party on Wall Street.  Our current retirement plans are the perfect storm for revolution.  Next hour’s discussion on education is where value in the next generation is either gained or lost.  We expect to trade work over time, except the greedy try to cheat economics.  That is why it is written: ‘it is easier for a camel to go through the eye of a needle than a rich Mormon to buy his way into grace.’  Money has no value without civil society; simply taking care of our own children isn’t enough, we must provide opportunity for all children.  Economics is like thermodynamics, the equations must balance, eventually.  Our nation’s problem is we can’t tell the difference in work and entertainment.

  • JeanBruce

    How did 401K’s make the S&P 500 stop paying dividends to pay their profits to the executives and board instead?

  • AC

    mine is doing ok-ish, but i’ve got a ways to go & have back-up savings/investments.
    Tho, a lot of people who should have retired in our office can’t. people whisper about it and feel bad…..

  • wauch

    Look it comes down to the fact that everyone from myself making $35K per annum to state/federal folks making $150K are going to have to get used to 3-4% annual returns on retirement. The problem is that we continue to allow for the top 0.1-1.0% to privatize profit and social gain. We eat spinach and they eat cake……off of the collective plate! I can adjust to PIMCO’s “New Normal” as long as it is understood that we are never ever ever going to bailout Wall Street. Neither party can promise this and retirement funds continue to over hype and under perform! Symmetric honesty would be helpful!

    • Charles A. Bowsher

       There is a far lower % of state/federal workers making $150K than in the private sector. Quit distorting your arguments with your political agenda.

  • MadMarkTheCodeWarrior

    Two words: program trading.

    Over 60% of all trades were program traded in May. Wall Street is no longer about investment. It literally is a rigged game. You’ve got supercomputer facilities the size of small schools making trades on trends that last for milliseconds. In August 2010 a new data link reduced the round-trip trading time between Chicago and New York by three milliseconds, to 13.33 milliseconds. Plans were announced for a new link to reduced trade times from London to New York to 60 milliseconds.

    Then there was the crash of 1987… and 2010. This trading does not add certainty to the market, it only increases volatility. The damage that these vehicles have done and will do again serves what legitimate role in commerce?

    This is bleeping gambling and the losers are the folks with mediocre 401K’s. These systems do us no service, yet, our tax code currently promotes this because gamblers are taxed at less than half the rate that Paul the Paver pays for wages earned busting his butt spreading asphalt in August to pave the roads that these gamblers drive on.

  • Still Here

    Americans’ problem isn’t saving too much or saving in the wrong vehicle; it’s not saving enough.  SS, 401(k), equity in your home, Roth IRA, Regular IRA, … should all be used in concert to save for retirement.  Moreover, the definition and length of retirement need to be revisited. 

    Americans have been on a debt-fueled, savings-free consumption boom and reality can’t be put off forever.

    Whackadoodles like those below would rather blame someone else for their own poor planning and lack of education. 

    • Terry Tree Tree

      With prices, food, fuel, and shelter going UP rapidly, while MOST peoples’ wages stay stagnant, or DECREASE, how do you GREEDY rich propose that people save more?
         Those that chose NOT to be a bankster, gangster, overpriced incompetent executive, or other CRIMINAL, are loosing on every front!
         Which occupations do YOU say that an HONEST person can do well in?

    • Victor Vito

      Sure, me and my kids will live in a tent down by the river so I can max out my 401 k on a yearly basis.  Simplify, I guess.

  • Drew (GA)

    The only thing missing from the pic for today’s show is the giant boot built by Capitalism waiting to stomp on the nest. You can’t make an omelet without breaking a few eggs, right?

  • Sam Walworth

    I just cannot understand why on earth there is a limitation of 16k per year for an average working person in a 401k however one can put millions (in an indirect way) to his/her IRA.

    At the same time its even more insane that one cannot even put 16k into his/her own IRA if you are an average person.

    This is simply unwise, to me.

    Its my retirement account, and if in a given year I can put about 100k, I must be allowed to, is it too much to ask for?

  • Jim978

    Section 401(k) was added to the Internal Revenue Code to allow employees to supplement employer-funded plans.  It was never intended to replace such plans.  However, when employers realized that they could substantially cut their benefit costs by shifting the retirement income funding burden to their employees, they did it.

    Is the 401(k) working?  Not the way it was intended to work!

  • Terry Tree Tree

    The picture left off the snake Banksters gobbling down other peoples’ nest eggs!

  • Gary B

    The problem with the 401(k) isn’t the vehicle, it’s the amount of money paid in by both employers and employees. While working as a CFO in a non-profit, we set up a retirement plan in the 1980s using 403(b) type plans (equivalent to 401(k)) based on achieving retirement income of at least 65% of working income from a combination of social security and the 403(b) plan, and using a conservative mix of stocks and bonds. Our evaluations and simulations showed that an employer contribution of between 7% and 9% would do that over a working career of 30 or more years.
    If there is a problem with the 401(k) today, it’s the low employer contribution. If employers aren’t going to budge on that, employees are going to have to make tough choices about whether to make up the shortfall by increasing their savings rates or accepting a lower retirement income.
    If a person wants guaranteed income, 401(k) balances can be used to buy annuities.

  • MrNutso

    This is a topic never spoken about when financial regulation and congressional budget goals are discussed.  Since Republicans gained control and/or obstructed the government in 2001, my 401k has been on a sickening roller coaster ride, that always ends back at the starting gate.  Every time I get some good earnings, we suffer for our elected fools.
    Republican control resulted in a crash through 2003.  Then when things finally got better by mid 2007 I suffered the consequences of the unregulated financial sector and I crashed again.  Then through the summer of 2011, I recovered to highest value yet only to be hosed by TeaPublicans bent on bringing down the economy by refusing to raise the debt ceiling.  I have finally recovered (mostly) again.  
    I expect another crash a year from now when we see the financial sectors reaction to a Romney presidency unchecked by  a Republican congress, or an Obama presidency continually plagued by the party of no.

    • AnitaC1040

      Bravo. My sentiments exactly!

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    Compared to a pension, 401(k)’s stink. Period. Especially as you get older, every whoops in the market is more difficult to recover from.

    Also, given the past performance we’ve seen from banks and other investment institutions, I have to question is my 401k is being handled in my best interest, or someone else’s?

  • Chas

    Hey, hey. Don’t worry. Paul Ryan has the answer for us working people: privatize Social Security and Medicare. Yeah, that’s the ticket.

    • Victor Vito

      I heard someone on TV say the free market will fix all these problems!

      • AnitaC1040


  • Ellen Dibble

    I would really like to find out if Mitt Romney understands this situation.  The aging American population, to the extent we are more vulnerable financially — through diminishing health and diminishing occupational flexibility — stands in Direct Conflict of Interest with the interests of the country at large, the way I see it.  The investments that undergird our declining years have to be the wherewithal for the country to innovate, renew its infrastructure, haul itself into the 21st century.  Those investments, whether institutional, through the huge state and private institutions that manage vast sums of money, or done personally with variously informed efforts on our own part to edge this country into future, those investments become CounterProductive for everyone if they are drained into the kind of casino atmosphere that Wall Street represents.
        We all win if this investment is truly throwing all the resources accumulated by the Baby Boom into the industries and research and so forth that make us strong, taking those responsibilities off the back of government.  
        However, if that investment is not accomplishing that, government has to do more and more and more.  I would like to know what Romney would do to guarantee any part of that.  Meanwhile, I have my suspicions that people cop right out of trying to invest in our future at all, and simply invest in the biggest and most valuable house that they can — or houses — and use that as a large and well-heated or cooled piggybank, hoping to sell it when the going gets tough.

    • William

      It seems impossible for anyone to guarantee equal outcomes for anyone.

  • http://gregorycamp.wordpress.com/ Greg Camp

    At present, my retirement plan is to keep working for a decade after I die.

    • Still Here

      The government’s assuming you’ll still be paying taxes as well.

    • Victor Vito

      Mine is to work as long as I can, and then become a TREMENDOUS problem.

    • Sam

      Hi Greg,
      That is funny.
      And probably one of the few things I agree with you on.

      My goal is to find a job that doesn’t feel like a job, then at least it won’t feel like working. :)

      • http://gregorycamp.wordpress.com/ Greg Camp

         That’s what I do.  It doesn’t pay great, but I never leave work thinking, “That was a lousy day.”

    • Oldfart

      Well, just how much money do you have saved for retirement?  Is it a 7-digit figure?  A low/med/high 6-digit?  Or some 5-digit figure?

      Just move to Thailand.  Whatever money you saved up will go a long way.

      • http://gregorycamp.wordpress.com/ Greg Camp

         No thanks.  I prefer the rights of the U.S. of A.

      • AnitaC1040

        Thailand? That doesn’t sound good. Sort of like the Best Exotic Hotel?

  • Ellen Dibble

    I hope the guests will focus on the average American family.  I think the average income is about $45,000 a year, and I’m not sure if that’s individual or family; I think it’s individual.  I don’t know if there are a LOT of people at the average, of if most people are either earning about $15,000 or about $90,000.  If so, I’d like to know that.

  • Steve

    Is Ejicasion working? and Mitt Romney and the 401K

  • jefe68

    If I’m not mistaken the 401k was originally designed to be part of a tree legged stool for retirement. You had a pension fund, SS, and the 401k was brought into play to spur on more savings for retirement. They were never designed to be the only retirement plan. 401(k) plans are part of a family of retirement plans known as defined contribution plans. Other defined contribution plans include profit sharing plans, IRAs and Simple IRAs, SEPs, and money purchase plans.

    • Mellewis

      You are exactly right, But the powers to be have blinded the minds of teh people into thinking the 401k is the golden bullet. Not so!!!!!

  • Ellen Dibble

    The idea used to be you’d retire and play golf for about five years, if you were lucky enough to survive that long.  Generally, people tend to degenerate when they aren’t working.  They feel expendable and to some extent may be.  Nowadays, people think in terms of maybe 20 years of lounging on a beach.  What is it that makes this ring hollow to me?  Unrealistic!

  • Brian Berg

     I personally completed over 200 individual income tax returns per year
    these last two years. I should have kept track of how many people
    cashed-in 401k’s each year but I did not. My estimate is that it is
    near 30% of my clients, most cashing in the full value. Each and every one said they needed the
    money right then (many for medical emergencies), even though each one
    knew they would pay tax and a penalty on the withdrawal and also not
    have the money for the future.

    • Sam

      And the same people, will probably scream against the universal and affordable health insurance, and state that taxing the rich is UNFAIR. :)

      • Brian Berg

        Yes, some of them would feel that way and most of are low income.  Out of my 200+ returns last season, less than ten reported any interest income at all, e.g. no savings account either.

        • Sam

          How many of these 190 people (200 – 10 that showed income) are working at or above “living” wage?
          Are they really CAN’T or WON’T?

          • Brian Berg

             Is that can’t or won’t report interest income or can’t or won’t work at or above “living wage”?

    • Guest

      My own experience preparing tax returns for 30 years is that most of the people I saw who took money out of their retirement plans did so for lifestyle reasons:  they wanted bigger finer homes, new cars every 2-3 years, vacations, swimming pools; it was rarely for a true emergency that couldn’t be postponed.  It was a “live for the moment” mentality.

      • Brian Berg

         I think there is a lot of truth in what you are saying and this is a huge cultural failing we have the privilege of living with.  Many of us are more concerned about affording a flat screen for our third bedroom or a new car than our retirement.

        However, I believe I have a somewhat unusual client base in that I currently happen to work in a very poor rural area.  The median household income is $32,356 and median home sales price of our county is $64,962.  Over 30% of its residents collect public assistance.  The few very well-off do not come to my office to have their taxes done.  I am convinced that most of my clients needed the money from their 401k’s to fix a vehicle problem so they could continue to go to work, to fix the roof on the house or for medical bills because they are uninsured or under insured, for example.  Many of them have also acknowledged they will be working until they die.

      • AnitaC1040

        Wow…I don’t know anyone like that.

  • john

    Please feel free to select one of the three ideas on how the
    US retirement system can be supplemented or improved:

    Case I:   Everyone
    with a 401K, or equivalent, account may upon retirement, withdraw up to $x
    amount tax free.  $x would be determined
    by Congress after weighing many factors; eg, deficit; economic conditions; etc.  I would suggest that $x be set at the median
    annual USA household income.

    Case II:  Anyone with
    a 401K (or equivalent) account may upon retirement, buy into social security,
    much like one would buy an annuity, or much like creating a charitable
    remainder trust.  The payout for buying
    in would be based on any of several factors; eg, current market annuity payout
    rate; percent payout rate of a charitable remainder trust; etc.

    Case III: Ditch the 401K. Today, the average worker pays
    6.2% into SS with a required company match. 
    For that, the average worker, upon retirement, receives from SS, on
    average, 42% of their working pay.  I
    suggest we double ALL those percentages; eg, worker contributes 12.4% of pay,
    with NO CAP, the company contributes 12.4%. 
    Upon retirement, the average worker receives from SS, an average of 84%
    of their working pay.  I would cap the SS
    payout benefit to about 2 times the median household income.

  • Ellen Dibble

    Question:  I bought a whole-life life insurance policy back about 1980.  It isn’t expensive, but the accumulations are invested and bring interest.  I noticed that during the crash of 2008/2009, that money continued to grow as if nothing had happened.
        So my conclusion, as a totally naive investor, is that ALL my money should go to life insurance, because the accruals there seem to do much better than any other investment.  Maybe that’s because the investors have it in their own interest to keep that steady.  

    • Sam

      Good question. I’d like to hear some feedback on this.
      I am thinking of converting my term-life into whole-life.

      The general advice in ALL personal finance books is that you get term-life (if you need it/want it) and invest the difference that you would have spend on paying for the whole-term, and you supposed to get better returns.

      • ggxxhh

        with insurance you will get tax deferral and possibly guaranteed rates of return. Also if done correctly you can withdraw tax free. Even though you are paying a level premium the internal cost of insurance does go up as you get older , and can eat away at the returns a bit.

    • MrNutso

      In the 80′s, insurance contract investments were the safest retirement investment though with a low rate of return.  Part of the stock market crash of the late 80′s was insurance contracts investing in other things (i.e. gambling on supposed safe bets).  The result was that over night, insurance contracts became the riskiest investment, and I think are no longer even offered.

      The moral is that nothing is a safe bet.

  • Gussy

    I had a pretty decent 401K until the great Commonwealth of PA awareded most of it to my ex-husband who collected debt while I was trying to increase assets for a comfortable retirement.  Need less to say I am a bitter 50 year old woman.  But I have a good job and will try to recover most of it.  Will NOT marry again!

    • Terry Tree Tree

      I hope you will find a well-off man, or woman, that you get along with well!  Or, I hope you win one or more lotteries?

      • Gussy

        I forgot to mention he also got my pension and the house and I had to pay him support for 2 years.  There were no children and he has a good job.  I will date or something but I will not put myself in a situation where someone thinks I’m there sugar momma nor I will do that to someone else.  The lottery sounds good but I’m just not a gambler.  I’ll just work for a very long time.  He can’t get to the pension until I retire!  Guess who’s not retiring for a very long time!

        • Terry Tree Tree

          Right ON, Lady!!

        • AnitaC1040

          I am so sorry, Gussy.

  • Victor Vito

    I’d love to hear someone address the 800 lb gorilla in the room.  What happens when millions of Americans with no nest egg at all reach an age when they can no longer effectively work or be employable?  Are they “on their own” to live in squalor and misery?  Do we intend to have such a powerful police state as to be able to control these poverty-stricken masses?

    Before you laugh at or dismiss this as a threat, the vitality of youth is not required to pull a trigger or swing a hammer.  And yes, I am referring to violence.  It isn’t a reach to imagine millions of hopeless people turning to violence.

    • Terry Tree Tree

      That will give the GREEDY rich the excuse to have us slaughtered, that they are pushing for!

    • Charles A. Bowsher

       I just read part of Lyndon Johnson’s State of the Union in 1964 where he said;

      “Unfortunately, many Americans live on the outskirts of hope-”

      More and more are living there now than ever before.

  • Michiganjf

    The big SS fix will be to work until you’re 73-75 yrs old… look around you!!!!

    … see many people giving jobs to 70+ year olds???

    Most of us will depend on SS, so what’s the answer Republicans???!!!

    … privatizing SS???!!

    …worthless 401ks, when the markets are rigged to work ONLY for the wealthy and institutions who can game the system with ultra-fast super computers??!!!

    Or how about we secure SS again, paid into fairly and STOP raiding the SS fund for tax cuts to the wealthy???!!!

  • Jim

    I know a lot about the 401k process quite a bit since 1994 when I was employed straight from college. The administrators and even the employers strongly encouraged employees to participate in this plan. Of course, we were living in a technology dream gone bust in the 90s. The interest was so strong that many of my fellow colleagues do not realize we had employee pension.

    Here is my opinion. the 401k plan is one of the biggest fraud in American history. This plan primarily benefits the high executives and CEO of this country.

    What frustrates me the most is administrators keep continuously implied the return of over 10% in the 90s and about 8% after 2002. but they NEVER mention those are not guaranteed percentage return. In fact they do not even mention that participants can LOSE money. I am not going to point fingers at anyone of the 401k administators. but they certainly know who they are. yes, they should be ashamed of themselves. we are talking about hard earned wages being contributed my honest American workers.

    At the end, if the administators give people such a glowing, attractive and too good to be true deal, it certainly is..

    • Terry Tree Tree

      401K administrators, like banksters, got paid WELL?

  • Donniethebrasco

    I hope someone talks about the current pension laws.  Originally the laws were structured to make sure that current managers did not bankrupt companies to fund their own generous pensions.

    But ask retirees of any airline or Polaroid, managers used pension funds to fund their own early buyouts and still bankrupted the company and discharged the pension obligations.

    The overall structure should be changed to create external trusts who have a fiduciary responsibility to report what part of the pension that they guarantee.

    The problem with 401(k)s is that people do not take enough risk.  They need to be encouraged to take risk by guaranteed products from insurance companies.

    Example for a 45 year old employee (with 5 years at company):

    Guaranteed pension at 65 if leave company today – $850/month
    Guaranteed pension at current salary if retire at 65 – $3,000/month

    Guaranteed lumpsum if laid off today – $40,000
    Guaranteed lumpsum if quit company today – $20,000

    Planned return pension at 65 if separation today – 1,200/mo
    Planned return pension at 65 if separation at 65- 4,200/mo

    These should follow insurance company variable annuities with low guaranteed rates of returns, but lock in during high stock market returns.

  • John C

    I have a question, for someone who is locked into his 401k/403b.

    Is the best strategy then if the market is failing the 401k to invest in a Government Bond fund program then?

    I _am_ seeing my fund fall consistently in value, so if I am forced to participate in this program, can I limit the bleeding in putting my strategy in safe(r?) assets?

    • Terry Tree Tree

      Can you put half in Gov’t. Bonds?

      • John C

        Well, they do have programs within Fidelity that are geared to things such as Small Cap Equity, Muni Bond Funds, etc etc., so yes.

        I can break it up half/half but I’m more tempted with the market’s demonstrated continued tankage to go headlong in the more stable, lower yielding funds…

    • MrNutso

      You need to continuously track the returns of the available investments in your plan.  In addition, you need to keep abreast of current events, such as how congress is working, since markets react what goes on politically here and around the world.  What has yet to be mentioned today is that 401k is a full time job if you want to get decent returns.

      • John C

        Thanks for the tip, however I’ve been advised (by a financial advisor who was not working for Fidelity) that to do so would really tend to be counterproductive since funds tend to go up and down, and are adjusted by the fund managers to take these things in account…

        He said you basically wind up chasing the yo-yo, and most who do this wind up taking an average net loss, compared to those who just lock it in and don’t look at it beyond an annual or biannual report.

  • Ellen Dibble

    Victor asks what happens when the unemployable aged are impoverished, Social Security and Medicare notwithstanding.  I think I know, because we have a lot of them in my city.  There are tax breaks for investors to support housing, “public” or “affordable,” where people pay a defined part of their income for the housing.  Cities set up support systems, whether for food, meals, supervision, services on call, etc., and the challenge now seems to be to keep these vulnerable aged separated from the pot-smoking and drug-dealing young who are getting public support (and benefit in a win-win fashion from tax deductions to the rich who enable this kind of arrangement) who try to prey on them.
        No, these seniors have no motivation to increase their income and become more of a contributor to the community.   That is a lose/lose proposition.  They will volunteer, but not hunt around for paid work. 
        It’s a warehousing proposition, alongside the American side of wring as much as you can from the working population.  Capitalism plus.

  • donniethebrasco

    Also, be aware that because of incompetence in the SEC and restrictive laws in the public markets, the private equity and institutional investors have been cherry picking companies to take private and making this investment opportunities unavailable to the general public.

    Active investing has decided to avoid the stupid laws like Dodd-Frank by taking good companies private and not subject to the ludicrous regulation.

  • donniethebrasco

     This is exactly the attitude that will cause retirees in their 50s to miss returns that will help them retire comfortably.

  • http://gregorycamp.wordpress.com/ Greg Camp

    I’m not being entirely humorous.  I’m lucky enough to do work that I’ll never want to stop doing.

  • Glenn

    If older people have to work longer and longer, what will happen to the younger people trying to enter the job market.  There is a lack of jobs for everyone, and it is not getting better.

  • Young Gun

    I am young and looking for to secure a retirement…but I’ve read ‘A Random Walk Down Wall Street’ and it seems that I could invest my $ just as well if not better than anyone working in the investment business. Also based on scandal I don’t trust investors with my $. Is it smarter to make my own investments vs relying on investment companies? 

  • Ellen Dibble

    I am hearing about mandatory 5% right on top.  What about all those student loans?  Don’t the younger generation have mandatory loans to repay first?

  • ghm52

    Increase interest rates on savings! Give people a choice: to gamble with the criminal stock market or put it where it is insured and it will grow!

    • Charles A. Bowsher

       Try investing in treasuries.

  • RonL

    This shows that the  biggest Ponzi scheme was not from Bernie Madoff but rather from Washington and Wall Street, what did the expect with stagnant or declining worker incomes over 30 years? 

    • Charles A. Bowsher

       No,the biggest Ponzi scheme has yet to be uncovered. It is Warren Buffet’s Berkshire Hathaway.  Wait and see.  When he was buying stock in the 1980′s he would “book” added value for any stock he thought was worth more than he paid for it.  The “added return” was reflected in his glowing “income” statements and resulted in the investor frenzy we are all familiar with.  There have now been 30 years of inflated returns and growing investment. The day of reckoning will come after Warren passes on.  And it will not be pretty.

  • Greyman

    Oh, great! An individual mandate for retirement accounts!

  • Jim

    what are your thoughts on using life insurance as a retirement vehicle? I am struggling with this decision.

    • Young Gun

      I would like to know this as well….have generally heard it’s not a great idea..

  • ghoffman

    So glad to hear someone addressing this huge problem! All we hear about is cutting Soc. Sec. with NO alternative or plan for how people will ever save enough for retirement and have their life’s savings in a secure and safe. I have gained and lost in my 401K. Who knows what, if anything, it will be worth when I need it. There has to be a better way!

  • Ellen Dibble

    Someone in a few years will be thinking harder about employment and retraining for senior citizens.  They won’t just dismiss this as:  It’s a lot harder for senior citizens to find employment.  
        Why is that?  If you have X million seniors looking for employment, isn’t that a resource to be tapped?  Pay attention to That!  It may be necessary.

    • ghoffman

      Seniors are a last choice. Their health insurance is too expensive.

  • Bob Letcher

    The crux of the matter is less whether 401k is working than it is about whether the politics of denial of a problem will force not taking that problem seriously.

  • Terry Tree Tree

    DID the people ‘guiding’, or ‘administering’ the funds of 401Ks PROFIT, FAR more than those that they were ‘performing these functions’ for?
      GREEDY rich stealing from people they claimed to be ‘helping’?

  • Micah

    I think there is an aspect missing from your discussion.
    Asking a person with no understanding of the stock market to invest their own
    money through a 401(k) is difficult to be sure. However, another way to look at
    it is the defined benefit plan puts your retirement in the hand of
    professionals that are hired by the company (or government) that you work for,
    where as I defined contribution plan, like a 401(k) gives you the freedom to
    seek professional investment advice from whoever you wish. We have seen big
    pension plans blow up and leave workers with nothing.

  • Rberryj3


    You have a good thing there with the Whole Life. I have one too. You know you can withdraw money from that TAX FREE after a certain number of years. We repalced our roof that way.

    As for the rest, I just cannot belive my friends and colleagues that are relying of Soc Sec. Congress will take those funds. They will NOT be there. Congress steals from SocSec EVERY YEAR…and those “borrowings” have NEVER been paid back.

    I learned the investing world when I was 20. I had to chose what my employer allowed us to chose from in the way of 401K plans. It took me about a year, but I have learned what anyone else can learn. You have to MANAGE your 401K. You just cannot let it sit and hope it will grow. I got out of things before the last crash, bought the banks low, and have a lot to show for that move.

    So for example, look at Europe very carefully. If they go too far down, I’ll move out of equities again and run to bonds or perhaps even gold. You just have to learn the way this all works, and I have to say, if I can do it, anyone can. It is not that hard, really. You just have to take to the time and learn how it works and what to do.

    • Ellen Dibble

      I didn’t know about that tax-free bit.  I think all my money is available tax-free now, which is a good thing, because I’m earning more post-65 than before.  I get a headache when I think about tax returns from here on.  I sure do NOT have time to keep an eye on my investments, but sitting and watching them from the sidelines has worked out pretty well.  I was able to put some aside in my 30s, which probably most people cannot, due to children.  No family, but some security.  The way the USA works, if you have fall between the cracks in the medical system, if your occupation does not contribute for you that way, or if you are putting a few children through college, either way, you can pay out the cost of a mansion or so and find you have, as a result, no future.  So people go back to school, arranging a second act to begin about age 60.  Hopefully that works out for you.  It’s a gamble.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    If (actually when) the US has its Greek moment, everyone’s 401k will be toast – as well as their SS and Medicare.

  • Julia

    …assuming you have a job with benefits that offers you a 401(k)…

  • Chris

    Everyone I know has lost at least a third of what they put in their 401k.

    They and myself would have been better served to bury it in the garden.

  • Still Here

    Personal responsibility appears to be dead in this age of coddling by the state.

    No 401(k) mandates investing in stocks.

    • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

      Many companies offer very limited choices.

  • Yar

    Come on Tom, The numbers don’t tell the story.  Money is a false horizon, value is what you can get for your time.  When Wall Street gambles instead of builds companies with value, we lose. This guy sounds like a used car salesman.   

  • RjF

    What about a safe fund held by government that pays a reasonable return (NO FEES) if held long term…
    Can even pay off the national debt while were at it!

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    I’ve always wondered if 401k investment strategies are being used to benefit us, or a few “preferred” customers.

    • Chris

      Ha ha ha. It’s called dumb money on Wall Street. And they take it from you.

      • TomK in Boston

        Exactly right, and just think how hard they are lobbying to get SS money turned into dumb money!

        • AnitaC1040

          Jeepers, TomK, you are my hero. Get a talk show.  ;-)

    • Dr. Brown

       now you know

  • Charles A. Bowsher

    This topic should be a loud wake-up call
    to all Americans that Paul Ryan’s budget plan would be disastorous
    for most of us. He and the Repugnicans want to privatize Social
    Security and voucherize Medicare. Can you imagine your early
    Alzhiemers afflicted parent, friend or God forbid yourself making a
    decision each year which carrier to choose? Do everything to defeat
    every Repugnican running for office this year. That is our only hope.We need to remove the caps from income subject to Social Security

    As for alternatives to 401-k’s I would
    push for all workers at all firms putting aside 5% of their wages
    into a general pool as the young lady said. I would tweak it a
    little by pooling those moneys and using an actuarial payout based on
    life expectancy and number of hours worked over that persons
    lifetime. Their working salaries would not affect their payout. This
    would reflect the fact that they are no longer contributing to the
    companies bottom line when they retire and they were already paid for
    their “value” to the company when they worked.

    Arithmetic!? Get this bozo off the
    line. If he isn’t familiar with Actuarial Science I suggest he
    find another field!

    Problem with the “encore” career is it robs a job from someone else.

    • Chris

      The Paul Ryan budget is the Republican answer to the deficit.

      Impoverish the elderly. Drive them to the streets and death follows not long after. 

      No need to pay for Medicare and Social Security.

      Deficit solved.

      • TomK in Boston

        Actually it’s even better. It screws the elderly and does NOT solve the deficit, due to cutting taxes at the top even more. Then they can demand to screw the middle class even more. That’s how “starve the beast” works.

        • Terry Tree Tree

          Everyone that is not a GREEDY rich, is the beast?

    • TomK in Boston

      The ryan budget is simply class warfare. Private SS will be like a 401(k) while current SS is like a real pension plan. Follow the money. Switching from real pensions to 401(k) has cut corporate costs, and the extra profits flow to the elite while the workers get less. Result = redistribution to the top. Ditto ryan medicare Groupons will shift more costs on seniors and allow continuing ultra-low taxes at the top. Result = redistribution to the top.

      The other nice class warfare aspect of the 401(k), or private SS, is all the fees collected by wall st. Believe it, the banksters are drooling over the prospect of getting their hands on SS money. Once again, more $ flows to the top.

      Finally, sorry to say, most individuals are idiots when it comes to managing their own money.

      • Phylliszim

         All too true — I just love the “Tea Party’ idiots who claim that programs designed to help those of us who make up the 99% amount to “socialism” or “social engineering”! Please let’s vote these morons  out of office.

        • TomK in Boston

          Please, indeed, and the “socialism” shtick is one of the worst Big Lies. Taking a baby step back toward the great capitalist system we once had and away from the ryan hunger games version is simply choosing better capitalism. The “class warfare” tax hikes on the 1% that have been proposed take their rates from all-time lows to simply very low. Cry me a river.

      • AnitaC1040

        Well said, Tom…again!

    • Phylliszim

      Hear, hear! All points well said.

  • Csg52

    You have a large percentage of the population coming out of college who are out of work, often into their 30s and 40s. How are they going to have 40 years to contribute to 401Ks? All I do is watch my 401K go down as I’m ready to retire. My sons work for companies that offer nothing, not even health benefits. This was nothing but a way to feed the gambling habits of brokers and bankers.

    • AnitaC1040

      Bravo, Csg52

  • Ellen Dibble

    The idea that older people should stay out of the labor force because we have too many people — what is wrong with this picture?  The issue of jobs…

  • ghoffman

    Will there be jobs for all the seniors added to the work force? We don’t have enough now!

  • Adks12020

    One major difference between various 401Ks is employer matches.  The guest just mentioned employer and employee 15% contributions.  That’s all well and good, if that actually happens.  I don’t know many employers that will contribute 15% of a salary to a 401K.

    My employer matches 25% of my contribution up to 6% of my salary; that doesn’t amount to very much.  My girlfriend’s employer, on the other hand, matches 100% of her contribution up to 6% of her salary.  That can be a huge difference in the end returns. Her statements are evidence of that.  She makes less money, her investments are very similar, she’s been in one about the same amount of time, and yet her balance is 3 times the size of mine.

    401Ks can be great, if the plan is good.  If a person doesn’t get much of a match, it’s not nearly as good.

    • Still Here

      So switch jobs and perhaps your current employer will see that their benefits don’t stack up well.  Nothing prevents you from saving more on your own and looking at other tax-deferred options.

      • Adks12020

        Switch jobs…yeah, that’s easy right now.  Give me a break.  I’ve been searching for another job for almost 3 years.

        The problem is that employers are matching less and less for newer hires to cut costs.  My employer knows what they are doing. 

        Nothing is stopping me from saving more on my own except my salary.  When you don’t have much money to save you can’t save in more than one place now can you?

        • Still Here

          Nothing’s easy.  Maybe your girlfriend’s company is hiring.  You can almost always save more by spending less. 

          • Terry Tree Tree

            What part of he’s been looking for 3 years, did YOU not understand?
               It’s EASY, for the GREEDY rich, that have other GREEDY rich, to hire them to ‘outsource’ jobs, so they can get GREEDY richer?

          • Still Here

            Every day you confirm your wife is a saint.

          • Terry Tree Tree

            Want to marry her, and find out for yourself?

      • Terry Tree Tree

        In the DREAM world of the GREEDY rich?

  • Julia

    Young Americans: Are you kidding? Some of us young Americans are lucky just to get a j-o-b, let alone a job with benefits!  What’s a 401(k)?!

  • MadMarkTheCodeWarrior

    Reality check – all people can not work longer and longer: people wear out: wear and tear, accident, injury. such unfortunate folks can not physically do the work… and then there is agism. This is reality.

    Right wing politicians are making this key to their plan to address deficient retirement plans. Embracing magical thinking is insanity. Would you go to insane doctor or an honest one.

    • TFRX

      There’s also the Plumber’s Crack: The “average” life expectancy we keep hearing about since the onset of SocSec isn’t distributed evenly.

      I don’t know about these guests, but the rest of our media is full of “shower before they work” people making grand assumptions about the health 60-something folks who “shower after they work”, and they should suck it up and work a few more years before SocSec, for the projected life expectancy that someone in their economic strata simply is not going to have.

      • AnitaC1040


  • J2d2ca

    The obesity epidemic is also arithmatic – calories in/calories burned, but look at the US.  Our human behavior is just poor – we tend to not do what we should.  The same goes for retirement (and health insurance, for that matter).  I feel a mandatory system for many of these social issues that affect all of us is probably the best choice.

    • AnitaC1040

      What are you, the food police? It is not that I disagree with you, but our parents generation, the Greatest Generation, smoked like chimneys (cigars, ciggarettes, pipes), drank highballs, old fashions and martinis all the time, sometimes through pregnancy, they didn’t work out like the baby boomers, they didn’t use seat belts. They ate what they wanted. And yet, they got their pensions and SS. The baby boomers on the other hand, work out…when they can, gave up smoking, eat organic…when they can, take vitamins and try to do the right thing.  NOW you want to take away our old age insurance?  And I know many baby boomers who commute 2 hours, or an hour and a half just to get to work, like me. The best we can do is work out on the weekends, because we eat at our desks and are afraid of not performing at high levels. Just leave the seniors alone…give them the information and education, but don’t penalize them for working all their lives. And some of us run from work to take care of other family members.

  • Aufst2

    In these discussions about working later into life I rarely hear any acknowledgement that those with very physical jobs simply cannot do them into their 70′s.  The idea is plausible if you are at a desk for most of the day,  but please consider the other 50%.

  • AJ

    I’m 28 and terrified by this conversation. What can I do at my age to avoid falling into this trap?

    • Chris

      Move to a socialist country.

    • Ray in VT

      In part perhaps live cheap, try to limit your expenses and squirrel away what you can.  I know that it’s tough in our economy, but we’ve gotten away from frugality and saving over the year in favor of material goods that seek to satisfy immediate wants.  Not everyone goes that route, but certainly many in our nation do.

    • MrNutso

      Save as much as you can.  Pay attention to current events around the world.  Don’t go out to eat.  Limit what you spend on non-essential consumer goods.  Think about your future life, marriage, kids, parents future needs, etc.

      Find out what your employment track prospects are.  I have an advantage of being a shareholder in my company, which will buy back the value of my investment when I retire.

  • Chris

    THat’s right. Our wages are going DOWN.

    Health insurance is rising, rent is rising, utilities are rising, there is no “extra” money.

  • Walker

    The reason why many of the current 401K plans are so small is because the conversion rate (from regular retirement plans to 401K plans) was so low…effectively sealing 40% to 70% of the value of the regular plans.

  • Robert E.

    My generation (I am 66) deserves every bit of economic hardsahip it gets. That includes me. We have spent a lifetime spending money we didn’t have. Now the chickens come home to roost. It’s way too late to fix with more of the same nanny state intervention which put us here.

    • jefe68

      So let’s just kick all those folks, including yourself, to the curb. Let them become homeless and left to live out there lives in poverty.

    • Steve_T

       Speak for your self. Say me or I. I have saved and lived a very reasonable life style, I have never owned a new car, or expensive house.  You think that a whole generation set themselves up for failure? Clue: what power did we have in making all thees bad economic decisions? When Our parents were really making the decisions 30 years ago. Nanny state intervention, hope you don’t fall through the cracks. But from your post I guess you think that anyone who does deserves nothing.

      The next time you see a homeless person about our age remember, that could have been YOU! But for the grace of chance.

      • AnitaC1040

        I agree with you Steve_T. My husband and I live a frugal life. No vacations, a modest home in a mill town, that everyone made fun of. I have never bought a new car. I don’t have a smart phone or wide screen TV, no HBO or other movie cable channels. We actually have been talking about dropping cable all together. I will be 58 in June and I had nothing to do with all this deregulation mess that the right wing voted on during the 80′s, 90′s and the Bush administration.  They are all theives. And the Wall Street speculators are drooling over getting our SS benefits in the form of privatization.  I remember Bush talking about privatizing SS. I believe many right wingers hold this belief, but because it doesn’t poll well, they don’t talk about it as much.  I went to a state college and today those are very expensive for working class people. My postal worker father managed to send both his kids to college and take a 2 week vacation down the Cape every year. My husband and I have never taken a 2 week vacation and we certainly can’t afford to vacation on the Cape, ever. We pay off our creit cards as soon as we get them and do our best to save. I still worry about our retirement. Both my brother and I were laid off in our 50′s. We don’t get pensions, through work. My generation is the generation that job hopped to get a salary raise. I have also been laid off multiple times and have not had enough time for getting a pension plan. My highly paid professional brother is now living with his mother in law, just scraping by, no one is hiring him (he is 4 years older) and my husband and I live in fear that our contract jobs will lay us off at any moment. Please, Robert don’t say we are lazy or greedy. “Nanny State” that is like the right wing dog whistle. Is that what you called America in the 1960′s and 1970′s before all the right wingers and blue dog dems got a hold of our economy? My 89 year old mother can retire in some comfort because of my fathers decent pension, her SS and some savings. We don’t have that now. Corporations just raid their pensioners or go bankrupt leaving their employees and retirees with nothing.

  • Ellen Dibble

    If Mr. Wray thinks people have steady incomes and steady demands on those incomes, he’s remembering a few decades back.  Nowadays, there are cascades up and down.  The thing to do is instead of a big car or house, set aside that money; do that for a few years, and then — then DO NOT count on it.  It may vanish.  Instead, start to plan for a couple of careers to have on the shelf, ready to pull off if need be.  Part of the nest egg is so your Second Act or Third Act will be a preferable occupation, not something worse.  In this economy, there are significant sacrifices in being reasonable about life planning.  You can’t be secure enough — will I be run over by a bus?  to move in ways one might choose.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    “According to Fidelity Investments, the average 401(k) balance among its 11.8 million accounts increased to $74,600″

    According to Fidelity a couple is also going to need $240k for medical expenses in retirement. Good luck with that $75k in your 401k plan.

    • TFRX

      What’s the last thing a bad investment advisor says before drowning in a stream?

      “Don’t worry, it averages a foot deep!”

  • http://gregorycamp.wordpress.com/ Greg Camp

    Colleges these days are getting away with staffing classes with adjuncts like me.  That way, there are no benefits to give.

    • Still Here

      Is that because so much of the cost structure is devoted to less productive endeavors, or at least only tangentially related to education? 

      • http://gregorycamp.wordpress.com/ Greg Camp

         That, and budget cuts by the state, thanks to dropping tax revenues.

    • jefe68

      I hope you’re looking for a way out. If you’re over 45 the chances of getting a full time job in higher ed is not good.

      The for profit schools are even worse, they burn people up like there is no tomorrow. If you can avoid them like the plague. 


      • http://gregorycamp.wordpress.com/ Greg Camp

        I do free lance editing work, and I write.  Good luck, eh?

    • Terry Tree Tree

      Administrators’ pay went UP, didn’t it?  Probably WAY up?

      • http://gregorycamp.wordpress.com/ Greg Camp

         Right in one.

    • Phylliszim

       AMEN — as tuition continues to climb toward the heavens!

  • http://profiles.google.com/rickevans033050 Rick Evans

    To the guy who a 9:44AM is saying no one has 5%. LOL. Of course we do. If no one with income had 5% to save, Comcast, McDonalds, Dunkin’Starbucks, etc.etc,etc would be going out of business.  Also houses are 50% bigger than years ago. The lady has a good plan that might need a few tweaks but it deserves a really good look.

  • ScottLayden

    AMEN to allowing common citizens to allocate (or mandate) 5% of their income to government run pension plans like CALPERS. I would sign up today! 

    I run a mortgage branch in a middle and upper middle class area (Franklin, TN).  Day after day clients come in that have almost no chance of retiring based on their virtually nonexistent savings and retirement accounts.   If they had personal retirement accounts…they got wiped out in the recession as they tried to keep their businesses afloat.   And this is an educated area.

    For the rest of the United States, it’s ludicrous to think that an under financially educated group of hard-working salt of the earth people like I grew up with in the mill-based economy town of Oregon City OR should be managing their own personal retirement accounts.  They simply don’t have the education, and the habits of savings are not part of the culture.
    Any any baloney about “accountability” only is fair if the individual KNOWS the risks.

    By pulling the rug out from under the populace removing traditional pensions, but NOT requiring education, is akin to knowing that cigarettes cause cancer and not telling them!  It’s setting them up for failure.

    We need a conservatively run, real program for real people, like a fully funded and untouchable-boy-spenders Social Security PLUS where a worker can choose to put up to X% more into that account and it will perform at levels of, say, social security….at least. 

  • GG

    I am a 26 yr old x finacial industry empoloyee working a new company that offers a 401K plan. I do not participate because the opertunity cost of the funds is to high on a market that is volitile.

    if you company contributes that barley covers the fees associated with a mutual fund. Now you have to hope the markets increase or your hard earned money is disapearing. Better off opening a hotdog stand.

    Then you have all these firms taking “soft Dollars” cutting into returns. Why would I take the risk?

  • http://gregorycamp.wordpress.com/ Greg Camp

    Lying around, not laying around, unless you’re talking about laying a nest egg.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    70% of our economy is based on consumer spending – what happens when a big chunk of our population is old and broke?

  • Still Here

    Here she goes, another tax coming your way so the state can coddle more. 

  • Swanlake N

    I think a real secure safety net for retirement and universal single payer health care would be a huge driver of innovation and creative entrepeneureship because a gift group of people would be freed to start businesses, take risks and take creative risks. So many people are stuck in crappy low wage jobs to keep insurance, keep benefits, pay student loans, etc. And they don’t go out and act on their wonderful ideas that could generate jobs for others and drive a new, dynamic economy. The only people who can afford to take risks now are the very young and the wealthy, but think of all the great innovations that could come out of the reat of us!

    • Chk2000

       I am self employed, have lived frugally my entire life and have a good savings yet I am still worried as I am only 50 and I cannot fathom buying my own health insurance until I’m 65 (and reportedly will be eligible for Medicare).  Right now I pay $560.00 a month with a $2,000 deductible and since I’ve had a deductible for the past two years have had to FIGHT to have my yearly ‘well’ physical covered.  Recently I was injured and am hoping my injuries will heal on their own as I don’t want to shell out more to get treatment.  Tying affordable health insurance to employment is unfair as as nora said, keeps many people in jobs they would otherwise leave to be innovators.  Just don’t get sick or injured or someone who saved their entire life and spent thousands on health insurance can still go bankrupt.  Why does one have to sell their soul to a corporation in order to afford health care in the USA?  It just doesn’t make sense. 

  • Kathy

    Please god, the answer is not perpetual employment. We have several employees in the 70+ age range. Nobody is going to fire them because it would be unfair and because they desperately need the money. However, the hand holding required is ludicrous and in some cases, the work they do is less than the work required to supervise them. Add that to the fact that there are young people who desperately need jobs and the whole thing is a disaster. The answer is not to work later in life, the answer is to bring back mandatory retirement and some system that gives people a decent life when they do retire.

    • Phylliszim

       Hear, hear!

  • Walker

    If you want to continue the 401K plans, you need to prevent them from being uses as a temporary savings plan.  You should NOT be able to withdraw from these plans for education or other major purchases. 

  • http://www.facebook.com/people/Jessica-Pellien/100000963829327 Jessica Pellien

    Teresa Ghilarducci’s book When I’m 64 spells out her proposal and the looming crisis in great detail. 

  • Alan in Auburn, AL

    Where will the stock value come from?  I.e. if millions more start willingly, or by mandate, putting money in stocks, that’ll drive up stock prices.  But won’t that just be inflating another bubble?

  • Roynilson

    Joe in Texas forgot to mention that if you do re-enter the workforce while on Social Security, your earnings are capped and if you exceed the cap, you have to give money back.  And heaven forbid, if you file a Schedule C (self-employment) the fuel assistance  regulations count 60 percent of your gross revenues as “income” to determine eligibility.

  • Steve_T

    Working longer? How do you do that when you can’t find a job?
    I just hit 60 NO jobs for us old folks. Even tho I can work circles around a guy half my age.  I can’t even get the chance to show what I can do. So when do I retire? SS is not going to be an option for several years. They still shot horses don’t they. Both of the panelist make me sick.

    • Phylliszim

      Welcome to our world, Steve_T! See my post above.

    • AnitaC1040

      Yes, Steve. I am as scared and pissed as you. Both my husband and I were laid off in our mid 50′s and now we work as contractors. We have to pay for private health insurance which is horribly expensive. We have no benefits, we are afraid of taking a day off and we both know that at any monment we could be laid off. Just recently, my husband’s boss told him he was too expensive. We are both scared. I wanted Obama to lower the Medicare age so that we who are close to retirement could at least have health insurance. I know once we lose these jobs, we are done for. Sell the house and flee to someplace cheaper and hunker down until SS kicks in. Hopefull finding small jobs (joke, joke) to tide us over. It ain’t pretty out here. I don’t think that most of the elites in charge know what is going on in America because they seem to be hanging out with their campaign donors. Maybe some know, but they won’t or can’t address the issues because of their Wall Street donors.

  • GG

    Why work and contribute to a plan simply to pay fees and soft dollar payments to advisors and brokers. Then keep your fingers crossed that the market goes up.

    Now I am working not only for my boss I am working for the crook advisors.

  • Cragin52

    Recall that George W. Bush wanted to convert the Social Security system to a 401K-modeled system. 

    • captnboston

       and the chance of receiving your SS plan before you die is???

  • Kate Mortimer

    I am a retired teacher, living at nearly the poverty line, and I am also a baby boomer.  I am not alone.  Your “expert” who claims that the retirement situation is not worrying is WRONG!!!!!!

  • Ellen Dibble

    Ghilarducci is not focusing on jobs for seniors at all.  She just says we don’t have enough jobs.  I think I know why.  I’m doing enough work for two or three; in a better coordinated economy, I could be training people and hiring people.  My experience and knowledge of the economy and environment for such skills could provide open doors for many jobs that otherwise could be done a lot worse, or possibly even sent overseas.  instead, there is a crowding, a squeezing.  And an inflexibility that makes it tough to get the time and energy and skills where they are best deployed.  Young people can do this too.  So can older people, but it’s tough.

  • Richard_haglund

    Ask your 401K proponent to do the arithmetic:  9 trillion dollars divided by the population of the United States is $30,000 per person.  It’s not enough …

  • Ghee

    Please stop saying “nobody does that”. Let’s reeducate and DO THAT! Let’s change the mind set from feeling entitled to taking personal responsbility for our futures and retirements. Putting away at least 8% of my pay, and also taking advantage of my companies matching funds which you can look at like free money or a salary increase (they moved from pension to directed n recent years), is what I do before anything else! Before I choose my housing, my transportation, etc. 
    Let’s also relook at our lives and expectations. If we are living longer why do we think we still should retire at 65? That was for people who only expected to live a few years beyond that target age.

    • Phylliszim

      Ghee, you obviously are not in your 60s yet. Please see my post above for the “real deal” about when you “choose” to retire. Those of us over 55 or so know how it feels to be summarily CHOSEN to retire!

  • Charles A. Bowsher

    I think when we are in crisis mode now.  When 20% own or control 88% of the country’s wealth the game is over.  Why even play?  It is time get out our white handkerchiefs and surrender.

    We need to start a new game based on time, not money.  Let money serve us for luxuries, while our time provides our necessities.  Inflation is here and is growing widespread. It started with one pound boxes of graham crackers being reduced to 14.4 ounces.  That is a 10% increase in price and nobody noticed.  It’s not just graham crackers, it’s everything.  Open your eyes America!

    • Steve_T

       Yes I noticed, and true not just graham crackers, just about every thing is less for more. I have seen this happening for years, I stopped buying a few things I like, do to the fact that the price did not reflect this. If I want to buy a pound of something charge me for a pound don’t change the amount and charge me the same, that’s a gimmick to cheat  people.

  • Joe

    The 401k system is broken but can be fixed.
    1. Companies need to offer more options to employees. Most plans only offer a small amount of choices and not all of them are good investments.
    2. The tax structure needs to change to a lower tax amount so that you can pay at the rate that investors pay since it it a long term investment.
    3. Employers should invest the match amount even if the employee chooses not to invest.

  • Still Here

    Congratulations to the saver!  A good example for the rest of us. 

    • Terry Tree Tree

      The savers that LOST money in their 401Ks?  The savers that lost money on the homes that banksters STOLE, with improper, or fraudulent foreclosures?
         OR, just those that SAVED the banksters, frauds, and MAJOR investors?

      • AnitaC1040

        Wonderful Terry!!

  • http://gregorycamp.wordpress.com/ Greg Camp

    And who’s going to pay for educating Americans?

  • ghoffman

    The photo of the 401K eggs in the nest should have shown a broken one with the egg spilling out.

  • nora

    Want drive innovation, create new businesses and create new job creators? Give us a real safety net and universal healthcare and all the smart people currently stuck in crappy jobs for the benefits will take risks, start businesses and create a whole new vibrant economy.

    • Ellen Dibble


    • Chris

      So true. I have met so many really smart creative people doing meaningless, useless, stupefying jobs.

      So much talent and brains being wasted.

    • AnitaC1040

      Love, love, love what you said. My sentiments exactly. That is really the way to set us free.  Maybe “they” want us stuck in those crappy jobs instead of allowing us the freedom from their soul sucking jobs.   ;-)  I would love to start my own business. I am sure there are others who could join their talents together right here on this thread who could do it together. But most of scared of losing their security. I am excited just thinking about it.

    • JGC

      You are so right, I just don’t understand why employers have to be responsible for healthcare. It is not their business.  I am sure most would be glad to give up that responsibility, just like they are trying to devolve the 401K.  A baseline safety net would serve everyone .

  • Kate Mortimer

    I am a retired teacher, who HAS to work to make ends meet, I have no 401K, little savings, I am a “baby boomer”, and I STILL am living near the poverty line.  Whoever thinks that we have nothing to worry about is VERY misinformed.

  • http://profiles.google.com/rickevans033050 Rick Evans

    One of the fastest growing industries over the last 20 years? Storage. That’s were much of American’s savings have gone.

    • Still Here

      Because they put prior year savings into stuff they didn’t need.

    • Saving Stuff vs. Money

      Indeed….I was spending about $200 a month on storage for multiple years….and I don’t have a retirement account.

      • AnitaC1040

        Really? What were you storing?

  • GG

    Hey Ghee….I am taking your 8% in fees thanks for contributing to my car payments. Then I am going to hold the markets hostage and take away about 10% of your market contributions over the past 10 years. Thanks for working for me. Keep contributing; should increase it to 10%.

  • Jockaplin

    The show was essentially a debate between theory (David) and practice (Teresa). In theory the 401k is an ok idea – let’s you control your own retirement with the possibility of doing really well if you know what you are doing (though we’ve recently seen that even the “experts” don’t always seem to know what they are doing), but in practice people are not always good at saving and investing. I knew many people who took their 401k’s out of the market at the bottom of the crashes that seem to have become regular events, because they couldn’t stand watching their savings keep falling. 
    The fact is that the 401k is not a safety net, and that some people will do well and some won’t.

    • Terry Tree Tree

      The executives of these ‘plans’ DO WELL, while clients may, or may NOT?

  • prude

    the way to get a bunch of money into a 401(k) is to put a bunch of money into a 401(k).  it is a behavior issue and some people can behave and some cannot behave in a prudent manner.  being prudent is dorky but it is the only thing that really works.

  • Joe Smith

    I am a CPA. The 401(k) is not wrong. What is wrong is the way workers perceived it years ago.  Instead of rigorously saving 10-15% of their income, they wound up spending the excess the employer’s could pay out in the good times. Middle-income families with dual incomes, buying big houses, boats, all the other toys childhood couldn’t provide (because their parents were frugal post-war adults), spent what should have been plowed into 401(k)s since they were no longer getting defined benefits (pension) plans from their employers.

    It’s an unfortunate fact of life that as an adult you have to look toward the future as well as having fun now. You learned this with the fable of the ant and the grasshopper and it’s no less true now than when it was first told.  Not having enough set aside from dual incomes is your own foolishness. Those living on one, while difficult, should have set side money for the winter.

    Two other things: Employers not only got out of pension funding but for the least little excuse don’t contribute their match to the new 401(k)s without fail.  That amount, while usually capped, by not being contributed, has put the WHOLE amount of funding on their workers.  That IS wrong, it’s a public policy issue that needs government intervention to change (meaning making a match mandatory despite the company’s economics).  Companies and their senior management fail to be a good corporate citizens when they do this.

    The investment companies mislead the public with their insistence and marketing that you have to work longer. Why? Because you will put more money into their 401(k) products and keep them in there longer. Better for their bottom line, for sure. But, frankly, MOST people when they hit their 70s are not going to want to, if they even can, haul off to a job 8-5, 5 days a week; or any work at all. And you don’t need 70% of your pre-retirement income when you’re in your mid-80s!

    I’ve been out of work a number of times.  However, after spending 40 years working, living modestly and saving (even in the hard times), I plan to retire, with reduced social security at age 62 and that’s it.

    • Guest

      I’ve had clients ask about financial planning, and they think that there is some trick to it.  When I explain that the trick is to put as much money as allowed into a retirement plan and don’t pull it out until age 65, start a college savings plan when a child is born, live modestly and under your means, and save money outside of the retirement plan for emergencies, many lose interest in financial planning.

      • Still Here

        Too practical for this audience which is used to getting all it wants and more.

      • RolloMartins

        The gov’t limited the amount I could save to 3%. So saving enough was–and is–quite a trick. Why couldn’t I put as much as I wanted??? What business was it of the gov’t?

    • Terry Tree Tree

      The company executives got THEIR ‘compensation’, whether the workers did or NOT?

    • Phylliszim

      Not all of us, Joe! Some of us have been driving the same aging cars
      for years, have modest homes, and kids that just finished college. No fancy “toys” for us. We
      DID save diligently for many years — since we were in our 20′s — and
      we’re now in our 60′s and just hanging on. We lost years of hard-earned
      savings. PLEASE don’t paint all of us with the same brush ’cause it’s
      incredibly annoying.

    • ellen

      Having fun???? Come out from under your rock, mr. cpa. Don’t apply your experience to millions of others from a sanctimonious lectern. Your naive comments are from la la land, with unrealistic views of how the majority have to struggle to get by–much less pay for housing, education, health care and retirement. These basics are getting more inaccessible for millions of people, who are not having fun.

    • RolloMartins

      Would have loved to have saved 10-15%. The trouble, Joe CPA, is that there was a federal regulation that targeted my rate to all my fellow employees’ pay rates. They said I could save no more than 3%. Gee, thanks for that. And they didn’t match. If a company such as the one I worked for only hired minimum wage jobs even the management at the stores would only be able to save at a top level of 3%, which was nothing. Tough to make that up now. Actually, impossible. 

    • Mwn560

      I think another benifit to a 401k is, when you die whatever is leftover can go to your kids. SSI is not inheirtable. The 401k choices in my plan are horrible, however the employer 3% match makes me keep putting away, plugging along. The longer I work the less jobs for our young. I’m 56 so I got another decade to go. I would rather buy silver dimes than be in my 401k, but the match just keeps sucking me back in. 

  • Glenn Koenig

    Hey, we’re only human.  We’re optimists.  Meanwhile, the world  population of humans has outstripped the planet’s carrying capacity for us.  Yes, some predicted that this would happen, but most people did not have the foresight to understand this, much less do anything significant about it.
    Sadly, there is going to be a lot of unexpected results as we go along.  Check out “The Great Disruption” for the science behind this and the surprisingly optimistic analysis by the author, as we transition to a radically different society and culture.

  • jimino

    The defined benefit retirement plan, honestly funded and managed by professionals with a fiduciary obligation to its beneficiaries, provided as a bargained-for benefit by a life-long employer, is the single most important feature defining the “greatest generation”.  The widespread financial security and sharing of the overall benefits created by our economy represented by it has been destroyed by the “bad-money” (see Kevin Phillips) financial sector that now rules (literally) the world.

    • TomK in Boston

      Exactly right. The oligarchs have been attacking our once-great middle class society for a long time, and real pensions were one of the first things they destroyed, turning them into 401(k) and big fees and chances to remove the “dumb money” from the naive investors. They killed home equity, unions, decent wages, low-cost public higher education, with a river of payments on student loan debt flowing to the financial sector, and now SS and medicare are in the crosshairs. Amazingly it seems all they have to do is yell “deficit” and the Useful idiots go “Please! Take more!”.

    • AnitaC1040

      I have read Kevin Phillips. Good man. Where has he (and his voice) been lately.   Also, I agree with what you wrote. Nicely put.

  • Usvi2u

    I’ve contributed to IRA funds for all my working life but it will never be enough to completely stop working. With some luck, I may be able to work less as I get to “retirement age”. I’d be considered a skilled trades person/artisan. What would really help me now and would have saved me thousands of dollars in the past would be access to good healthcare that is not connected to an employer.

  • Phylliszim

    I’m upset that two huge “elephants in the room” were ignored by Mr. Ray, who seems to live in some financial Cloud-Cuckoo-Land.

    1) What about the multitudes who, like my husband and I, were unceremoniously thrown out of our highly skilled professional jobs AND OUR CAREERS in 2009 at ages 61 and 59, just as the Supreme Court made it nearly impossible to sue for age bias? We got no responses (much less interviews) despite hundreds of job applications. We are just getting by with meager part-time work, and we still have student loans to pay off.

    2) What about those who left work to care for sick kids and/or elderly parents? These are jobs too, exhausting and difficult. There’s no social security or retirement program for these, which can consume years of a working person’s life. This especially penalizes women (who still make less than men in most jobs when they ARE working) — my potential Social Security payments are a fraction of my husband’s. We are now 64.5 and 62 years old, saved diligently since we first started working, and have lost years of hard-earned savings in the financial debacle. 

  • AnitaC1040

    I know this point is “off topic” but with so many of us relying on the Stock Market and investing to help with retirement, I was wondering if you could have on your show again, Justin O’Brien. A few years ago, I believe it was your show he was on because he had just written a book called, “Wall Street on Trial” in 2003, indicting the entire system. I went out and bought that book. It was quite interesting. I believe he has written another book more recently. I would be interested to hear what he thinks about the 2007 world economic collapse and it’s effect on retirement savings and the wisdom of putting money in the Stock Market or IRA accounts for regular US citizens, specifcally because there are no safe guards for the Market, since the repeal of Glass-Steagall Act in 1999. Also a government who thinks that deregulation is the way to go, a corrupt political system fueled by Wall Street campaign donations and the whole trust factor that plays into how they (both DC and Wall Sttreet) are perceieved by the public.

    • TomK in Boston

      This is off point too, but you gotta diversify your investments. During the Bush crash and now during the euro mess assets perceived as safe, like T-bonds and high quality munis, go up. So does gold, tho personally I wouldn’t touch it except to trade. They don’t move up as much as stocks go down in a crash, but they sure are a huge help in stabilizing the portfolio. Nobody should have their whole portfolio in equities. 

      • AnitaC1040

        Thanks you, TomK. I do remember my father advising me to purchase safer retirement assets like T-bonds.  Both my husband and I have tried to diversify our savings and have managed to save a great deal. (We don’t have smart phones, or get HBO, do not take vacations, we only have one meal a week out-as a date night, we live in a mill town so paid off our morguage well over 15 years ago and frankly we are much better off than our siblings.)  As far as our finaicial adviser is concern we are “on track” as we head into our retirement years in a few years time. But I still worry, as both of us are contractors and could be out the door, job wise, at any moment. Leaving us in our late 50″s with no prospects. I have started to look in the US and abroad for cheaper places to live at this point. I fear for my siblings and my in laws.

  • Dave in Vermont

    Hi Tom,  I enjoyed your show about the 401k and Social Security.  However, I did not hear one word about the devastating effects of bad health on retirement.  I did not hear the whole show but believe me one bad illness can wipe your slate clean and no one is sympathetic to your plight.  We all think that all is going to be well forever.  My health is great, but I have a sick wife and everyone thinks that since we have a good healthcare plan that should be enough.  It is not!  The hospitals and other healthcare providers all have the system rigged to overcharge Medicare and then pass along whatever they refuse to pay.  The results are devastating.  Each provider can charge whatever they choose for each item and there is no standard rate for each service.  We received a charge of $500 today for a 5 minute check to just to determine that an oxygen concentrator machine was working properly.  The difficulty level of that procedure is about equivalent to a mechanic testing your car battery for a dead cell.  There is no security social or otherwise for the ill among us.  Please address the health issues related to retirement or the picture you present will not be complete.  I had a good job and retirement plan plus a good benefits package including a 401k and a better than average premium healthcare package but my 401k is quickly being depleted due to these circumstances that we have no control over.  Thank you for airing these issues.  Regards, Dave in Vermont   

  • Dasturtz

    Hi Tom. I was equally disappointed and uneased by the respondents giving their closing arguments based on what they “believe” and not by citing well-researched data. Closing statements like “I believe this will be hard work we need to do one person at a time” for defense of a private retirement approach do not add significant information to the study but rather simply communicate an opinion. We need dispassionate problem-solving rather than competing opinions and beliefs based on different data sets or worse, mere opinion.

  • leo from chicago

    The 401k is a joke and a fraud.  Many of us are working two or three jobs just to keep afloat and make ends meet.  Our incomes are so low — even working those jobs — that there’s nothing left to contribute to a 401k and since employer contributions are based on our pathetic incomes, it can only guarantee a pathetic retirement.

    So here’s the game plan: work 50-60 hours a week, maybe get one day off (Sundays) if you’re lucky — and be forced to do so till the day you drop dead.

    • Zing

       There are many good death benefit plans available.  Every cloud has a silver lining.

  • leo from chicago

    “Getting them to save”?   Yeah right.  You hear that all the time on ‘market’ shows.  I found it really really easy to save — back when I was making $20k more a year.  Now I’m just happy if one of the paychecks comes in before the bills become due.

    On the bright side: Considering the kind of disaster we’re approaching with all the baby-boomers retiring, telling poor people to save more money will become the modern equivalent of ‘let them eat cake’.

    • captnboston

      There would be all sorts of money for Baby Boomers retiring if the government had created the SSI lock box on day one, (thanks FDR). Instead every administration has included SSI in the budget each and every year. Effectively stealing over $4 trillion of the peoples money. Given the chance the Democrats will roll your hard earned dollars into the fund too. Mine will be in a Roth IRA shortly, as I pay the taxes up front and move on.

      • jefe68

        That you think SS is stealing says it all.
        Why do even bother trying to come up with a credible argument?

        • captnboston

          At some point the government will keep the money most of us have already paid and id has been used for something else, other than SSI.

          I guess you could say it’s not stolen until that happens, but the premise at this point is that it is not going to be returned.

          As our president has SUPER-polarized the American public I expect nothing will change for the working stiffs of this country for a very long time.

          I am just waiting for the Occupy group and the Tea Party to realize they are essentially on the same side.

      • TomK in Boston

        It’s in gvt bonds backed by the “full faith and credit” of the USA. Those are the bonds that the whole world runs to at the first sign of a crisis. What do you want SS to do, put the $ under the mattress? 

        I do agree that the right will eventually try to default on the SS bonds as part of their never ending class warfare. If they can avoid the guillotine after arguing that they can default on debt to Americans while paying off the rest of the world to maintain our credit, we’ll have what we deserve.

        • captnboston

          Not under the mattress… However, if the bonds are actually backed by the “full faith and credit” of the USA, then we should simply pay the loan back to SS to meet shortfalls. Then we wouldn’t be scaring senior citizens.

          Tax and spend Republicans? I think not. New Deal; Great Society; Vietnam; Korea; NAFTA all wonderful Democratic institutions.

          • TomK in Boston

            What do you mean? SS will redeem the bonds as needed. It would be stupid to redeem all the bonds before the $ are needed – then it’s back to the mattress. 

             The scaring has nothing to do with reality. The righty agenda from day 1 has been to destroy SS. The favorite tactic is to scream that SS is going broke, so the voters don’t care what you do with it. Then you propose a scheme to destroy SS and say that it is a plan to save SS.

             In 20 years or so, if nothing is done and you think we can actually see 20 years in the future, SS will only be able to pay out 75% of promised benefits. The logical reaction would be “Wow. This is an amazingly strong program!”. Do you know of anything else guaranteed for 20 years? Of course, the right offers a different perspective. OMG! Only 100% for 20 years! Better privatize ASAP!

             The key point, again, is that the oligarchs want to default on the bonds to keep their taxes low. Stay tuned. When SS starts cashing in the T-bonds, I predict we will start hearing reasons why the SS T-bonds aren’t real T-bonds. Then it will be time to think about revolution.

  • captnboston

    Nothing new here I’m afraid. If you didn’t plan properly shame on you. The neo-socialist Democrats want to move your 401K into some sort of government managed account, a la Argentina. Uncle Sam knows best, right?

    • Daniel McNickle

      The greatest probability of success in investment is achieved when the investment is maximally and intelligently diversified. The greatest degree of diversification is possible with the largest possible pool of capital; the largest possible pool of capital can be acquired from the broadest possible base; thus, the aggregate benefit to our entire society can be maximized  if all members are required to participate. If indeed all Americans are created equal, which is axiomatic to the American system of government, then the benefit to each individual American should be considered equally. It follows that the correct solution to problems which face the large majority of the society should be solved in such a way so as to maximize the aggregate benefit; that is, to give the greatest benefit to the greatest number of people. 

      We spend a tremendous amount of money each year on our national defense, and our national defenses — which are the finest the world has ever seen and completely unmatched by any single competitor — are responsible for defending each American equally. Such is, at least, the implied goal of American defense spending. Why is it a goal of the American federal government that each citizen’s life should be defended from foreign attackers, but not a goal that each citizen’s life thus saved be a life worth saving? 

      We are a country that prides itself on campaigning domestically and abroad to ensure the dignity of every human being. Such is the American self-image: for as long as we can remember, we have been the city on a hill. What sort of city are we? In a utopia, there are no elders left to starve slowly to death in the streets. There are no children fed garbage because fresh, good food is too expensive for them. We are strongest and best when we can be a shining example to the rest of the world as a nation that, with one loud voice, is proud to proclaim that we love one another and we will never depart from our brethren’s sides. 

      • captnboston

        Simply, you were doing well until you got to “if all members are REQUIRED to participate”.

        And that is where your argument breaks down. I’ll ignore Paragraphs 2 & 3 as they are simple rhetoric.

        We tried this experiment once, (SSI). Everyone is required… oh yeah, except municipal workers and oh yeah I forgot government workers. The of course there’s the 8% to 12% of the TOTAL population that live under the radar using CASH only. Then there are those that won’t work (not to be confused with can’t work). Then of course the government has been allowed to use SSI income as tax income to the tune of 4 trillion dollars.

        Face the reality that you can never force people to do anything without the plan going horribly awry…   Case in point, Europe. European social democracies exist because the United States has saved every country TWICE from dictatorship over the last century and pumped trillions of dollars into every last country. Not to mention defending them to this day. Without a strong USA their social system falls to pieces.

        In a nut shell, too many people in the cart, no longer enough to pull it… The only way is the free market in a capitalist and democratic society. Love is too complicated and as you should well know, few people love their fellow humans unconditionally. It’s simple sociology. Marx should have taken this into account.

        • Rleonard02

           I don’t know what government employees you are speaking of that don’t pay SSI.  I began my public service in the military and have held various state and federal positions since the 80′s and have always paid SSI taxes.  At one time prior to the mid 80′s civilian federal employees did not participate in SS but for about 25 years now they have.

      • TomK in Boston

        Daniel, when you say “We”, unfortunately, you don’t speak for the ryan-rand-romney clique.

  • Dee

    Why are you and Ms. Ghilarducci only looking at 401ks? I, and many of my friends are invested in various IRAs, as well as real estate that is not part of any retirement “plan,” but is part of the investment portfolio to be used in retirement. I think she is vastly underestimating how well many of the 50-64 folks have saved and invested for their futures.

    Carmel, CA

    • Chenster

      That’s because the title of the segment is, “Is The 401(k) Working?”

  • Tina

    Another crisis in retirement:  even WITH a Part D drug plan, the cost for some drugs is OUTRAGEOUS!  If you haven’t tried to check out the difference between your prescription plan you might have now (if you are fortunate enough, and way too many people are not, as we all know!) and what your costs might be when Medicare is primary, do so NOW, to help prepare yourself! I had no idea until this month that there are people who VOLUNTEER with Medicare to help people understand which Medicare “plan” is best for each individual.  These volunteers are called SHIPs, and they often work out of a senior center.  You go to them and ask them to plug in your specific prescriptions.  They will print out a chart that shows you how much you will pay before the donut hole, during the donut hole, and afterwards in the period called “catastrophic”.  When I heard the term “catastrophic” on the news, I assumed the price of the drugs during this period would represent the true nature of a catastrophe:  not so!  Some of the drugs are still outrageously expensive, as if being sick isn’t already catastrophic enough.  

    Thank goodness Part D is there; but, still, the drug costs can be horrid – frighteningly so! 

  • RolloMartins

    David Wray is selling something and I’m not buying it. The K-plan was put in place in order to save corporation’s money. We all bought into it and shame on us. I noticed Wray didn’t say anything about the rule that kept me from being able to save more. I was limited to 3% saving rate. Would have been nice to save more–I certainly wanted to.

  • Roy Mac

    What brilliant ideas.  I’m 65 and saw 2/3 of my retirement funds get flushed in 2000 with the combo 9/11 dot com crap, and those investment gains never came back.  Tell me where I was supposed to get more earnings to make up that, when I was already 55?  Since nobody will even talk to me now, how am I supposed to do anything other than die?

  • Marcia Riquelme

    According to analysts of the Wisconsin Retirement System’s future under Walker, there is a distinct indication the system will suffer many sorts of assaults. There are statistics and reports available to confirm this. There is a commission appointed by Walker to ‘review’ the WRS, thousands of folks are aware of this, but there are 300,000 enrolled in the system and the majority do not realize the System is in jeopardy. If you would like more information about this valid concern, contact Roger Springman,608-617-1027, or Buzz Davis, 608-873-4886,cell:608-239-5354..They are prepared to explain the details of these concerns. I urge you to contact them. They are well-known to the grassroots network and the thousands who have heard their presentation. 

  • http://twitter.com/RvLeshrac RvLeshrac

    Wray uses $50k as the input for a 401k, but what about those who make $25-30k? Once they’ve paid out rent, utilities, insurance, and food, they don’t have 10% left to invest.

  • http://pulse.yahoo.com/_SJGAGBG34OPWWP7TCU5DPUNXJA Linda Wilson

    One of the things I wonder about is whether my generation (born 1960s) will really live to be as old as my parents’ generation and need the massive amount of money they’ve had for living expenses and healthcare.  As an adult, I have never had the stability, standard of living, or healthcare that my parents had as adults.  I’ve had to work harder and for much longer hours than they ever did, at much more sedentary jobs.  I haven’t smoked liked my father did, but as I approach the age at which he had his first heart attack, I wonder what my 50s hold for me, and whether I’ll ever use that 401K.

    • TomK in Boston

      Don’t let Ryan see that! We already have the shortest lifespans in the developed world, thanks to inequality and private health care, but he’ll think making them even shorter is a great idea.

  • Terry Tree Tree

    Watch the bankster snakes swallow your nest egg?

  • ottomarcos

    I’m not retired, yet, but I’m glad I stuck with a traditional pension, and never went the 401(k) route!

    • Marcross

      Good choice. You’re lucky. Few have this option. Just hope that your employer doesn’t change the benefit formula to your disadvantage or terminate the plan altogether. Defined benefit plans are fiendishly complex, but the better of the two options if one stays at a job for a prolonged period of time. Indeed, they gain in value with age.

      • ottomarcos

        Way back when we were first given the option to go with a 401(k), my first thought was, “What if there’s a stock market crash one day, or some other economic catastrophe occurs in the future?” So, I passed on it. I actually became eligible to retire in 2007, but continue to work because I’m now 57, so not that old. Also, my future monthly pension payments grow with every additional year I keep working. My employer is one of the largest universities in the country, so there’s no chance the benefit formula will change, or be terminated, for me. However, younger employees will have to work longer, since the formula was changed somewhat for them, a few years ago. Those of us who had been there a long time were “grandfathered in” to the old formula, since it was considered the right thing to do.

  • Sheryl Yates

    I will have nothing. I will have social security and my 401K is nothing. Too many losses. Easy access and I have used it to help with my living expenses over time  as I needed it. They should never done away with pension plans. We are all screwed.

    • ranndino

      I fully agree that there are a lot of issues with 401K replacing pensions, as I’ve mentioned in an another comment, but using your 401K to help with living expenses is plain stupid. 

  • Aliera_ekieron

    I saw this 2day from demos: over a lifetime 401k fees can cost a median-income 2earner family nearly $155,000 http://bit.ly/Jybgdw

  • Marcross

    The traditional defined benefit plan is dead. Long live the traditional pension. Theresa’s grey sky scenario is all too compelling, even if unwelcome. David Wray’s is compelling, even if unrealistic. All manner of employer sponsored plans have gotten the chop over the past five years. The defined contribution “product line” (profit sharing, salary deferral) is here to stay, given the greatly increased transience of the work force in the twenty first century. Yet, in the search for and retention of top talent, employers would do well to rethink what plan is most attractive over the longer term. To all of these conundra there are no easy answers.

  • TomK in Boston

    Teresa was great. I particularly liked how she pointed out that once we were moving FORWARD. We got SS from FDR, then unions started to negotiate wages and benefits, employers started to provide pensions, and then we got medicare. Things were constantly getting better for average Americans. Since Reagan, it’s been nothing but losses.

    She also explained how the pooled assets in defined benefit plans could hire professional mgt, could have the low fees that big institutions get, and could be diversified enough to smooth out the market ups and downs. All those are big advantages over having individuals dealing with the sharks, sorta like medicare as we know it vs an individual going to WellPoint with a ryan groupon in hand.

    It sure would be nice to be moving forward again as a society, instead of wondering what the ryan-rand-romney types are going to cut next.

  • Rafael Botero

    Hi Tom,
    Could you please shed some light on this issue? They’re citing the Health Care Law where it requires a mandatory microchip implant in March next year.
    Thanks,  Rafael

    • TFRX

      Well, if I escape out the back door and somehow don’t come home at dinnertime, someone may find me and bring me to a vet. Most vets in suburbia know about microchips, and will scan for one, and it will tell them where I live and how to contact my owner.

      Waitaminit, that’s my cat I’m talking about.

      Seriously, your tinfoil hat is slipping.

    • jefe68

      If I were you I would move to Argentina ASAP.
      Change your name, give up your US citizenship and definitely lock the door. But I would still be careful and watch for the microchip zombies, they will be looking for you.

    • TomK in Boston

      Is it possible to remove the microchip that programs the talking heads to parrot voodoo econ scripts that haven’t changed since 1980?

    • ranndino

      I sure am glad I’ve figured out a way to no longer get horribly formatted emails forwarded to me by crazy, scared, old white people. You may want to do the same.

  • Randall Bolten

    Great discussion today! David Wray made one important point that went mostly overlooked, which is that 401Ks and IRAs (they behave in much the same way) didn’t exist until the oldest Baby Boomers were more than 30 years old. So we haven’t had a fair test of these plans just yet.  Because of the miracle of compound interest, the difference in end-value at age 65 is huge, between starting to invest in your 20s, and waiting until after age 30 to start investing. . . much more than you’d think! 

    • Jill

      People in their twenties can’t get jobs, live in their parents’ basements, and have loads of student debt.  From personal experience I know that the idea of saving for retirement in this kind of situation is laughable. 

      • john

         Compound interest is not operative with a 401(k) in the same way it is with a deposit account (savings, CD). A collapse in the stock market can wipe out a huge amount of money. no?

  • http://www.401kDayTrading.com/ Richard Schmitt

    As long as we are left to manage our own 401(k) accounts, let’s make something out of a stock market that has offered nothing more than volatility for the past 12+ years. Consider taking a few minutes a day to make incremental daily fund exchanges between cash and stock that convert the market’s ups and downs into lasting gains in retirement savings. Much safer than it sounds, 401(k) day trading involves buying low or selling high once a day within retirement savings accounts – where trades do not trigger immediate taxes or direct trading costs. Over the 10 years ended March 31, 2012, a 401(k) day trading strategy netted a return of 42.5%, almost 20% better than holding the S&P 500 (excluding dividends). Find out how this simple, but carefully crafted approach satisfies 401(k) funds’ frequent trading rules in a book called “401(k) Day Trading: The Art of Cashing in on a Shaky Market in Minutes a Day.”

  • Taguba

     Great show. One point about fees; anyone can have a Vanguard account and because it is a true mutual fund company (i.e.; the clients are the owners) the fees are very, very low and Vanguard has faithfully lowered fees as their funds and ETFs gain more assets.

    You can also diversify very well with Vanguard. I don’t have a 401K or a pension (I’m self-employed) but I with a bit of reading and thinking I’ve been able to construct a portfolio that weathers ups and downs reasonably well.

    The point is, you don’t have to be a pro or have access to pro money managers to do alright with your money. The problem for a lot of folks is A) getting the money and B) taking a bit of time to learn what to do with it.

    Extensive research has shown that buying and holding a range of index funds (or ETFs) will beat the majority of professional money managers. So, really, you’re better off on your own…

  • Nancy

    This show gets to the botoom of what is wrong in “media” today.
    No-one cares what the “EXPERT GUEST” has to say. They have been getting it WRONG for far too long. (and the POLITICIANS , all the SPIN DOTORS, ANYLISTS ect. ect. ect..)
    The guy I want to hear from is the GUY who called in and had found a way to live on $18.00 a day in AMERICA!!!!!!!
    That would be USEFUL information. He should be the guest for an HOUR!!!
    Let the 401K specialist who thinks the “math works” call in and get 30 seconds to promote his agenda.

    Media has been talking to the wrong people and giving them a platform for their NONSENSE for too long. Media has been asking all the wrong questions for far too long.

    You need to decide who’s side your on.

    NPR is suppose to stand for National PUBLIC Radio.
    If you are not going to serve the PUBLIC perhaps you should change your name!

    • ranndino

      Anyone with a modicum of intelligence who regularly listens to NPR and conservative radio can tell which one of those is more objective and provides better information. I think NPR should keep its name as is.

  • Terry Tree Tree

    401K, and other ‘investment’ counsellors, executives, and the banksters GET their money, whether YOU gain or lose?
       The way to be sure a 401K, or other investment is going to pay, is to be the executive of it?

  • Galen

    401Ks that have promised 10% returns?  That’s outrageous, why didn’t she out these companies.  i have never seen that.  Plans that only allow stock market investments; why not out them?   Excessive fees; not Vanguard?  People too stupid to make good choices in their plan; do not insult us.  For individuals who have underinvested in their retirement you want to trust state and local government that have inadequately funded their own plans and are in deep financial trouble as a result?  Government has no special skills at investment decisions. Is this really a way to give my my savings to some one else, aka a pool of funds?      401K plus social security is a good combination but maybe we should discuss it being mandatory; that is the only issue.  

    • http://www.facebook.com/profile.php?id=1350469531 John Buchan

       The Pension Protection Act of 2006 allowed employers to automatically enroll employees into 401Ks in a default fund at a default rate. It isn’t mandatory as employees can still opt out. And most employers did this, but I think 401Ks are difficult for most Americans to understand and use.

    • ranndino

      Most people don’t have the expertise or time to become investment experts and 401K’s are subject to market volatility. Pensions used to guarantee people some sort of income in retirement, but the conservatives have successfully killed that off.

  • Andy

    Here is my problem with the program…Tom had a “point” that he wanted to get across, that 401k plans are flawed.  He got an impressive articulate nationally recognized expert to argue his side, and an inarticulate impressively-titled boob (from the smaller industry association with only 1200 member companies, ASPPA with 7500 member companies is the more prominent) to provide “balance”.   Congratulations Tom, your audience got your “point”.

    • mark43

      One of the things wrong with a company 401K is you can’t place trailing stops on your positions. This is almost insane. If it were not for the employer match I would rather just invest myself. However if I did it myself, the trading fee’s would be much higher than using the Employer plan. Dot com bubble crash, Money just rode into the ground, 2008 crash lost big time, why? no stops. It’s not avalible in a 401K. There needs to be a better retirement product.

    • ranndino

      You are judging after the fact. Tom got the guy who is supposed to be an expert in the field argue for his side. It’s not his fault that his arguments sounded inadequate. 

      You probably listen to conservative radio a lot. I’m sure Tom can take some lessons from conservative hosts on how to provide balance. Oh right, they don’t even pretend that their goal it to provide objectivity.

  • Still Here

    Please, the point of this show was to have on somebody who thinks the government’s got the solution and it involves people paying more taxes.  This is more big government claptrap.  More nanny state solutions so we can create more bureaucracies of unproductive public employee union members.  Truly disgusting.  

    But we recognize that the government is full of criminals, the biggest and greediest criminals by far.

    • Laurie

       So all those international banks that got super-greedy and tanked the world economy were actually government-run? Gotcha.

    • http://www.facebook.com/profile.php?id=1350469531 John Buchan

      Most Americans cannot or will not save for retirement. This is why most Americans only have Social Security for their retirement income. Ronald Reagan strengthened Social Security, are you calling him a criminal? That doesn’t fly in most peoples’ books…

      • cleansweeper2

        With the low wages who the hell can save? Savings on $10.00 an hour give me a break

    • ranndino

      Yup, because the Wall Street is full of nice, ethical people who aren’t involved in any criminal activities. We should put all our trust in them.

  • Brewmaster95060

    this woman is an idiot. I do not what her any where near my money.

  • Pingback: BPP401k.com Newsletter June 6 - Benefit Plans Plus 401kBenefit Plans Plus 401k

  • Paxtriot

    Hya Brewmaster! I am a rich casino owner with a retirement plan just for you! Give me your money and I will put it on the roulette! 50000% return guaranteed!!!! (the govmint made me print a tiny disclaimer on page 15 and I hate them for that). Anyway, look at me, I am rich I have a private jet full of dancing girls. This is a proof my plan works !!!! I spent a dzillion of my own money to lobby the GOP to make my plan available to everyone. It works – I get richer! And if you want an alternative, my Wall Street buddies have one just like that too. See ya…

  • Romney Bin Bush

    If you ask where the retirement wealth of Americans are, look no further than  the TRILLIONS in bonuses “executives” pocketed for exporting our jobs.  Tax free, no less…

  • Mark

    David is clearly living in a different world than I am. To even suggest that the 401K has even the potential to provide the same kind of retirement security as a pension is lunacy.
    Not only are 401K’s subject to market volatility, but they are subject to the corporate budget slashing.  Company after company stopped contributing to 401K’s in 2008-2009.  Now they are sitting on piles of cash and are not only not hiring, but they have not re-started their contributions to their employees 401K’s. 
    I am sick to death of people in influential and powerful positions pontificating on the incentives and economics of a variety of programs (and implementing their ill-conceived ideas)..from supply side economics to 401K’s…with the implicit or explicit assumption that corporations and their officers will behave ethically.  This has been proven over and over again to be FALSE.  Similarly, the assumption that people will behave in the best interest of their organization is FALSE.  They behave in their own personal best interests and are likely to behave in a manner consistent with their peers, whether it conforms to a textbook definition of ethical behavior or not. 
    If you don’t believe me, look at the now well-established causes of “the great recession”.  Talk to an investment advisor b/c they sell you what makes them more money in fees, not what is best for you.  The mere existence of Whole Life Insurance as an investment vehicle is proof of this. 
    Trying to accumulate wealth in Wall Street investment vehicles is about as effective as trying to accumulate water in a wicker basket.

  • http://profile.yahoo.com/UQEXSVP4VRJW65CCIETCE77WBA Kbakers

    What do we do if my dad thinks hes signed on to a 401k but we cant find no proof?

  • http://buysteroidsuk.co/ Buy Steroids

    I don’t think it is and i’m very worried about my retirement.

  • http://profile.yahoo.com/64SO2MQXB5BRJ5ZI4I342UIGP4 Attila

    hehe, it is very good to see all you people cry :))

    Let me tell you my idea, I`m from another coutry by the way.
    1) When you had much better life than people in any other country you never thought that you were spending your future.
    2) The future is now. Payback time Americans.
    3) Stop crying, you will still enjoy 10 times better retirement time than people in any other country. Maybe you can`t fly to Hawaii every year, and can`t buy a 42″ long RV to travel America.  Poor you, I feel very sorry for all of you.
    4) The real loosers are your grandchildren. In 20 years they will recognize what Americans did from 1970-2008 and they will curse your names at your graves.
    5) IF you still don`t feel shame please pull some pictures from Africa or any other countries and see how people retire there.

    6) Actually my mother has already retired, and she is getting $350 per month. I never heard her complaint.

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