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Originally Posted by Ultrarunner
I shouldn't be surprised... I've heard so many 401k spiels that they all run together... heard another one today and I was thinking to myself that these guys never learn.
Anyone notice how, in a declining market... all the financial institutions shuffle personnel around... I guess it's to keep the public at bay... kind of hard to blame the new guy when he wasn't the one that sold you the product.
Every year at one company the 401k people would come in and give the standard pep talk... funny thing is they were all missing in action for 3 years.
One of the topics in today's talk was the benefits of the Roth being tax free and I raised my hand and asked for how long?
Sales people really have one goal and that is to make the sale...
I would be happy to participate at whatever amount to take advantage of the company match... thing is the company match was temporarily suspended in 2006 and has not come back...
I'm sure these financial offerings must work for some... just don't have any faith they will be there for me.. based on promises that have been made and not kept...
For the record... I think the notion of retirement free from financial worry will become even more elusive in the future and the turning point, in my opinion, is when retirement benefits shifted from defined benefit to defined contribution.
I took a pay cut when I switched companies for benefits... the new company had a generous stock plan, bonus plan, 401k match, etc... things were going great til part of the company ownership changed and our funds were in limbo for over a years till the IRS ruled on the same desk rule...
What that meant for me is the benefits I had negotiated for and taken a pay cut to get suddenly all but evaporated because I was only 20% vested... so 80% of the money in my account from the employer program was gone.
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You can say the same thing about leaving any job that has retirment benefits even pensions. if you leave before your pension is vested you lose it.
at least with the 401k you leave with the part you saved.
while there may be a few 401k's that companies sponser that have higher fees for the most part they are not much higher if your company uses fidelity or vanguard or any of a number of other fund families.
we cant blame the savings vehicle as much as we can blame the lack of interest and knowledge most folks have .
the typical american knows more about sports, their car and refrigerator then anything pertaining to investing or mapping out a financial plan.
im on the board of 401k management at my own company and the people blindley follow each other into hodge podges of things that make no sense.
they then all bail at the wrong times and get back into things at the wrong time and their performance is poor.
on the other hand im drinking from the same well and have done very well .
so its not the vehicles as much as the lack of knowledge.
we use fidelity for our 401k and many of the same funds in the 401k i own outside the 401k as well and the expenses are maybe .25% diifference if that much.
its not just in 401k's that people perform poorly in . look at morningstars invester tracker. they show you what each fund did if you bought in and stayed the course. there are 2 returns given on most morningstar performance data.
the more volatile the markets get the wider the spread gets.
they then show you by tracking the money in and out by small investors what their returns were. for the most part they run 1/3 what the fund actually gets as they try to time things in and out or try to jump iin everything hot that already happened.
the data collcted by ibbotsen and fidelity shows pretty much the same thing.
fidelity said that even the lost decade saw the average 401k balance for those 55 or older who contributed from 1/2 to max jumped from 96k to 216k over a time frame when markets were pretty sluggish .
1/3 was market gains and the rest the employees own contibutions and matching.
thats a huge savings even without much market help .