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Old 11-25-2016, 04:44 PM
 
Location: Albuquerque, NM
1,427 posts, read 2,569,254 times
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The vesting period is, indeed, an impediment to portability. However, when you look at the vehicle the 401k was meant to replace -- the defined benefit pension -- there is also typically a vesting period. My particular state tweaked its pension plans for new hires a few years back in an effort to boost solvency. The result? What was a 5-year vesting period for a pension is now an 8-year vesting period.
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Old 11-25-2016, 06:13 PM
 
Location: RVA
2,164 posts, read 1,265,106 times
Reputation: 4451
The "truth" is they range from superb to super turd. It's all part of the benefit package that has to be considered with salary for employment. While my pay wasn't spectacular to start, the benefits were. I chose safe and steady over maybe rich and risky. I never thought I was VP material, so my friends that were, and made it, did end up better off than me. But I also know plenty that didn't, and I am in better shape. I'll never make even $300k/yr, but then I do much better than $85k. I'll retire early. I like my job. 401k worked very well for me, consistently beating the market index funds every year.
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Old 11-25-2016, 08:18 PM
 
Location: Columbia SC
8,954 posts, read 7,729,944 times
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I was in high tech sales and marketing which has a very bad track record for long term employment so I learned early on to take care of my own retirement
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Old 11-25-2016, 10:09 PM
 
6,615 posts, read 3,742,110 times
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Quote:
Originally Posted by jrkliny View Post
I have known a lot of people who work on contract or who provide consulting services. Those who are successful, charge enough to make a good living, to pay for periods without work and to fund their retirement and healthcare. Many employers reward long term employees with better benefits. That could include participation in retirement plans, matching amounts, better working hours and more vacation. I see no problem with that, nor do I think that approach is outdated. If you look for a job and the starting benefits look poor, then look for a different job.
Contract workers are not "consultants." I worked contract work. It paid a fraction of what a permanent worker would get.

The problem with the 401k is the FEES charged by the financial institutions, as well as the limited investments (no savings accounts usually in them to park your money during a recession). And employers don't have to contribute to them. And workers are limited by law in what they can put in them.

A 401k won't provide enough, usually, for the average person to retire on. Which is why SS must continue as a SUPPLEMENT for seniors. It didn't have a ton of FEES that came out of it, and the worker likely will get every penny s/he paid into it, and then some...GUARANTEED. Like any conservative investment, the returns are COL only and not "growth" returns, in exchange for the guarantee.

And 401ks are taxed at normal income tax rates, even the dividends and capital gains. But the tax savings at hte front end helps to increase the amount the employee contributes.

Roth IRAs are better, IMO. The funds you can put into those are VERY limited, though. Unless you're rich; there are ways you can have multiple Roth IRAs in that case. Romney had a bunch of 'em. In other words, the less you need them, the more you can have.
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Old 11-26-2016, 12:32 AM
 
Location: Haiku
4,056 posts, read 2,569,746 times
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Quote:
Originally Posted by bpollen View Post
A 401k won't provide enough, usually, for the average person to retire on.
You are always able to open your own investment accounts, taxable or tax-deferred, and save in those. It is what I did. About 1/2 our retirement money is in taxable, half in a roll-over IRA (from a 401k). Other than the matching contribution, I am not sure the taxable isn't better in the long run. 90% of the assets in our taxable account is LTCG, which are taxed at a lower rate than what I will be taxed on RMDs from the IRA.
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Old 11-26-2016, 03:15 AM
 
Location: On the road
5,926 posts, read 2,887,264 times
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We're going to keep on doing tax free Roth conversions to push that IRA money into Roths for tax free withdrawals.
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Old 11-26-2016, 04:01 AM
 
Location: Central Massachusetts
4,800 posts, read 4,844,519 times
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The whole idea about the 401k is a result of big business wanting to get out of the retirement management program which was costly and inefficient. It worked well for the employee because he had to just work until he was eligible. Then came the mobility issue where people voted with their feet on better pay and working conditions. So the compromise of the 401k enacted into law made sense on multiple fronts to include employees. The latest investment regulations should help companies get better choices because now best interest is part of the fiduciary rules.

I personally would like to see an even more portable product that could provide greater security for the funds. A larger pool for investors and even possibly investment companies. I have said it before and it has begun to take shape. Recently a few states have taken on that role of overseeing retirement accounts. I think that is a good thing though there are those among us that will say "keep the government away from my money". I see their point. At the same time though I see a need and a void. Someone needs to step in a fill that void.
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Old 11-26-2016, 04:04 AM
 
4,194 posts, read 2,487,763 times
Reputation: 1935
Before investing in 401Ks, pay bills off with interest.. Thats the first step in making a good living...
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Old 11-26-2016, 05:28 AM
 
Location: annandale, va & slidell, la
7,335 posts, read 3,035,025 times
Reputation: 6147
Quote:
Originally Posted by pvande55 View Post
They all say, "put money in your 401k," but for many workers, not possible. Even if their employers supposedly offer one. Outdated 401(k) Rules Are Shortchanging Americans - Bloomberg
In fields like Engineering, Architecture, or IT where jobs may not last a year it prevents any access. Another problem, not mentioned, is no coverage for contractors or job shoppers.
Do a little research. There a other ways to save. IRAs, funds, mattresses, etc. The main thing you need is self-control!
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Old 11-26-2016, 05:57 AM
 
Location: Haiku
4,056 posts, read 2,569,746 times
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Quote:
Originally Posted by golfingduo View Post

I personally would like to see an even more portable product that could provide greater security for the funds.
You really don't need a "product" or the government to get you to save. Open up a brokerage account at Schwab or Vanguard and put money into it religiously every month for the 30 years of your career. Both of those companies have very cheap (i.e., very low fees, less than 0.10%) funds. No need to get fancy or try to beat the market - a basic S&P 500 index fund has historically returned an average of 11% per year. If the saver can put $10k into that account every year for his/her 30 year work career, at the end of that 30 year period the account will be around $1.8M. That is a real ball park estimate and not everyone can save 10k a year but the point is, it will grow by a lot and you don't need anything special - no special accounts, no expensive account managers, no government oversight. If people are intimidated by investing, I suggest reading the book "Boglehead Guide to Investing". It makes it very simple and cheap for anybody to do at least as well as the market average, which is pretty darn good, IMO.
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