Retirees tell me they have lost over 50% of their 401K Balance in the last year! (crying, state)

[Vinegaroon]

Originally Posted by taurus430

I would have suggested making a transfer from your 401K to a bank IRA (CD), that's what I did. You would not have payed taxes. Save that till you are older in a different tax bracket. As soon as I left a company, I rolled the 401K over to an IRA, I wanna control my own money.

Kudos to you Taurus! Not only do you control your money, but more importantly, you protected it from a downturn. People reading this that are 15-20 years from retirement should remember this advice. Don't keep playing the stock market with the bulk of your money into your golden years, and don't do as many people do and just ignore what is happening to your money.

[HappyTexan]

Originally Posted by Vinegaroon

If you are within 5 years of retirement, and you had more than 20% of your retirement in the stock market, I'm sorry, but you were asking for trouble. As you get closer to retirement, you have to move most of your portfolio into bonds or safer investments. Why anyone would continue to gamble with their retirement as they near that time is beyond me.

The euphoria of a bull market. Sooner or later the bear comes out.
If you follow the market you can see the trends and get out on the sidelines til it bottoms out.

I moved all my 401K money last October into a stable core fund. So far this year I got a 2.9% return. While it's not keeping up with inflation I did preserve my capital.

[Keeper]

I think you have to remember many ppl of retirement age are not 'stock market' savvy. I never had money to invest in the stock market so when my co. offered changed to 401K I read the info, talked to others and hoped I was making a good decision. The employees who were 20 years younger than me definitely were more knowledgeable on the ways of the stock market.

When I retired I did ask about moving my money to an IRA.. I was told not once but four times at 2 different banks, I could not move my 401K to an IRA, I had an IRA already setup at one of them too. I also talked to a financial planner who gave me all sorts of bad advice. Thank God, I didn't follow his advice.

I honestly don't know what else I could have done. It is easy to judge others until you walk in their shoes.

[HappyTexan]

Originally Posted by Keeper

I think you have to remember many ppl of retirement age are not 'stock market' savvy. I never had money to invest in the stock market so when my co. offered changed to 401K I read the info, talked to others and hoped I was making a good decision. The employees who were 20 years younger than me definitely were more knowledgeable on the ways of the stock market.

When I retired I did ask about moving my money to an IRA.. I was told not once but four times at 2 different banks, I could not move my 401K to an IRA, I had an IRA already setup at one of them too. I also talked to a financial planner who gave me all sorts of bad advice. Thank God, I didn't follow his advice.

I honestly don't know what else I could have done. It is easy to judge others until you walk in their shoes.

Keeper..that also holds true for young people just entering the workforce and being set up for a 401K. No education goes with these 401K's..just default middle of the road investment choices. They do not know about rebalancing or researching. Personal finance is not taught in schools as a general class (which IMHO should be a required class).

The days of pensions are over..but the corporations that moved everyone to 401K didn't do a very good job of informing and educating people on how to use them.

[Vinegaroon]

Originally Posted by HappyTexan

Keeper..that also holds true for young people just entering the workforce and being set up for a 401K. No education goes with these 401K's..just default middle of the road investment choices. They do not know about rebalancing or researching. Personal finance is not taught in schools as a general class (which IMHO should be a required class).

The days of pensions are over..but the corporations that moved everyone to 401K didn't do a very good job of informing and educating people on how to use them.

And those people did not do a very good job of attempting to research, or to find out where their investment choices were going. All I can think is that their money was not very important to them. Maybe people will begin to get educated about investing after this.

[Jara]

I remember when me and my husband paid 14% interest on a new home 1978, on a fixed mortgage. Our CD's were also paying 21% interest and paid for more then one trip to Australia. These were goals, to slap money into something that had a big yield of interest. Gas prices were low as well. Get the interest rate high on houses instead of the smoke & mirrors we have been seeing. Get the interest on CD's back to 21+ we will see some savers. People work better on incentive plans then give-away programs. No decent interest rate on savings accounts today. Why bother to save, might as well spend it. Then "Charge It" with those interest rates, that cost more then any free toaster the bank could give you. Remember the free toasters and automatic can-openers the banks gave away?

[taurus430]

[quote=Keeper;5616177]I
When I retired I did ask about moving my money to an IRA.. I was told not once but four times at 2 different banks, I could not move my 401K to an IRA, I had an IRA already setup at one of them too. I also talked to a financial planner who gave me all sorts of bad advice. Thank God, I didn't follow his advice.

Once I left the company, I moved my money to an IRA as they advise you not to leave it.
I do my own financial planning and taxes. I read up on finances and use a little common sense and keep things basic. I don't want to pay someone and have to trust them with my money. In another thread, people suggested seeking a financial planner. If I listened to one, my money would be in bottomed out stocks now instead of bank CD'S getting over 5% interest.

[taurus430]

[quote=HappyTexan;5617856]Keeper..that also holds true for young people just entering the workforce and being set up for a 401K. No education goes with these 401K's..just default middle of the road investment choices. They do not know about rebalancing or researching. Personal finance is not taught in schools as a general class (which IMHO should be a required class).

I do believe they should teach kids the basics in school of taxes, finances etc. This is stuff you need all your life and some people can't even fill out a simple tax return let alone budget their income. I didn't go to college I learned myself. I just didn't want to depend on an accountant or financial adviser.

[Jara]

I'm on pension, but my neighbor is on 401k. She is upset because she was told that they are not insured something she forgot about. She was given a choice of high risk, medium risk, and low risk on her 401k. She chose the low risk. This is something I don't understand, if the stock in the store she works at goes down, so will the 401K? Then it would effect all levels? This concerns me because my sons won't have anything to do with the 401k's. Also if the government privatized SS it would be no different then the 401k banking on the stock market for yields. Gezzzz Louise!

[HappyTexan]

Originally Posted by Jara

I remember when me and my husband paid 14% interest on a new home 1978, on a fixed mortgage. Our CD's were also paying 21% interest and paid for more then one trip to Australia. These were goals, to slap money into something that had a big yield of interest. Gas prices were low as well. Get the interest rate high on houses instead of the smoke & mirrors we have been seeing. Get the interest on CD's back to 21+ we will see some savers. People work better on incentive plans then give-away programs. No decent interest rate on savings accounts today. Why bother to save, might as well spend it. Then "Charge It" with those interest rates, that cost more then any free toaster the bank could give you. Remember the free toasters and automatic can-openers the banks gave away?

OMG..yes I do remember the toasters
When I was young and had my first job..I stuck with the banks for investments..savings account and then CD. Only when I was comfortable and knowledgeable did I move to the stock market.

With interest rates at or near 0, savings accounts and CD's can't keep up with inflation (3% according to govt, 10%+ according to other sites) the banks are shunned for the stock market and their excessive returns.

For many young people and many older ones as well with 401K's and mutual funds, this is their first bear market that personally affects them.