401Ks

I just think the line of reasoning that says it will automatically come back and continue to appreciate at 5 or 6 or 8 percent is flawed. Doesn't mean it won't happen. I just don't think it's guaranteed.

Also, bear in mind that for many 20-somethings, those matching funds are an illusion. Most places, you have to stay 5 years to be vested. In other words, the money's there, but if you leave, they take it back. And how many of us plan to stay at the same place for 5 years, especially those first few jobs? If, of course, we're lucky enough to have the opportunity to stay.

 

Of course it's not guaranteed. But take a long view of the stock market and tell me what it does: It goes up. If you're in your 20s, the long view is the only one that matters. Right now, when the market is down, you're picking up bargains.

Even if you leave a job -- or are booted from one -- you have your own contributions (tax-deferred, I might add) and whatever compounding has occurred in the time you've been making them, which you can roll over at the next job.

Match, reduced match, no match, it's damned hard to make a case against a 401(k).

 

A lot of us who began diverting money into a 401k a long time ago lost a lot of money, in absolute terms, this year in the market.

But we lost mostly "house money," gains we had taken from the market. Our contributions, by and large, still are there along with some growth -- just not what had been there a little earlier.

Had the tax man and our grubby little paws been all over that money for the duration, we'd be even worse off. The only thing worse than saving for retirement and having those savings take a hit in the market is not saving for retirement at all. Besides, if everyone is commensurately poorer over the next 25 to 50 years, supply and demand should bid down prices of ... everything ... a little, right?

That said, I know I'm going to be working five to seven years longer than I planned, at least. If, of course, any jobs exist by then. And the whippersnappers bother to fill them with old farts.

 

Excuse you.

At my first job out of college I was pissed because they wouldn't let me have a 401k -- I was 22 and you had to be at least 25 to get into the company's program.

At my second job the company was so small they laughed when I asked about a 401k, much less employer matching. So I started my own IRA.

At my third job I FINALLY was able to take advantage of the "free money" I kept hearing about. I socked away the matching maximum and then watched half of it disappear when, after 18 months at the paper, I changed jobs and learned the vesting schedule was 5 years.

Now I'm at a shop that just cut matching, but it's OK because the vesting schedule is six years and I doubt my paper or its parent company will be around that long anyway.

I've been saving for retirement for almost eight years and NOT A SINGLE PENNY that I have has come from an employer.

Bottom line: People of all ages can be smart and dumb about money (sometimes at the same time!). My generation has learned that we will be 100 percent responsible for financing our lives: there will be no Social Security, no company pensions, no 401k matching, nothing. Maybe there will be credit. Or whatever we can stick under the mattress.

 

Aren't you vested for a certain percentage of what you have put in even if you don't reach 100 percent vested?
i stayed at one shop for three years -- full vesting was 5 -- but i still have money in that account and my statement each quarter tells me how much it's worth for the time I was there.
I was on track early in my career to retire early -- i was shooting for 55. then 9/11 hit and i lost a lot. It took a while to earn that money back and finally got ahead again, and now this latest downturn has taken a pretty good chunk of what i had. I have no clue what I should be doing with my 401k until the market comes back. anybody got some advice? roll it over into a money market? bury it in the back yard? stay the course?

 

Yes.

 

Problem is, if it does, then the dollars that provide the share value are going to be worth less.

Again, not saying it's impossible. Am saying that just because it has always happened doesn't mean that it always will. There has to be a ceiling somewhere, and I fear we've found it.

Or, put another way, it once was inconceivable that the sun would ever set on the British Empire.

 

That sucks, Cadet. But I wasn't talking about you. You and Lolly are obviously exceptional.

 

there is no vesting on the money you contributed to a 401k. vesting applies to what the company contributes.

 

I agree.

 

I heard that it's just the managers who are not going to receive matching funds. Apparently the guild saved the non-union members that loss. But still, I don't think it's a smart move. When newspapers are trying to convince its employees that things will get better, making more cuts does little to improve morale.

 

Seriously, why would newspapers waste their time and energy trying to convince employees that things will get better?