401Ks

[Joe Williams]

Bottom line: People of all ages can be smart and dumb about money.

I'm one of the dumb ones about my personal finances -- which are horrible because of my lifestyle -- which is weird, because when it comes to what SHOULD be done, people come to me for advice.

Kind of one of those "do as I say, not as I do" deals.

Jesus.... are you ... me?

Well, except you're way younger than me, and I have way less saved for retirement than you do. I'm going to have to do a hell of a catch-up between 55, when the child/college support ends, and when I retire, which based on the way things are going will be when I'm 80.

Don't sweat it, S_F. If all goes will you'll die before then and the bastards won't get the money out of you.

Considering the lifestyle you commented on, if you get to 80 and you're eating dogfood because of your savings woes, you should just smile and thank various internal organs for having carried you to that impoverished point. ;D

 

[SF_Express]

I've thought of all these points, believe me.

Plus, at 80, my plan is to be the cart guy at a local golf course.

That's assuming the current ones don't live and work until they're 107.

 

[micropolitan guy]

My retirement job is going to be driving the customer-service shuttle at one of the local car dealers. Provided there still are car dealers, of course.

 

[Some Guy]

I am 31. I have a 401 (K)

But at this point, my retirement plan is a heart attack at age 42. That's all the life I have money to cover ...

 

[bob]

for what it's worth, Gatehouse just announced the end (excuse me--"suspension") of its 401k match, although to call it a "match" was a joke. It was a small fraction of the employee's contribution. But for a company that's probably going bankrupt, this comes as no surprise.

 

[Stitch]

I'm not sure where/when it became an employer's duty to supply retirement funds for its employees.

Don't get me wrong. I'm sure grateful for the $175,000 (give or take a few thou) Tribune has handed me over the past 20 years for retirement, and I'm grateful for their 25% match on 401(k)s and for the $780/month pension I will receive.

But I remain mystified why companies do this at all. Maybe I'm old-fashioned (or just from another planet), but I believe an employee should expect money for the hours he works, and anything else he gets (retirement money, pension, 401(k) match) should be viewed as nothing more than a gift.

If I am an employer, having to chip in 6.8% of a worker's salary (FICA) and help pay for his family's health insurance and help supplement his retirement --- all in addition to the salary I pay him --- is going to make me have as small a payroll as I can possibly have.

I'm not sure why we get health insurance, vacation, sick time, disability coverage, life insurance, or mileage. We're all just greedy bastards who are taking money out of CEO's pockets.

 

[ColbertNation]

for what it's worth, Gatehouse just announced the end (excuse me--"suspension") of its 401k match, although to call it a "match" was a joke. It was a small fraction of the employee's contribution. But for a company that's probably going bankrupt, this comes as no surprise.

Why so cynical? They said they would resume the match when the economy improved. Sort of ironic for us considering the concessions on our end during union negotiations last summer just to get a 401K.

 

[Brookerton]

My paper doesn't match 401K, so I don't see the point in joining their plan. Any suggestions on which 401K companies to go with?
T Rowe Price, John Hancock, Fidelity, other?

 

[harbinger]

I finally worked for a paper that had a 401k and a matching payment in the late 1990s. Probably had $12,000 when the recession of 2001-2 hit, about the time I left the paper. The account dropped by thousands. It took six years for it to finally build back up to about $13,000+. That's where it was when the stock market dumped last year. Now it's back down to $8,000. It will take years to build back up to where it was in 2001.

That's twice in a decade my gains have been wiped out and turned into massive losses. I doubt that account will ever amount to much. I also don't think I'll ever trust Wall Street again. Seems every so often the market tanks and everyone gets hammered. And then it'll rebound and you'll finally break even and start making some money, and it'll tank again.

If you don't have a company match, don't invest in the company 401k. Open your own retirement account at discount broker Charles Schwab or something. At least you'll have a wide choice of options, rather than the relatively few options provided by company 401k's. Get advice. Also do your homework. Look at what mutual funds are investing in. Many of the mutual funds that mirror the S&P 500 invest heavily in financials, for example. Those funds have been hammered.

 

[bob]

ALWAYS invest in a 401k. It's an automatic tax break. The money that's automatically transferred from your paycheck into your 401k account is exempt from taxes (until you retire and start withdrawals).
If you invest only in an IRA, that money is first taxed as earnings before you invest in the IRA.
If you invest $10,000 a year in a 401k, it's not taxed. If you instead invest that $10,000 into an IRA, it's first taxed as earnings before you take the IRA deduction.
And the investments you choose in an IRA can be essentially the same investments you choose for the 401k.

 

[Joe Williams]

ALWAYS invest in a 401k. It's an automatic tax break. The money that's automatically transferred from your paycheck into your 401k account is exempt from taxes (until you retire and start withdrawals).
If you invest only in an IRA, that money is first taxed as earnings before you invest in the IRA.
If you invest $10,000 a year in a 401k, it's not taxed. If you instead invest that $10,000 into an IRA, it's first taxed as earnings before you take the IRA deduction.
And the investments you choose in an IRA can be essentially the same investments you choose for the 401k.

Yes and no. The plans offered as 401K vary company to company, so you might not have the full range of mutual funds or cash-equivalent accounts. But there are different income/contribution limits for the two types. For instance, if your household income is above a certain threshold, the tax deductibility of an IRA starts to phase out until it's gone completely. With a 401K, that doesn't happen. You'd still have a Roth IRA as an option (again, up to a certain point of family income) but that's not a tax decuction today.

If you like your company's investment options, go with the 401K. If you don't, and don't make so much that you lose tax deductibility, opt for an independent IRA. Don't forget to look into SEP-IRAs to divert some freelance income from the tax man (temporarily anyway), too. You can do those in addition to whatever you do with your day-job paycheck.