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Old 11-13-2014, 04:14 PM   #41
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Every time I got a raise I upped my 401k contribution so my take home was the same. Once I paid off higher interest debt I used that same accelerated amount to max 401k. I bought a house that is probably half what I could qualify for and buy economical cars. It's not magic its realizing a problem and doing something about it. I maxed my credit cards twice and did a consolidation loan. I learned the hard way. Now I exploit the credit card companies for the points and signing bonuses. People spend themselves broke at all income levels. You can't spend your way to financial freedom.

I just really wish they taught finances in high school. It took me time and loss of money to see the light. My father said to save, but he didn't and didn't expand upon that simple phrase. I will pass what I have learned onto my child so they don't have to make the same mistakes I or everyone else do.
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Old 11-13-2014, 05:21 PM   #42
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In my first few years of working (full-time, back in the 1980s), I did not take full advantage of the company match (at the time it was only 50% of the first 6%, in the early 1990s it was raised to 75%). I put only 3% into my 401k because I had several big-ticket items I spent a lot of money on: (1) I bought my first car with cash, avoiding a costly car loan, (2) I paid off my student loans, avoiding more high-interest debt, and (3) I was saving up to buy my co-op apartment, including the closing costs which nearly wiped out my savings. So, the extra $1,200 I kept in take-home pay was needed to help with all 3 items. As soon as bought my apartment, I raised my 401(k) rate to 6% to take full advantage of the match.
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Old 11-13-2014, 06:00 PM   #43
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To my dismay, I have never had a 401k match, and I find it appalling that those with a match don't take advantage of it.
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Old 11-13-2014, 06:08 PM   #44
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Mega matched the first 3% at 100%. Despite the free money half the folks didn't participate. Every year I was required to talk to my group about free money. Never pressured but did put some numbers on the board to try to explain.

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Old 11-13-2014, 06:10 PM   #45
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As a manager, it never ceased to amaze me how many people in the group left free money on the table-most in matching pension opportunities.

And I was amazed when I heard the stats on how many actually logged, checked their employee directed plans, and made changes to allocations, investment selections, etc.

It may be why I retired at 58 and they are still working.
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Old 11-13-2014, 06:21 PM   #46
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I was amazed that my companies 401k was not rated higher than it was. 70% match of the first 10% plus an additional 5% company contribution each year. Low cost Vanguard Inst class index funds (.05-.09 ER) and only $50 per year in recordkeeping. The reason for a lower than perfect score - below average participation. Now my suspicions are confirmed. I do work with quite a few idiots.
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Old 11-13-2014, 06:28 PM   #47
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...snip...

The reason for a lower than perfect score - below average participation. Now my suspicions are confirmed. I do work with quite a few idiots.
That's why I was required to talk with my group every year. Upper management wanted increased participation to get better numbers.

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Old 11-13-2014, 07:05 PM   #48
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I do know the idea of social security not paying out has been around since the 1960s. I recall my mother saying at the time that she did not expect to get her social security. Of course she got it for 19 years. So at least some folks have felt that SS is at least a bit of a ponzi scheme since the system started paying out.
Well, it is by definition a Ponzi scheme if a Ponzi scheme relies on later joiners to fund payments to earlier joiners. But the belief is that payments will be augmented when the time comes, at least if any politicians plan on reelection.

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Old 11-13-2014, 08:56 PM   #49
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i remember the employee meeting very distinctly when Mega Corp rolled out thier 401k around 1984. It replaced an employee stock savings plan that was more of an annual bonus plan than a savings plan. The 401k at the time was in addition to a DB pension and I don't think anyone envisioned the DB pension being phased out. I signed up right away. The clincher for me was the ability to borrow the money out of the plan in a pinch. That is one reason I don't have a problem with responsible use of 401k loans. I started putting my kids tuition funds in there as well since 529 plans did not exist. Out match varied from 25 to 100 % on the 1st 4% depending on business conditions.
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Old 11-14-2014, 08:31 AM   #50
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I bet a lot of the 401K refusers remember the 2008 scam and just don't trust that their money will be safe in the "Wall Street Casino". Even in a fixed income investment vehicle.
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Old 11-14-2014, 09:06 AM   #51
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I was fortunate to have a boss educate me on the company's new 401k plan in 1983 when I was 6 months pregnant.
I already participated in the ESOP, stock purchase plan, and had deductions from my check for savings bonds, but immediately enrolled (have always had a fear of being a bag lady). I was able to increase my contributions over the years. When I became a manager, I made it a point to talk about the 401k plan with my teams - some got it and some didn't.


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Old 11-14-2014, 05:22 PM   #52
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Maybe they should change the name from 401k, Retirement Savings Plan, etc. to The Free Money Get Rich Quick Plan or something like that!
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Old 11-17-2014, 03:44 PM   #53
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Maybe they should change the name from 401k, Retirement Savings Plan, etc. to The Free Money Get Rich Quick Plan or something like that!
Or better yet - take $500,000 from the millions passed up by employees, give that as a fee to Donald Trump or some other celebrity, and produce a short infomercial with them to have all employees watch that pitches a "simple, easy way to collect passive income WHILE YOU SIT AT HOME WATCHING TV to make you rich like me! All it costs is 52 weekly payments of just $39.95....and shipping and handling is FREE!".
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Old 11-17-2014, 04:50 PM   #54
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I haven't read all the responses to the OP, but this is really the reason that the whole "privatize social security" idea won't work, IMO. It assumes that most folks will have basic understanding of investing - and that is just not so. Just look at the mess the 401k system is in. You can't go a week without reading across all the financial reporting outlets the "crisis in retirement" we are facing due to complete lack of savings (or very low savings rates). Many people leave free money on the table, and when they do invest in their 401k, they have very little understanding of what funds to invest in, what the expenses are for those funds, etc.

I say thank God for social security. It serves as a safety net and if it wasn't there and people weren't forced into contributing to it their whole working lives, I think we would all be paying a lot more in taxes from our own retirement accounts to help those that didn't have the foresight to save one red penny for their own retirement.
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Old 11-17-2014, 05:53 PM   #55
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...........
I say thank God for social security. It serves as a safety net and if it wasn't there and people weren't forced into contributing to it their whole working lives, I think we would all be paying a lot more in taxes from our own retirement accounts to help those that didn't have the foresight to save one red penny for their own retirement.
Amen. America isn't 330 million people like us. We represent a tip of the bell curve.
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Old 11-17-2014, 06:02 PM   #56
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I say thank God for social security. It serves as a safety net and if it wasn't there and people weren't forced into contributing to it their whole working lives, I think we would all be paying a lot more in taxes from our own retirement accounts to help those that didn't have the foresight to save one red penny for their own retirement.
+1 as much as I hate it conceptually. It's keeping grandma out of the poor house (or my parent's house more likely lol). And keeping my parents in law out of my house! Thank goodness for SS. FYI none of those 3 that benefit greatly from SS had any 401k eligibility as far as I know (farmer, piecemeal assembler, and 1099 construction worker. respectively).

Their children have fared much better, and even the spendthrifts among them do a decent job saving for retirement in their company's 401ks (or they did the last we discussed it).
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Old 11-17-2014, 06:08 PM   #57
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When I was a young person, I did not count on every seeing a nickel from social security. Thus, for many years the focus on saving for retirement was a bit more critical.

I also did not trust that the mega-corp retirement pension would still exist by the time I got to be that age. Yet, I did take it into consideration when I made the decision to stick with mega-corp rather than jump ship to a different company that had no pension plan.

Now, I am fortunate enough (perhaps some would say 'Lucky', but that is a whole separate thread...) that I have the old fashioned three legged stool. Pension, Social Security, and Savings.

I still remember the conversation where my boss explained to the group how not taking the base amount that the company matched on the 401k was just plain stupid. That convinced me to sign up. I had not signed up the first few years for several reasons:

1. The initial plan was a company stock purchase plan. During the period of time that I had been with the company the stock went into free fall, and basically taught people that the market was a good place to lose your money. It was hard to sign up to voluntarily put money into a 401k, when the past 5 years was a big loser on our stock experience.

2. We were living check to check, raising kids, going from two income to one income, etc. It took a bit to pony up the cash for the 401k.

After we were in it for awhile, the market hung in there and we could start to see that not only were we benefiting from market gains, but also from the company match. After some experience where you could start to see the compounding, it was obviously a no-brainer.

My own kids- one started out gung ho on saving large amounts in his 401k. Convinced that he was going to sock it away and be able to retire early. Within the first year or two the market took a big old hit, and all he saw was that his account balance was significantly less than what he had put into it. It is still a struggle for him to see value in investing. Plus, the companies that he has worked for do not have any match. Much harder to see why this is the right thing to do when you get burned early.
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Old 11-19-2014, 06:01 PM   #58
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Now, I am fortunate enough (perhaps some would say 'Lucky', but that is a whole separate thread...) that I have the old fashioned three legged stool. Pension, Social Security, and Savings.
That's me too. In my case I'll call it "lucky" because while I knew there was a pension plan I didn't give it much thought until I was about 35. And although I wanted to save the soon-to-be-ex didn't and wouldn't or couldn't.

An elder law attorney we worked with on FIL's issues called me a "financial dinosaur". That's probably an accurate description.
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