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Old 04-24-2013, 08:45 AM   #61
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Those interviews with the execs reminded me some of those interviews you see on "The Daily Show" when John Oliver or one of the other secondary characters interviews people in a satirical segment.
Ha, ha- that's what I thought too.

I watched it too. I'm surprised they made no mention of Roths, but I guess maybe they had to narrow the focus of the show.

I'm always a little puzzled by the all the talk about the 2008 crash. Unless you were unemployed and had to pull the money out, why would it matter so much?
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Old 04-24-2013, 09:15 AM   #62
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I'm always a little puzzled by the all the talk about the 2008 crash. Unless you were unemployed and had to pull the money out, why would it matter so much?
Well that's exactly it. The point was that most people don't understand the basics of investing and certainly don't have the skills to weather downturns. They often choose inappropriate asset mixes with high fees and then panic when they see their balances fall. Many people did the worst possible thing of borrowing from their funds after the 2008 crash. So they bought high, sold low and also incurred penalties. You might say "caveat emptor", but when you're saying that for the majority of people with 401ks I tend to blame the products and the salespeople rather than the customers.
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Old 04-24-2013, 09:35 AM   #63
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...but tapping 401ks to pay bills etc might not be classed as a choice if it's your only option to pay for an operation or the mortgage.
The 401K rules allow people to assess their situation and make choices consistent with their life circumstances. Would it be better for Ms Smith to have only untappable DB plans and social security when she needs $1000 for one month to keep from being evicted from her house? Is it better that she not have that operation?

The 401K plans haven't failed. They are a tool. People can buy annuities if they want to protect themselves from themselves.

SS is useful because it provides enough to live on. If not for SS, people who refuse to take responsibility for their financial lives would be depending on taxpayers. Well, they still >do< depend on taxpayers (the payers of present SS payroll taxes), but at least they helped pay for the earlier generation of retirees.
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Old 04-24-2013, 09:50 AM   #64
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Well that's exactly it. The point was that most people don't understand the basics of investing and certainly don't have the skills to weather downturns. They often choose inappropriate asset mixes with high fees and then panic when they see their balances fall. Many people did the worst possible thing of borrowing from their funds after the 2008 crash. So they bought high, sold low and also incurred penalties. You might say "caveat emptor", but when you're saying that for the majority of people with 401ks I tend to blame the products and the salespeople rather than the customers.
Why would you blame the products? They are doing exactly what the prospectus spelled out, which are presented to the employees before they pick the products to invest in. And who are these "salespeople"??

In all the jobs I had, a presentation was given by an HR person once a year who just put the funds up on a PowerPoint sheet and gave a short explanation (i.e. X fund is a short term bond, Y fund is an S&P 500 index, Z is yada, yada). There was no sales push whatever. Then you were given a sheet with info on all the funds and told to select what you wanted with percentages. They even showed sample portfolio's for conservative, moderate and aggressive mixes. And generally they showed what happened to them in good years and bad.

How much hand holding do we want the companies and government to do? Its always a tradeoff. You can be smothered with rules and regulations so that everyone comes out with the same result, or you can let people be free to make their own decisions with good or bad results. Myself, I'm glad I was able to freely choose.
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Old 04-24-2013, 09:56 AM   #65
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I enjoyed it. I thought it was great seeing the "big bank" retirement people squirm. I did wish that they had at least a short section on how to do it right. A novice might have been left with a feeling of doom and gloom, but no action steps. Perhaps they didn't want to venture into the "how to" business.

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Old 04-24-2013, 10:33 AM   #66
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I watched the show and did not think it was a waste of my time (can't say the same for the Hearst program that preceded it, though...).

It seems to me, as others have pointed out, that employee education really needs/needed to be improved with respect to saving for retirement. I don't remember what they provided us when I was first hired out of school, probably informational packets prepared by the fund companies offered and optional seminars given by representatives of those same companies. Then, there were day-long workshops given by my employer (state/academic) targeted for people who were not long from retirement. Good idea, and I signed up/attended, but for many the investment train has already left the station by that time, and only a portion of the day covered investing/finance. Other topics were other post-retirement things: health insurance, Social Security, pension plan, etc.

Thinking about it, one thing I never saw covered is high on the radar here at e-r.org lately: withdrawal/decumulation issues/strategies. That's unfortunate, since it's important, and I think would have been good for me to learn and think about earlier on.

Anyway, the PBS show had a little about that one guy who had to do his own research to investigate things like expense ratios and fees (good for him).

Other things about the show: yeah, those JPM and Prudential people were a real trip: I kept thinking "snake oil".

I also noticed that they interviewed briefly two guys in the middle of the show who I think are the two guys who wrote a book that ducky911 posted about: free book today only

I read this book recently, thought it was good although probably (like the PBS program) somewhat basic for people on e-r.org, but would be good for people just starting out to read about saving for retirement.

One spring, I took a course in business administration (not my field) just so I could learn something. It was divided into a number of topics, each led by a professor in that area. The Finance guy handed out copies of A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Tenth Edition): Burton G. Malkiel: 9780393340747: Amazon.com: Books

That's a book that I thought/think is excellent, and changed my mind about several things I'd been doing with respect to saving for retirement. But the reader has to come to it already motivated to learn.
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Old 04-24-2013, 11:19 AM   #67
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I started to watch it, but fell asleep a couple of times... so will go back and watch it later...


One of the things that I find interesting is that there is a lot of complaint on fees of US based funds... I would like to point out that even or high cost funds are 'cheap' compared to funds in other countries... when I was in the UK, there were people who kept asking me how they could invest in these funds because they were so much less than what they had.... I would think that this would be the same across the EU...


Not trying to defend the high fees, just pointing out that it is all relative...
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Old 04-24-2013, 11:27 AM   #68
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I tried to find an earlier post on this, but didn't find one so thought I'd give a heads up as I suppose the subject matter is of interest to many who are attending this E-R.org party. It's the premier next week of a new FRONTLINE episode called "The Retirement Gamble". My DVR is set.

The Retirement Gamble | FRONTLINE | PBS
Thanks for the heads up. I watched it this morning since I was “out” last night. (you've got to love DVR's) The show just helped to re-enforce my belief in DIY investing.
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Old 04-24-2013, 11:55 AM   #69
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I started to watch it, but fell asleep a couple of times... so will go back and watch it later...


One of the things that I find interesting is that there is a lot of complaint on fees of US based funds... I would like to point out that even or high cost funds are 'cheap' compared to funds in other countries... when I was in the UK, there were people who kept asking me how they could invest in these funds because they were so much less than what they had.... I would think that this would be the same across the EU...


Not trying to defend the high fees, just pointing out that it is all relative...
+1. I agree with this, the UK makes the US look like a paradise for the investor when it comes to fees. Even the UK's new Government mandated scheme "NEST" has a 1.8% contribution charge, ie front loaded, and a 0.3% annual management fee. The IRS makes it very inconvenient and expensive for US citizens to invest in UK based mutual funds, but why would you given the costs. When I return to the UK all my money will stay in Vanguard ETFs or US based retirement accounts that are tax efficient for the US and the UK
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Old 04-24-2013, 12:02 PM   #70
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Why would you blame the products? They are doing exactly what the prospectus spelled out, which are presented to the employees before they pick the products to invest in. And who are these "salespeople"??
I blame the costs incurred by selling of funds to the brokers who design the plans and the excessive fees on actively managed funds. Many 401k plans are just plain expensive and not designed to even give the employee the choice of a low cost option. DC plans can work, this forum is an example of that, but we are investment and retirement nerds, and many of us also have pensions and other sources of income. The current DC jungle needs some serious weeding if it is to work for the majority of people.
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Old 04-24-2013, 01:14 PM   #71
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The current DC jungle needs some serious weeding if it is to work for the majority of people.
+1
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Old 04-24-2013, 02:27 PM   #72
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+1. I agree with this, the UK makes the US look like a paradise for the investor when it comes to fees. Even the UK's new Government mandated scheme "NEST" has a 1.8% contribution charge, ie front loaded, and a 0.3% annual management fee. The IRS makes it very inconvenient and expensive for US citizens to invest in UK based mutual funds, but why would you given the costs. When I return to the UK all my money will stay in Vanguard ETFs or US based retirement accounts that are tax efficient for the US and the UK

Sorry, my first post must not have been clear...

These were people from the UK, Australia, and NZ asking me how THEY could invest in a US mutual fund to get the low fees... I had zero interest investing over there....

I told them you cannot without a US address.... one guy even asked if he could use mine!!!
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Old 04-24-2013, 02:29 PM   #73
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I blame the costs incurred by selling of funds to the brokers who design the plans and the excessive fees on actively managed funds. Many 401k plans are just plain expensive and not designed to even give the employee the choice of a low cost option. DC plans can work, this forum is an example of that, but we are investment and retirement nerds, and many of us also have pensions and other sources of income. The current DC jungle needs some serious weeding if it is to work for the majority of people.
I know a fair number of relatively intelligent people, who absolutely refuse to learn and get involved in managing their money, thus they are at the mercy of FPs who may or may not have their best interests at heart...
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Old 04-24-2013, 02:29 PM   #74
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The demise of the DB plan took enormous amounts of money out of employees pockets and gave it to the employers and to the mutual fund industry in fees. After seeing a recent post about an awful 403b plan with restrictions, poor investments and sky high fees no wonder Americans are failing to save adequately for retirement.
Uh..no.........
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Old 04-24-2013, 02:32 PM   #75
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The current DC jungle needs some serious weeding if it is to work for the majority of people.
+2

And for an example to prove my point - see this post about my husbands horrible 401(k) plan.

WWYD- Husbands craptastic 401k plan

Additional, anecdotal proof... My division was just bought - we're in process of enrolling in the new company's 401(k). Old company had low cost index funds - highest expense ratio was 0.18%. New company has mostly funds with expense ratios much higher. (The one and only vanguard fund is getting 100% of my new contributions.). Many of my coworkers are clueless as to why this matters. And they know math - they're engineers.
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Old 04-24-2013, 02:46 PM   #76
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The current DC jungle needs some serious weeding if it is to work for the majority of people.
I think if you check this ...over the past decade or so a significant percentage of house and senate seats have turned over.
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Old 04-24-2013, 02:47 PM   #77
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I know a fair number of relatively intelligent people, who absolutely refuse to learn and get involved in managing their money, thus they are at the mercy of FPs who may or may not have their best interests at heart...
And they get what they deserve.
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Old 04-24-2013, 03:01 PM   #78
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And they get what they deserve.
+1 Wisest thing my Dad ever told me was that "nobody is looking out for you, so you better look out for yourself*."

*only exception were my Naval Aviation brothers, they did look out for each and every one of us.
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Old 04-24-2013, 03:07 PM   #79
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Just watched the Frontline episode, and thought it was pretty well done. This ER.org community is not the target audience of course, but for the mainstream it lays out the pitfalls of not paying attention to your 401k options. The answers were there somewhat, mostly in Bogle's comment, but not very clearly layed out. Decent, not great...
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Old 04-24-2013, 04:16 PM   #80
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I watched it this morning and thought it was very good. Initially I was worried that this was going down the track to be a attack on capitalism and how we need the gubmint to save us but it took a turn away from that. I kept it and will watch it again. I wish Jack Bogle was interviewed more.

I did some dumb things early on but taking distributions or borrowing from my 401k were not some of them. I would look for mutual funds that had a good recent track record, I changed funds if they weren't doing well and other things that I know better to not do today. That said I did at least 1 thing right – I contributed 12% of my pay each year and got a 3% match (50% up to 6% after that no more matching dollars). I also was 100% invested in equity funds until 3 years prior to retirement, a bit aggressive but that was another dumb/risky thing I did. In the last 4 or 5 years I contributed the maximum and took advantage of the over 50 extra contributions. The 90's really helped this grow and grow fast being 100% in equities! My salary was adequate but not very generous even when I retired. I worked for a corporation that had ok choices and they did spend a lot of time educating us (from about 2001 on). I have always been frugal and LBMM. Not having children allowed me to have a fair amount of my pay available to sock away so that was a big help as well as divorces that did not hurt me financially.

But the bottom line is that most people are clueless - they take loans, they fail to even contribute or up to the free match, they take distributions or park money in the stable value fund for 20 years then wonder how they'll be able to retire at 65 when they are say 55. Having children can really effect your ability to save but taking lavish vacations, buying new cars, homes that are too expensive, spending most of what they earn, paying for kids education with their retirement funds, all these negatively effect your ability to have enough to retire not just early retire. I was one of the few people that brought my coffee, breakfast and lunch to work and saved a bundle, I always drove used cars, seldom spent money unless it was justified probably all the same things you did but they don't.

Bottom line that we all know here but that most people don't know is that costs matter and you have to LBYM. Spending money because you have it is a sure way to not be able to retire but most people seem to live for the present and ignore tomorrow until it “sneaks up on them”.
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