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Old 10-14-2012, 09:59 AM   #21
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Likewise, what percentage of people roll their old 401k accounts into the account their current provider provides? I know a few people that have more than six 401k accounts! I myself have two since a previous employer's plan offers me some better options than my current plan provides. That 401k account does have less than $25k in it. I don't think the company that manages it knows the account is less than 4% of our total retirement account balances...
This and some earlier posts about pensions show how retirees manage to live despite their apparent lack of funds, and that the underbridges are not crowded with geezers.
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Old 10-14-2012, 10:20 AM   #22
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Likewise, what percentage of people roll their old 401k accounts into the account their current provider provides?
I wonder why folks do this. Surely most could do better by rolling them over to their own IRA account. This usually provides more options and lower costs. The only "advantage" I see is being able to take a loan against the 401K, but this is usually a bad move anyway.
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Old 10-14-2012, 10:26 AM   #23
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I wonder why folks do this. Surely most could do better by rolling them over to their own IRA account. This usually provides more options and lower costs. The only "advantage" I see is being able to take a loan against the 401K, but this is usually a bad move anyway.
I personally have not met anyone that rolled their 401k over to a new employers' plan. I know many people that either withdrew their money, rolled it over to an IRA or just left it at their old employer.
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Old 10-14-2012, 10:30 AM   #24
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I have changed jobs and whenever possible moved my 401k from my previous employers plans (usually high fee funds with limited choices) to a rollover IRA with much better options. For many people in my situation, the idea of measuring final 401k balance will be very misleading.

I also have concerns that setting a standard of 3% and setting the expectation that the government has determined that this will improve retirement could make people think this is sufficient, but it is no where close.

Here's a post where someone did the math:
Senator DeLeon’s Universal Retirement Security Act « CIV FI
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As the chart following this post proves, taking 3.0% from a paycheck – assuming normal inflation and minimal merit increases (which increases ultimate fund earnings by concentrating more investment in the early career years) – will buy a person who retires after 40 years of full time work at a final annual salary of $50,000 with a whopping $2,010 pension per year; that’s an extra $168 per month.
So if the problem is average 401k balance at retirement generates an annuity of only $80 per month, this new plan substitutes a government run and controlled investment scheme in which workers cannot rollover balances and get better investment choices in an IRA of their own choosing. And the benefit for an average worker following the guideline generates instead of $80 a month a new benefit of $168 per month.

This does not sound like a solution, it sounds like a nose in the tent for more "solutions" in the future with significant risks of dismantling the 401k/IRA system (that does work for some people, especially ER) in exchange for a system that's not nearly as good.
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Old 10-14-2012, 05:00 PM   #25
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I also have concerns that setting a standard of 3% and setting the expectation that the government has determined that this will improve retirement could make people think this is sufficient, but it is no where close.
Agreed. 3% isn't going to get you very far.

To think in extremely simplistic terms, let's say a career salary that just matched inflation, and investments that just matched inflation - if you worked for 35 years, and planned for a 35 year retirement, wouldn't you expect to have to put away 50% of your income to match your final salary for 35 years?

You can adjust that a bit for say a 40 year career and a 30 year retirement, but that's still going to be far above 3%. I recall a frugal co-worker who said he felt he had to save half his paycheck - this might have been his thinking.

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Old 10-14-2012, 09:20 PM   #26
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Likewise, what percentage of people roll their old 401k accounts into the account their current provider provides? I know a few people that have more than six 401k accounts! I myself have two since a previous employer's plan offers me some better options than my current plan provides. That 401k account does have less than $25k in it. I don't think the company that manages it knows the account is less than 4% of our total retirement account balances...
Good point - I've kept some in my previous employers' plans because they have a lower expense ratio.
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Old 10-15-2012, 10:19 AM   #27
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Originally Posted by marko
............
This would supplement the forced savings plan called Social Security where employers take a portion of your salary and give it to the government who then pays it back to you years later (or not).










Well sort of. Actually the government takes your money and pays it to current retirees. You get a promise that the government will in turn take money from active workers and give the money to you when you retire.
Hey what could possibly go wrong, I mean it's the AARP and the federal government looking out for us.....

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AARP is politically biased and operates with questionable ethics (IMHO) so I would look upon any proposal from them with a jaded eye. Whether you agree with them or not, their position on the Affordable Care Act agreeing to take money from Medicare reimbursements cost them many members. They are currently trying harder to appear "non-partisan." Their questionable ethics comes from their business model. They charge people membership fees to try to sell them insurance and investment products which creates the bulk of their income.

If they favor forcing people to invest in retirement plans, they are obviously hoping to get on the bandwagon selling plans. If the government is serious about having people save for retirement, they would open up the government's thrift plan to every American.
Well said
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Old 10-15-2012, 12:04 PM   #28
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Whether you agree with them or not, their position on the Affordable Care Act agreeing to take money from Medicare reimbursements cost them many members.
Would you care to clarify this? I do not know that the Affordable Care Act takes money away from Medicare reimbursements or that AARP proposes to change the act to do this. This sounds like a falsehood. Educate me.
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Old 10-15-2012, 12:18 PM   #29
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Would you care to clarify this? I do not know that the Affordable Care Act takes money away from Medicare reimbursements or that AARP proposes to change the act to do this. This sounds like a falsehood. Educate me.
Lets not go there. Off topic and too slippery.
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Old 10-15-2012, 12:23 PM   #30
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Would you care to clarify this? I do not know that the Affordable Care Act takes money away from Medicare reimbursements or that AARP proposes to change the act to do this. This sounds like a falsehood. Educate me.
The PPACA reduces the Medicare Advantage subsidies put in place to launch that program. It also reduces the rate of growth of some reimbursements for Medicare covered treatment. The savings from these changes are used to reduce the rate of growth for Medicare Part A co-payments, Medicare Part B premiums and co-payments, and to cover the changes in filling in the "donut hole", the gap in prescription drug coverage.

http://www.aspe.hhs.gov/health/repor...vings/ib.shtml

Congressional Research Service report: Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA)
http://www.ncsl.org/documents/health/MCProv.pdf
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As noted by CBO, the provisions that are expected to result in the largest savings include the following:
• Permanent reductions in the annual updates to Medicare’s fee-for-service payment rates (other than physicians’ services) will account for an estimated budgetary savings of $196.3 billion over 10 years.10
• Setting payment rates in the Medicare Advantage program on the basis of the average bids submitted by MA plans in each market will account for an estimated $135 billion in savings (before interactions) over 10 years.
• Reducing Medicare payments to hospitals that serve a large number of low- income patients, known as disproportionate share (DSH) hospitals, is expected to decrease expenditures by about $22 billion.
• Modifying the high-income adjustment for Part B premiums is projected to save $25 billion over 10 years.
• Creating an Independent Payment Advisory Board to make changes in Medicare payment rates is expected to save approximately $16 billion over 10 years.
Oops. Just saw MichaelB's note. If this is important to anyone, follow up in a new thread.

I do think that the California supplemental retirement account is a pretty small savings program, percentage wise. It might save enough to keep some seniors off cat food, but I don't think it makes for a cushy retirement.
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Old 10-15-2012, 12:40 PM   #31
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Lets not go there. Off topic and too slippery.
OK
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Old 10-15-2012, 12:57 PM   #32
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The PPACA reduces the Medicare Advantage subsidies put in place to launch that program. It also reduces the rate of growth of some reimbursements for Medicare covered treatment. The savings from these changes are used to reduce the rate of growth for Medicare Part A co-payments, Medicare Part B premiums and co-payments, and to cover the changes in filling in the "donut hole", the gap in prescription drug coverage.

Medicare Beneficiary Savings and the Affordable Care Act: ASPE Issue Brief

Congressional Research Service report: Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA)
http://www.ncsl.org/documents/health/MCProv.pdf


Oops. Just saw MichaelB's note. If this is important to anyone, follow up in a new thread.

I do think that the California supplemental retirement account is a pretty small savings program, percentage wise. It might save enough to keep some seniors off cat food, but I don't think it makes for a cushy retirement.
Not a problem, good idea to start a new thread if there is interest in Medicare and PPACA.
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Old 10-15-2012, 01:20 PM   #33
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Since I am the OP, I support this idea as I did not intend to discuss anything related to PPACA under the thread I started. Discussing healthcare policies on this website has gotten me in trouble in the past so I won't take any more chances :-)

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Not a problem, good idea to start a new thread if there is interest in Medicare and PPACA.
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Old 10-16-2012, 09:19 AM   #34
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Since I am the OP, I support this idea as I did not intend to discuss anything related to PPACA under the thread I started.
So what did you want to discuss? Other than post a link and summary, you have not commented at all on the content or any responses.

Was there a point you wanted to make? It escapes me.

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Old 10-16-2012, 11:04 AM   #35
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I was just curious about what participants on this website feel about the way 401k plans work and whether they feel if regulations about 401k plans should be changed, in light of the story from the article.

Please remember I am not FIREd yet so not much time to participate as much as I would like.

However I can confirm that I would prefer to stay away from healthcare politics. My views are well known- nothing to add on this front :-)

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Originally Posted by ERD50

So what did you want to discuss? Other than post a link and summary, you have not commented at all on the content or any responses.

Was there a point you wanted to make? It escapes me.

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Old 10-16-2012, 11:18 AM   #36
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I was just curious about what participants on this website feel about the way 401k plans work and whether they feel whether regulations about 401k plans should be changed, in light of the story from the NYT article.

Please remember I am not FIREd yet so not much time to participate as much as I would like.

However I can confirm that I would prefer to stay away from healthcare politics. My views are well known- nothing to add on this front :-)

The article does not change my view on 401(k)s. Just because there are a LOT of people who do not plan for their future in anything, much less retirement does not mean that the vehicle created for the people who do plan and contribute should be changed...

I am sure someone else can come up with the figure, but I believe there is over a trillion dollars in 401(k)s, so it is not like it is not being used as intended...
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Old 10-16-2012, 12:52 PM   #37
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Yes, make the spendthrifts save or whatever. But leave the 401K's alone!

Speaking of leaving people alone, I just remember a Pink Floyd song in a movie that I watched in the early 80s. I usually listen to much more sedentary music, and do not remember much about the music in this movie, except for the following song.

We don't need no education
We don't need no thought control
No dark sarcasm in the classroom
Teacher leave them kids alone
Hey! Teacher! Leave them kids alone!
All in all it's just another brick in the wall


PS. There's a brief spanking scene (of an adult, not a kid) for people who may be interested.

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Old 10-16-2012, 05:06 PM   #38
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IMHO, the current SS system is all the government provided retirement system we need. Let's get it fixed up to be financially sound and then leave the rest of retirement planning to the individual.

Plans to legally require force people to put money in to other various investment schemes seem like something that the lobbyists for investment advisers and firms would like. No doubt they smell big commissions and fees.
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Old 10-16-2012, 06:31 PM   #39
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Well, I managed to approach the national average with my first job.

I worked five years for a long defunct former #2 computer company in the world when I was a teenager. Their bones were bought by another company which was bought by another company that I suspect will be bought by someone else in the next few years.

All was well until I received a notice from the current company saying that my pension plan may have been hacked into, so they were giving me free credit monitoring. Hmm? Pension? So when I called and worked my way through a bunch of people, I finally got to the right department and discovered that my 5 years (and 2 days!) of vested employment entitled me to a $50 a month pension or a lump sum of about $5k when I'm 55.

Talk about 'found money'!
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Old 10-17-2012, 06:03 AM   #40
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Well, I managed to approach the national average with my first job.

I worked five years for a long defunct former #2 computer company in the world when I was a teenager. Their bones were bought by another company which was bought by another company that I suspect will be bought by someone else in the next few years.

All was well until I received a notice from the current company saying that my pension plan may have been hacked into, so they were giving me free credit monitoring. Hmm? Pension? So when I called and worked my way through a bunch of people, I finally got to the right department and discovered that my 5 years (and 2 days!) of vested employment entitled me to a $50 a month pension or a lump sum of about $5k when I'm 55.

Talk about 'found money'!
I would take the $50.
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