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Old 07-24-2012, 07:59 AM   #21
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Originally Posted by BLS53 View Post
Do you really think the bulk of the population has the inclination and aptitude to amass an investment portfolio on their own?

I'm far from stupid, and I don't understand half the stuff you discuss on here concerning investing.
Which is why we need financial education in schools, should be a required course.

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And as for government mandated 401k's putting a crimp in your E-R plans. Guess you'll just have to earn more money, and step up your investment skills even further.
Especially when the govt decides that it's in their best interest that your new retirement age is 67 or later.
TJ
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Old 07-24-2012, 08:51 AM   #22
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While the system has failed for many people, it is because of their lack of discipline, not because the system is flawed. IMO the fact that you shouldn't cash out your 401k when you change jobs, raid it before retirement, etc are or should be well known to the general population given all the articles and help that is out in the public domain. I'd bet that if you designed a questionnaire that most people know it is not wise to do such things, but they do them anyway because they are weak.

If one has access to a 401k and saves and increases their savings over time and invest it a target date fund (hopefully low cost, or mix of bond/equity funds) then they will have a substantial retirement nestegg in their 50s and 60s. That is what many people on this board have done so it proves that it is possible.

In my mind the question becomes whether it is better to dumb down the system so people can't be stupid (say SS on steroids) or educate people better.

Perhaps an alternative might be to either outlaw or make some of the stupid things that people do harder. For example, require that a 401k be transferred to another 401k or IRA when one changes jobs, outlaw or increase the penalties for early withdrawals, require employers to provide at least some basic index low-cost investment options, etc.
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Old 07-24-2012, 09:18 AM   #23
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I find it interesting that there are many billions of people on this planet that do not even come close to the wealth we have here and they seem to be doing just fine... without any retirement plan....

AND, people have been living for many hundreds of years without any plan...

All these things are new... they did not exist when my mother was born...


I just do not think it is gvmt's job to make sure everybody is able to live like they did prior to retirement.... SS is there for basics... you can live OK with that level of income..
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Old 07-24-2012, 09:23 AM   #24
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Bingo. I agree that we need a safety net to prevent the bulk of the population from ending up destitute in retirement.

I feel that SS handles this pretty well. We can discuss tinkering with it, but ultimately I don't see any reason to greatly expand it. I certainly don't want the government creating a separate forced annuity program. They have enough problems keeping the promises they have already made.

SS is generally enough to keep seniors out of brutal poverty. They may have a reduction in their standard of living if they haven't saved, but they will be able to pay rent in a basic place and get enough to eat.



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I wouldn't.
We already have a REQUIRED program that annuitizes your contributions, is inflation adjusted, it's called social security. If we need more SS, we can just raise SS taxes and be done. Of course SS had it's own problems, problems that won't be solved by ANOTHER government program.
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Old 07-24-2012, 09:31 AM   #25
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I find it interesting that there are many billions of people on this planet that do not even come close to the wealth we have here and they seem to be doing just fine... without any retirement plan....
I bet a lot of them live in a culture where the kids are responsible for supporting them in their old age. That's the only way my in-laws can be surviving right now.
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Old 07-24-2012, 09:47 AM   #26
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I don't think the article is discussing a plan where those of us on E-R.org get to go along our merry way, while the government takes over everyone elses retirement planning. That's the problem. SS is mandated no matter how responsible you are. This kind of stuff isn't about providing a safety net, it's about taking over. Those of us that choose to save, invest etc., would no longer have that freedom, or it would be curtailed so the masses could be secure. The government is not a cure for stupidity, laziness, or apathy. It breeds those qualities.

Like TJ says, if they would start educating people on the critical financial aspects of life instead of all the BS they are taught in school now, this wouldn't be a problem. Heck, it's not a problem now.
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Old 07-24-2012, 10:23 AM   #27
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I'd welcome some sort of government program that consolidated 401k/IRA contributions into one account, invested conservatively for the person's age, and made it super simple to save and retire.

What we currently have fails most Americans, and is therefore, not *working*.
I'd welcome a voluntary program, but it wouldn't work for the same reason that 401k's 'haven't worked' - which has little to do with investing. 401ks have worked just fine for people who've saved and used them as recommended by 401k admins, it doesn't have to be rocket science as Jack Bogle and many others have demonstrated for decades. I agree most people have not been successful with 401ks, but it's because a) they don't save/save enough and/or b) they think they're a lot smarter than they actually are and do all sorts of stupid things that ultimately have them buying high and selling low or crazy AA's. It's not because they couldn't do better, it's because they're not interested.

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So you guys don't like people retiring with only SS and pensions, and now you don't like mandated private accounts either.

Do you really think the bulk of the population has the inclination and aptitude to amass an investment portfolio on their own?
Not trying to be flip, but what else should be mandated? Everything?

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The "average" American has proven they lack the discipline to save for their own retirement and thus need somebody else to do it for them.
And there's the core issue...

With all that said, it wouldn't surprise me at all if mandated private accounts became law one day. Wall St would undoubtedly get behind the idea...
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Old 07-24-2012, 10:28 AM   #28
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Which is why we need financial education in schools, should be a required course.

Especially when the govt decides that it's in their best interest that your new retirement age is 67 or later.
TJ
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Old 07-24-2012, 10:48 AM   #29
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In the current system, in order to have a financially secure retirement, individuals must be responsible and do some saving. To help, they have 401k, IRA, 403b and other tax advantaged programs to make it easier. Yet still many (most?) just do not save enough and spend more than they should. Faced with the notion that they MUST be responsible, they still don't and overspend.

Imagine instead a sweeping government program that makes everyone no longer need to be responsible, they are forced to save enough to be slightly better off than Social Security alone. I expect that will quickly become the accepted standard and expectations will shift to spend all that remains - but rely on government programs to take care of everything. We will become even more rare than we already are.

I also cringe at the thought of the single point of failure if everyone's retirement savings is collected into one big program. A bad assumption or poor investment decision could wipe out everyone's savings.
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Old 07-24-2012, 12:03 PM   #30
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I just searched through the United States Constitution and its amendments and I did not find any RIGHT to retirement.

Retirement should just be a privilege for those who choose to participate and therefore the government shouldn't be coming up with new ways of collecting our money.

I believe that a properly implemented social security system would only be used by the destitute and could probably be combined with the welfare system to streamline care for those in need.
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Old 07-24-2012, 12:18 PM   #31
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....Do you really think the bulk of the population has the inclination and aptitude to amass an investment portfolio on their own?....
Absolutely, positively YES.

Given what is broadly available in 401k's, tIRAs and Roth IRAs there is no fathomable reason that a middle income person cannot amass a nice retirement nestegg to supplement SS. As others have said, it isn't rocket science. If they just had a subscription to Money or another financial magazine that would do the trick as they all say the same things about how it is foolish to cash out a 401k when one changes jobs, use retirement savings for purposes other than retirement, etc. but people do it anyway because they are undisciplined

Now when they are screwed as they approach retirement they will whine about it, but it is simply the cumulative effect of their own bad decisions.

Unless we want a nanny-state (and I do not) to require retirement savings is dangerous direction to head. Once our children's generation see how their parents has screwed themselves and have been forced to work into their old age or live in poverty in their old age hopefully they will avoid making the same mistakes.
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Old 07-24-2012, 12:43 PM   #32
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I love these discussions. They ignore the true premise of democratic government in the current age. Government doesn't want to educate anyone, if they did we wouldn't have the school system we have. Government also has no desire for free citizens, rather it desires debt trapped servants. Modern democracy is an elaborate ruse to 1) buy votes with middle class dollars and 2)collect large "campaign contributions" from plutocrats who can be repaid at no cost to the political operatives by directing favors, favorable legislation and favorable subsidies etc.

The game is fixed from top to bottom. Both parties play similarly, they differ only in spin.

There is no interest in "the masses", other than as cover and justification for further incursions into whatever freedom we have left. There is also no interest in justice, or in improving society. The most casual look around will convince of this.

Ha
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Old 07-24-2012, 12:50 PM   #33
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Ha-lways the optimist.....
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Old 07-24-2012, 12:51 PM   #34
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This is a laughable article. The 401k/IRA has failed for some, but works great for many that use it. The truth of the matter is that some people like awesome stuff now (like big houses, sweet speed boats, and flashy cars) and don't want to spend any time thinking about or planning for their future. After all, it might take time out of their busy schedule and crimp their style.
Respectfully, I think you may have missed the point. She is not talking about the folk that use it to their advantage and manipulate their financials to ensure a reasonable retirement. She is referring to the 80%+ Majority who cannot and do not.
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Old 07-24-2012, 12:54 PM   #35
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I love these discussions. They ignore the true premise of democratic government in the current age. Government doesn't want to educate anyone, if they did we wouldn't have the school system we have. Government also has no desire for free citizens, rather it desires debt trapped servants. Modern democracy is an elaborate ruse to 1) buy votes with middle class dollars and 2)collect large "campaign contributions" from plutocrats who can be repaid at no cost to the political operatives by directing favors, favorable legislation and favorable subsidies etc.

The game is fixed from top to bottom. Both parties play similarly, they differ only in spin.

There is no interest in "the masses", other than as cover and justification for further incursions into whatever freedom we have left. There is also no interest in justice, or in improving society. The most casual look around will convince of this.

Ha
120% Agree!
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Old 07-24-2012, 02:27 PM   #36
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I love these discussions. They ignore the true premise of democratic government in the current age. Government doesn't want to educate anyone, if they did we wouldn't have the school system we have. Government also has no desire for free citizens, rather it desires debt trapped servants. Modern democracy is an elaborate ruse to 1) buy votes with middle class dollars and 2)collect large "campaign contributions" from plutocrats who can be repaid at no cost to the political operatives by directing favors, favorable legislation and favorable subsidies etc.

The game is fixed from top to bottom. Both parties play similarly, they differ only in spin.

There is no interest in "the masses", other than as cover and justification for further incursions into whatever freedom we have left. There is also no interest in justice, or in improving society. The most casual look around will convince of this.

Ha

This post brought up an old memory that had not surfaced for many years...

When I was in college, we had someone come to talk to a large group of people about life in the business world... he said something like "I love to hire people who have just gotten married, bought a house, and had kids... they are very motivated to work hard to keep their paycheck coming"...

This has been the normal way for a lot of business... work your employees as long and hard as you can, and hope they continue to buy stuff so they have to continue to work...

A viscious cycle....
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Old 07-24-2012, 03:00 PM   #37
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There are a lot of tangents in this thread aren't there.

Q: Are most people capable. A: Yes, if they'd do nothing more than invest 10% of their income in a balanced/target/life AA fund they'd do fine. Every 401k provider I ever worked with came into our facility once/year and basically told my employees to do just that.

Q: Are most people inclined. A: Nope. Not only do they overestimate their investing acumen and shoot themselves in the foot, they either don't save enough, don't save at all or "loot" their 401k account unnecessarily. Not saving is the root problem, not 401k's of investing knowledge per se.

In conclusion, most people (80% +/-?) don't make good use of 401k's, IRA's, etc. and therefore aren't/won't be prepared to retire. And they all vote, so don't be surprised if legislators mandate something. It would be consistent with Ha's views as well, I am sure the financial sector would've happy to throw campaign contributions to legislators who make sure Wall St benefits from all the mandated retirement accounts. I hope to God we don't get another paygo scheme when the demographics are already working against us...
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Old 07-24-2012, 03:02 PM   #38
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Ghilarducci is worried that people making $100k won't have the self-discipline to save and won't be able to maintain their lifestyles in retirement. I don't know why that's the government's business.

Those people will get about $28k annually from SS. Maybe that will go down to $21k to keep SS solvent. That provides them enough to live indoors and eat. If they want more in retirement, they can decide to save without being forced.

Even if we introduced some mandatory saving scheme, people who don't want to save will offset that. They will look at the growing balance in their retirement accounts and simply borrow more to spend today - they will reason that, after all, they still have all that money in the mandatory savings.
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Old 07-24-2012, 03:08 PM   #39
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Getting off my soapbox, once again I see an article that purports to say something about how people are or aren't prepared for retirement, but doesn't begin to do that.

People have low IRA/401k balances. Do they own their homes? Do they have defined benefit pension plans? Do they have other savings, rental properties, etc?

It seems straightforward to sit down with a sample of 62 year-olds and get the full picture - SS, DB, DC, house, other assets, etc. That picture should include how much money they really need to maintain the lifestyle they had when their kids were home (ie the time these gurus say they were supposed to be saving), did the kids leaving home reduce their spending target? People on this board routinely ridicule the 70-80% rule-of-thumb, what do people really need?

The BLS gets people to keep detailed records of their spending for its Consumer Expenditures Surveys, it shouldn't be any harder to find people who will share this retirement information.

I'd like to see the results of that study. Heck, I'd volunteer to be one of the interviewers. I think we'd learn a lot about how well people have or haven't planned.

(Okay, maybe that was just a different soapbox.)
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Old 07-24-2012, 04:20 PM   #40
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The ant and the grasshopper. It will never be any different. Same reason why some people choose not to pay their current bills. Never mind saving they can't even live paycheck to paycheck.
I'm no rocket scientist but I wouldn't trade my 401k for the pension my company eliminated years ago. Put the money away from day one, never miss the cash and live accordingly.
I know a number of people who make good money, spend every cent and lament their situation. They comment the 401k is useless yet they don't even contribute enough to get the max match from the employer. Max out the 401k , IRA, Roth etc diversify and you'll be fine. The system works.
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