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Old 01-05-2017, 11:26 AM   #61
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This is one of the dumbest lawyers I've ever seen, from the article:

Some savers underestimate how much they will need to retire or accumulate too much debt. Lucian J. Bernard is among those wishing he had a do-over. The 65-year-old lawyer from Edgewood, Ky., doesn’t have much savings beyond a small company pension and Social Security. He cashed out a 401(k) in the 1980s to fund law school and never replenished it. He implores his daughter to start saving.

“It’s a little easier saying it than doing it,” he says.


Really? 65 year old lawyer with nothing saved? How the hell did you graduate from law school?

Just reinforces the fact that it's NOT the retirement vehicles that are at fault for some folks - those people are ignoring them.
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Old 01-05-2017, 11:29 AM   #62
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Originally Posted by Texas Proud View Post
/sarcasm/

But, but, but, but.... what about all those poor people who cannot make a decision for themselves!!! SOMEONE has to take care of them... isn't that what gvmt is for
You know there's a bell curve, right? There's plenty of folks that will not ever get it. I volunteer with one of them and it's not his fault, he just doesn't have an IQ high enough.
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Old 01-05-2017, 11:31 AM   #63
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Set the default option on 401k to 10% contribution and put it all in a target date fund. Limit loans and withdrawals other than in retirement. Even Joe should be able to handle that, especially if it's a default part of the plan so no additional action is needed.
This would work, and I don't know why mandatory contributions and plan selections have not already been enacted.
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Old 01-05-2017, 11:44 AM   #64
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This would work, and I don't know why mandatory contributions and plan selections have not already been enacted.
People did have mandatory contributions in the past. Some of have been linked in this thread.

A couple of problems in the past: The people doing the investing and management of those mandatory contributions pillaged them. And the low-expense-ratio passively-managed index funds of today did not exist decades ago. Just look at what has happened to teachers. There's a lesson there.


But nowadays, I would not be averse to forced investing in the TSP as long as I could have a guaranteed low expense ratio for a guaranteed set of asset classes such as those in the TSP. And as long as I could contribute additional investments to places of my choice.
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Old 01-05-2017, 11:47 AM   #65
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Lots of people wouldn't be keen on the government "taxing" them even more for another Social Security system, regardless of how good such a plan might be for the "average" person.
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Old 01-05-2017, 11:54 AM   #66
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Well then those people can't complain when they can't afford to retire.
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Old 01-05-2017, 12:04 PM   #67
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Isn't Social Security already [American] society's fall back plan?
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Old 01-05-2017, 01:36 PM   #68
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Social Insurance ie SS and Medicare and personal savings are a sensible approach to retirement. On the personal responsibility side some people could improve, but many people simply don't have the income to save much and LBYM. With the cost of healthcare, education and housing rising the practical poverty level is creeping into the middle class. If you are working for minimum wage living day to day is hard so I can see how retirement saving would suffer.

ER people often forget that this is a rarefied place full of well paid people or those who've had job with great benefits so LBYM hasn't meant worrying about the kids being hungry.


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Old 01-05-2017, 01:50 PM   #69
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Social Insurance ie SS and Medicare and personal savings are a sensible approach to retirement. On the personal responsibility side some people could improve, but many people simply don't have the income to save much and LBYM. With the cost of healthcare, education and housing rising the practical poverty level is creeping into the middle class. If you are working for minimum wage living day to day is hard so I can see how retirement saving would suffer.

ER people often forget that this is a rarefied place full of well paid people or those who've had job with great benefits so LBYM hasn't meant worrying about the kids being hungry.
+1
I'm not sure given our consumer-driven culture with relentless buy-buy-buy coming from all forms of media LBYM is a solvable problem without some sort of "forced-savings" option for DC plan or re-introduction of DB plan.

However, as others have said, the new administration seems quite keen on removing government mandates, so I'm not really sure any progress would be made in forcing 401K savings.

Despite being (more-or-less) a west-coast lefty, I've got more of a contrarian view on company-sponsored retirement plans. While I think they are awesome if you are a recipient, as a small business owner they don't make much sense to me. Unless I absolutely must provide it to be competitive in the marketplace for employees (like offering healthcare) I sure don't want to offer it. My job as a business owner is to run a good, profitable business and take care of my employees. But I'm not sure that extends to signing up to provide income for employees for the rest of their lives.
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Old 01-05-2017, 02:12 PM   #70
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Set the default option on 401k to 10% contribution and put it all in a target date fund. Limit loans and withdrawals other than in retirement. Even Joe should be able to handle that, especially if it's a default part of the plan so no additional action is needed.


The mechanics are simple, the politics are hard. Tell Joe the gumminit is forcing him to do something and watch him holler.
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Old 01-05-2017, 02:19 PM   #71
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The mechanics are simple, the politics are hard. Tell Joe the gumminit is forcing him to do something and watch him holler.
So forcing people to "do the right thing" "for their own good" is where America has end up.

Sigh
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Old 01-05-2017, 02:22 PM   #72
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I take it you didn't notice what's going to happen with the ACA.

IMO there are some things in life that are too big to fail. Adequate retirement and universal, truly affordable health care are two of them. SS is not enough for #1, and the ACA obviously wasn't the answer for #2. Fortunately we have all new people that are going to solve this for us.

*ducking*
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Old 01-05-2017, 02:23 PM   #73
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When we first started at a megacorp the fund options in the 401K had fees of 1% to 2%. It eventually got a lot better when they added Vanguard funds but can you imagine the amount of money that was effectively stolen from everyone with these funds? (which did not even end up beating the index). It is little wonder people did not trust 401K.
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Old 01-05-2017, 02:42 PM   #74
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My company started the 401k plan around 1986. I've actually heard about a number of employees who have been around since that time but never contributed to the 401k. 30+ years foregoing a 75% match on up to 6% of salary It boggles the mind.
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Old 01-05-2017, 02:49 PM   #75
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My company started the 401k plan around 1986. I've actually heard about a number of employees who have been around since that time but never contributed to the 401k. 30+ years foregoing a 75% match on up to 6% of salary It boggles the mind.
definite facepalm
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Old 01-05-2017, 02:51 PM   #76
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The mechanics are simple, the politics are hard. Tell Joe the gumminit is forcing him to do something and watch him holler.
google "Australia superannuation"

they basically outlawed DB plans quite a while ago and force employers to put in something like 10% of pay into a DC plan
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Old 01-05-2017, 03:26 PM   #77
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So forcing people to "do the right thing" "for their own good" is where America has end up.

Sigh
Forcing is never the solution, a carrot, or simply inertia, is better than a stick. In the UK retirement saving is not mandatory for the employee, but everyone is automatically entered into either an employer plan or if the employer is small into a Government sponsored DC plan called "NEST".The employee can opt out if they want, but they have to actively choose not to save and to give up the employer match.

So you have a choice, but in the US you choose to save and in the UK you choose NOT to save.
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Old 01-05-2017, 03:37 PM   #78
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Forcing is never the solution, a carrot, or simply inertia, is better than a stick. In the UK retirement saving is not mandatory for the employee, but everyone is automatically entered into either an employer plan or if the employer is small into a Government sponsored DC plan called "NEST".The employee can opt out if they want, but they have to actively choose not to save and to give up the employer match.
Exactly. I read about this in a couple of financial behavior books. This became clear with the organ donation checkbox on driver's license renewal forms. In states where the default was changed to be an organ donor the donation rates went up a huge amount (50%? I forget.).

So if the employer makes the default to save 10% to a target date fund AND to gradually increase the percentage with each raise until it gets to ~18%, most people will do that. Now, whether they'd have sense enough to leave it alone until retirement is a different question....
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Old 01-05-2017, 04:11 PM   #79
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Set the default option on 401k to 10% contribution and put it all in a target date fund. Limit loans and withdrawals other than in retirement. Even Joe should be able to handle that, especially if it's a default part of the plan so no additional action is needed.
Note that many companies have moved to opt out for 401ks from opt in, i.e. you are enrolled in the 401k for some percentage unless you take affirmative action to not enroll. This seems a simple solution. Note that a number of companies increase the percentage as raises occur also.
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Old 01-05-2017, 04:17 PM   #80
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Note that many companies have moved to opt out for 401ks from opt in, i.e. you are enrolled in the 401k for some percentage unless you take affirmative action to not enroll. This seems a simple solution. Note that a number of companies increase the percentage as raises occur also.
yes, and some do this annually so you have to opt out each year
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