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Scott Burns -- The 401k monkeys
Old 07-10-2004, 04:22 PM   #1
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Scott Burns -- The 401k monkeys

http://www.dallasnews.com/sharedcont...rns.7af23.html

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Re: Scott Burns -- The 401k monkeys
Old 07-13-2004, 09:17 PM   #2
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Re: Scott Burns -- The 401k monkeys

I thought it was an interesting article, in the way it lays out just how few people really take advantage of the 401k. But it struck me that the author was barking up the wrong tree with the idea that it's the employers and the 401k plans that are not doing their job (not educating employees enough, not getting them to contribute, not offering good fund choices). While those things can and should be improved (for instance, I think that all 401k plans should include index funds as an option), I think the basic problem is simply that people don't care enough about their retirement.

Seriously, I think that's it. People are more concerned with "getting and spending" right away, and saving for the future is just not a priority. And when all the encouragement finally gets through and they contribute to their 401k, it's on autopilot. I mean, to ME it seems like Job #1 to make sure my money is working as hard as it can for me, and that I understand 100% what my plan is and how my fund choices advance that plan, but... my impression has been that most people don't know and don't particularly care to know much about it.

So... ignorance can be rectified, but apathy? Good luck. The problem I see is that the system may get overhauled to save the apathetic from their own cluelessness... and the end result will probably be less flexibility and fewer choices for those people who actually DO their homework and care about their money.
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Re: Scott Burns -- The 401k monkeys
Old 07-14-2004, 03:58 AM   #3
 
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Re: Scott Burns -- The 401k monkeys

Yep, that was me, i.e. oblivious to planning, just earning and
spending. Luckily I woke up in time.

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Re: Scott Burns -- The 401k monkeys
Old 07-14-2004, 05:12 AM   #4
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Re: Scott Burns -- The 401k monkeys

Hey Holly,

I have a slightly different take on "who's responsible". I don't believe that people/investors as a whole have ever really cared about saving for retirement. However, pre-401(k) days, the employers forced employees to save for retirement in things like DB plans and mandatory contributory DC plans (like university DC plans w/ TIAA-CREF).

When employers began switching from DB plans to DC plans, and began giving employees the choice of whether or not (and by how much) to save for retirement, employees did not (and still do not) have enough info to make educated decisions. We can't just throw people into a whole new (retirement) system and expect them to make rational/educated decisions. Kind of like "capitalism" in Russia. :

More choice and flexibility is not necessarily better, and a lot of the time can be much worse. Overall, I think the retirement savings problem is a breakdown that employers, gov't, and employees are responsible for. As to how much of the whole each is responsible for, that's an issue I don't want to touch. I also think that the lack of basic financial education has doomed and will continue to doom many people to lives of financial distress.

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Re: Scott Burns -- The 401k monkeys
Old 07-14-2004, 07:16 AM   #5
 
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Re: Scott Burns -- The 401k monkeys

Hi Alec. I have mixed emotions about your views on
personal responsibility for investing/rertirement planning.
Ordinarily I am a "look out for yourself-keep government
out of it" kind of guy. However, without SS I would be in deep doo doo, retirement-wise. I am a pretty smart
guy and yet government had to do it for me. I suppose
that begs the question...........would I have been more
careful and saved if there was no SS in my future?
I honestly don't know.

JOhn Galt
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Re: Scott Burns -- The 401k monkeys
Old 07-14-2004, 09:39 AM   #6
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Re: Scott Burns -- The 401k monkeys

There are many reasons I can think of where people just couldn't afford to save for retirement: those who are ill/disabled, too old to work, or low-income people who struggle just to have ends met, etc. I believe as a society (read: goverment), we are responsible to provide BASIC care for our old, poor and weak. Thus the SS (or OAS/CPP), free public school, welfare, subsidized shelter and free health care.

However, for many of us who are able and lucky (willing?), we can have a better standard of living and/or retirement (whether it is to retire earlier or richer etc) and this is our responsibility. Gov (or "society") will provide basic, if you want more than you gotta take care of it yourself. You want to retire early? fine, than start saving and investing as much/early as you can.

I am hard pressed to accept the ignorance argument because in this day and age where there are so many free information floating around (internet, library), you can easily learn many things. I think it is really many people don't want to take the responsibility to educate themselves or to save. it is easier to spend than living within your means and save.

And corporations? Hey they are in the business to make money. They are not in the business to teach you about personal finance, to hand-held you through your investment or even, to nag you to max your contribution. As far as they are concerned, they have provided a means through which you can start saving for your retirement. Whether or not you educate yourself about it and choose to use it, is up to you.

Then again maybe it is attitude of expecting someone/something other than youself, to take care of you is the barrier for most people. I don't know. I don't have that attitude.

Jane
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Re: Scott Burns -- The 401k monkeys
Old 07-14-2004, 10:04 AM   #7
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Re: Scott Burns -- The 401k monkeys

After being involved in the employement benefits industry for a number of years I have seen quite a few nightmare situations that were created by employees that took an inappropriate action (or inaction) that later on came back to bite them in the a**.

It seems that an employee (usually a new employee) enrolls in a 401k plan or company-sponsored medical plan that they almost "randomly" select the coverage and, in the case of 401k, the investment mix. Many employees just do not take seriously the initial enrollment process and, to magnify the problem, they never take action at a later date to review/change what they have enrolled for.

I now believe that it would be much better for both employer and employee if everyone purchased their health coverage and retirement coverage outside of the employement arena. Many laws and a great amount of reeducation would have to be done to convince both sides that it would be better this way. Many employers would have no problem with sheding this resposibility however I doubt that most employees would be willing to assume this responsibility on their own.

I'm afraid that most employees, left up to their own devices, would not begin their own health insurance or retirement plan and would, instead, buy a new car with the additional $ in their paycheck. Sad...but true.
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"I've been trying to learn more about apathy...
Old 07-14-2004, 10:15 AM   #8
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"I've been trying to learn more about apathy...

... whatever that is, but I find that I just don't care."
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Re: Scott Burns -- The 401k monkeys
Old 07-14-2004, 11:42 AM   #9
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Re: Scott Burns -- The 401k monkeys

Scott Burns columns without the registration required...

http://www.uclick.com/client/bos/sb/.../11/index.html

A benefits attorney seems to think that corporate America is failing it's 401k covered employees because the employees; don't participate, don't contribute enough, or can't "achieve near-market results".

How can corporate America run a contributory retirement plan like this?!! This is an outrage, I tell you. The benefits attorney seems to think that there will be grounds to sue... :
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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 07:29 AM   #10
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Re: Scott Burns -- The 401k monkeys

I always read these types of articles keeping in mind who the author is and what they want their audience to do......hmmm, the lawyer will start a class-action lawsuit of which he/she will take a 50-75% cut....how will that fare on the corporation's ability to pay percentages to DCPs and payout on DBPs?

I agree that nowadays there aren't many excuses to educate oneself regarding what it will truly take to retire---and almost all of it can be had free - either through the internet or the library. All choices have consequences - even for self-proclaimed victims.

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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 08:20 AM   #11
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Re: Scott Burns -- The 401k monkeys

Quote:
I believe as a society (read: goverment), we are responsible to provide BASIC care for our old, poor and weak. Thus the SS (or OAS/CPP), free public school, welfare, subsidized shelter and free health care.
One problem with your theory Jane, none of this stuff is free. Public schools spend on average about $7000 per kid, and we aren't exactly getting a great return on that investment. Half those kids will graduate with 8th grade reading skills.

Free health care, unless volunteered by the medical professional, involves the government taking the services of the doctor and paying a below market rate for the services in return.

We need to fix the system to make health care and a good education affordable to many more people - more government control will NEVER accomplish that.
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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 08:43 AM   #12
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Re: Scott Burns -- The 401k monkeys

Hasnt it been proven conclusively that the government is the worst operator of any business?
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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 09:49 AM   #13
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Re: Scott Burns -- The 401k monkeys

Quote:

One problem with your theory Jane, none of this stuff is free. Public schools spend on average about $7000 per kid, and we aren't exactly getting a great return on that investment. Half those kids will graduate with 8th grade reading skills.
You are right it is not free as all the social programs are supported by tax. I meant "free" as in they are accesible even to those who may not be able to afford it since they are paid already by tax money. Private school for example is not "free" by my definition since some poor people may not be able to afford the hefty price tag and thus, don't have the option of putting their kids through private school. But public school is open to eveyone no matter how much your income is.

You are right that the quality of school in North America is decreasing. I am not quite how to fix it: more funding? Train more teachers? Or, changing the public school system by placing more stringent tests, curicullum (sp?) etc? I don't know.

Quote:

We need to fix the system to make health care and a good education affordable to many more people - more government control will NEVER accomplish that.
I think in terms of providing social programs for the masses, government is so far a good choice for it (provided they are not corrupt, etc). Gov can pull off resources (such as tax money) and distribute it to social programs. How would you suggest to accomplish that other than gov being involved? I am not sure if you are thinking of private corporations providing social services. If you are how are we going to be sure that they won't just cater to those who can pay the highest price?

Awhile ago I was reading about a two-tier health services - one is the basic provided by Gov and the second tier is by private corp. It seems all good on the surface as the concept is that: if you can afford it why not get a better health care that is available to the masses?

But then I thought what is the downside of such system: more health care practitioners probaly will be drawn towards the private corp since they can probably offer better salary etc.

Good for the have. Not goo for the have-not.

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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 09:56 AM   #14
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Re: Scott Burns -- The 401k monkeys

Quote:
I always read these types of articles keeping in mind who the author is and what they want their audience to do......hmmm, the lawyer will start a class-action lawsuit of which he/she will take a 50-75% cut....how will that fare on the corporation's ability to pay percentages to DCPs and payout on DBPs?

deserat
Yeah that was my first instinct too. It reminds me of lawsuit of a woman who spilled her hot coffee on herself and sued McDonald for selling her hot coffee. I think the woman bought a hot coffee and then drove away with coffe on her lap.

Or people who tried to sue fast-food industries for making them fat?

What was that saying? You have made your bed and now you have to lie in it?

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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 10:07 AM   #15
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Re: Scott Burns -- The 401k monkeys

It says that everyone has a victim mentality and they need to find someone else to blame for everything that happens to them in the absence of accepting personal responsibility coupled with the "**** happens" inflection.

I wonder what people from just a hundred years ago would have thought of all this.

Is it part of the natural flow of a civilized culture, which flows through self-centered-ness and later into apathy?

Or is it that theres just enough hand-holding and care taking built into various 'systems' that we work with that we expect it throughout, yet the hand holding isnt seamless so we dont really get it?

Or is it that we're genetically bred to react only to more imminent threats and situations and those long away things like retirement planning give way to more urgent needs?

I heard someone say that the big problem with the world is that everything ALMOST works perfectly and as you might expect, but periodically something doesnt work at all and we're inured to the feeling that everything is supposed to go a certain way, so when something doesnt, we freak out and look for whose fault it is.

On the school thing, this is our greatest mistake. We pay teachers like macdonalds employees, put very little time and money into our kids educations, parents have no time after their 60 hour jobs to engage, and in the end we will reap what we sow.

Which is not enough.
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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 10:21 AM   #16
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Re: Scott Burns -- The 401k monkeys

Quote:

You are right that the quality of school in North America is decreasing. I am not quite how to fix it: more funding? Train more teachers? Or, changing the public school system by placing more stringent tests, curicullum (sp?) etc? I don't know.
Competition, competition, competition. Abolish the practical monopoly that government has on primary education and let the free market flourish. There are countless ways to teach just about everything, the government school textbook committee will rarely pick the best one. Actually, there isn't really a best one - every kid is different. Another argument for mass experimentation in education.

Quote:
Awhile ago I was reading about a two-tier health services - one is the basic provided by Gov and the second tier is by private corp. It seems all good on the surface as the concept is that: if you can afford it why not get a better health care that is available to the masses?
I think the primary problem with the health care system in the US is that the consumer is not directly paying for service. People pay $20 for a doctors appt and think that is the cost, which of course is very wrong. It's not even insurance, its pre-paid health care. We need the get the employers of it, and make insurance be insurance again, with the vast majority of consumers paying out of pocket for routine health care and insurance kicking in for unexpected events.

Since that probably won't happen in my lifetime, I do find John Kerry's proposal somewhat interesting. He wants to make government an re-insurer reimbursing private insurers for their expenses over 50K on any individual insured. It's the 80/20 rule, let the private market handle the 80% and society will help with the 20% that tend to be really expensive.

In an ideal world, I'd much rather see a free market solution. However, realistically, it's not going to happen, if anything government will get more involved in health care over the next 10-20 years. In that scenario, Kerry's proposal has some merit.

(Note - I'm not a Kerry supporter, but I will give him or his advisers credit for what I think is a fairly interesting solution that could actually help in the short term.)
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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 10:40 AM   #17
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Re: Scott Burns -- The 401k monkeys

Of course we'll never have real competition:

1. Teachers get salary plus commission for every kid that passes some benchmark test at each grade level.

2. Piss on health care - pay people to be healthy - raise the medicare deduction to create a trust fund - say 1 mil cap per person - pay each person a real amount in dividends starting at 55 or 62 depending on how much medical (of the cap) they used up and when during their life time. We(ER's) do numbers all the time and lay off with bookies - er I mean insurance. If say 1/3 to 1/2 of a teachers comp came from kids actually learning or staying healthy would boost your SS by 1/3 to 1/2 in $ - over time it might get some attention - especially if they all got a score card every year. And doctors and hospitals might have to start quoting costs.

And then of course for real all American competition - fantasy football.
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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 01:25 PM   #18
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Re: Scott Burns -- The 401k monkeys

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On the school thing, this is our greatest mistake. We pay teachers like macdonalds employees, put very little time and money into our kids educations, parents have no time after their 60 hour jobs to engage, and in the end we will reap what we sow.

Which is not enough.
Teachers have one of the most powerful and influential labor unions in the country. They aren't underpaid, in fact they have to create artificial scarcity with licensing schemes to keep salaries where they are. If anybody could walk into a public school, apply, and get hired on their merits, salaries would go down.

Anybody can be a teacher. A four 4 year education degree is not a high hurdle. They work 9-10 months a year, and have a pension plan that many in the private sector would kill for. They are paid on seniority, and once they get tenure they basically have guaranteed employment until they choose to retire.

That said, the good teachers probably are underpaid, if they even stay in game. The system is set up to reward longevity and obedience, not achievement.

Lack of money is not the problem with education.
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Re: Scott Burns -- The 401k monkeys
Old 07-15-2004, 05:13 PM   #19
 
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Re: Scott Burns -- The 401k monkeys

I've known some teachers (up close and personal).
Man, what a cushy job. The only gig that may be
easier is a cop in a small town. I suppose Dunkin' Donuts is grateful to have them though.

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