Free To Canoe
Thinks s/he gets paid by the post
401Ks Not for Everyone
I have been preparing taxes during the season for a few years now. During my 2013 tax season, a large percentage (about 15%) of my customers have cashed in their 401k accounts with penalty this year. We live in a poorer, rural area. Most of my clients are lower middle class income range.
Some were desperate for money because of the severeness of the economic downturn but most I cashed in due to poor money management skills. Many think of the 401k as an emergency fund and therefore don't have a real emergency fund established. It is discouraging.
Another observation new to me. Most older retirees would be considered disabled if they were of working age. For many of my older clients, it is an effort to make it into the office to have their taxes done, especially in the bad winter weather. I worries me to watch them walk.
One is mistaken if they think the workforce (at least as I view it here) is going to retire on 401k and other retirement plans alone. Most Americans with poor money management skills are relying on the Social Security program for old age survival. What happens when they lose their job because they are not healthy enough to compete? SSA. No SSA, disability. No disability, welfare. Do we really want to talk about no welfare? Better to have them fund SS and at least pay for part of their own retirement than to be a complete burden to society.
I contend that a 401k, even with some matching by the employer is the wrong choice for some people. Unless a person has some saving ability and money management skills, it is usually a losing proposition. I never hear anyone discuss this aspect of retirement saving.
I have been preparing taxes during the season for a few years now. During my 2013 tax season, a large percentage (about 15%) of my customers have cashed in their 401k accounts with penalty this year. We live in a poorer, rural area. Most of my clients are lower middle class income range.
Some were desperate for money because of the severeness of the economic downturn but most I cashed in due to poor money management skills. Many think of the 401k as an emergency fund and therefore don't have a real emergency fund established. It is discouraging.
Another observation new to me. Most older retirees would be considered disabled if they were of working age. For many of my older clients, it is an effort to make it into the office to have their taxes done, especially in the bad winter weather. I worries me to watch them walk.
One is mistaken if they think the workforce (at least as I view it here) is going to retire on 401k and other retirement plans alone. Most Americans with poor money management skills are relying on the Social Security program for old age survival. What happens when they lose their job because they are not healthy enough to compete? SSA. No SSA, disability. No disability, welfare. Do we really want to talk about no welfare? Better to have them fund SS and at least pay for part of their own retirement than to be a complete burden to society.
I contend that a 401k, even with some matching by the employer is the wrong choice for some people. Unless a person has some saving ability and money management skills, it is usually a losing proposition. I never hear anyone discuss this aspect of retirement saving.