You Are Responsible For Your Retirement

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There’s an article over at Yahoo Finance, in their retirement section (if you aren’t looking at it today, June 27th, you probably won’t see it on the front page anymore), titled “The High-Stakes Battle Over Automatic 401(k) Picks.” The little blurb underneath reads:

Legislation stalled over what investments should be included in automatic-enrollment plans is causing millions to lose out on retirement savings. What forces are driving the dispute?

If you read that strictly as its written, it sounds like Congress is causing innocent Americans to lose millions of dollars because of their deadlock on what should be the automatic pick in auto-enrollment 401ks. It says that because that’s eye-catching and it’ll lead to a click from the reader, but ultimately it’s not Congress’ fault, it’s the employee who is losing out on retirement savings’ fault. If everyone was clued in enough to enroll in their employer sponsored 401k plan, Congress wouldn’t have to waste time on the issue, there are plenty of other issues to waste time on.

You are responsible for everything that happens to you, including your retirement savings, whether you like it or not. The moment you think that you aren’t responsible for your own life you can just pack it up and call it a day.

Enroll in your 401k, put it in something intelligent (warning: you might have to read something), and ask your legislative representative to do something useful like clean up the environment.

{ 9 comments, please add your thoughts now! }

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9 Responses to “You Are Responsible For Your Retirement”

  1. Foobarista says:

    The problem is often there are no “intelligent” choices, especially in smaller companies. I was once in a 401K plan where every single stock fund managed to lose money – and this was in 1999 when you had to work hard to lose money in stocks. Fortunately, I was aware of the wretchedness of the plan and had my money in the money-market fund.

    The _real_ scandal in 401Ks, and something that could be addressed by Congress, is that 401Ks are a wierd sort of “walled garden” that are managed by entities called “401K custodians” that restrict the fund choices to a set of expensive funds and use the commissions to make big money. In my last two companies, I managed to kick and scream enough at our HR people to get S&P 500 index funds, but it was never easy, and I heard lots of lectures about why index funds are terrible and “professionally managed” funds are the cat’s meow.

  2. Phil says:

    I think it was Mario Cuomo — or another Cuomo — who is often quoted as saying something like the following:

    “It is government’s job to make sure that services are provided, not necessarily to provide the services.”

    If we, as a country, could manage to do the same thing with social security, medicare, medicaid and all the rest of entitlement issues as we do with 401(k) — encourage/force people to take responsibility for their own lives — we’d probably have a much smaller federal government. However, that would be at the expense of politicians having that much less control over our lives.

    I think it would make for a great compromise, don’t you think?

    Go Fairtax…

  3. Bill says:

    I whole-heartedly agree that YOU are ultimately responsible for your fate, not the government. The headline, problably written to catch the eye of the reader, could also have been written by a liberal who actually thinks it’s the governments job to provide a comfortable retirement for all. What paper did the headline come from?

  4. Charlie O'Neal says:

    While I only invest enough for the company match. I feel that a person should have a choice in what what he/she invest their money in.

    The funds available for investment in my 401k sucks to the nth degree. All of the funds underperform and on top of that you are charged 1.4 – 1.7% in management fees for most of the funds.

    I have most of my retirement invested in taxable accounts (IRA is maxed each year). While most people would disagree with this train of thought, at least I can get into index funds that have low expense ratio’s.

    Until the gov’t decides to regualte how 401k’s are managed. A person is paying a good chuck of his retirement on excessive/hidden fees, at least at the company I work for. I would not be suprised if this happens with a majority of the 401 K plans.

    I’ll get off my soap box now.

  5. mbhunter says:

    Read something?? Nah, I’ll just put my money where you tell me, Jim.

    Actually, the main question I ask is, “What motivates the government to push for legislation that makes it a default that I enroll in a 401(k)?” (Meaning the Pension Protection Act of 2006.) As an acquaintance quipped, “When’s the last time that the government has ever done anything for my benefit?”

    If the government really wanted me to save, why not just run an educational campaign about the virtues of thrift? Why instead write law that steers me into having contributions deducted from my paycheck into a tax-advantaged and restricted retirement account? This is probably not for my benefit.

  6. Luke [also Zook] says:

    I really enjoy these posts and threads. It must get slapped in ALL of our faces [the Generation X and y’s especially] because we should only depend on ourselves for our future. Of course the young, old and handicapped are excluded in this.

    I am talking about the new 22-year old right now that just graduated from college. He/she MUST begin the process of making money and saving for their future. To rely on the government for finacial secruity doesn’t hit home hard enough for Americans in general. There are far to many folks in debt and not having a care to the difficulty they will endure as they age.

    I am in the minority on this, but I think basic classes discussion personal resposibity and finance should be required in every single public school..I had to take wood shop, cooking and for my quality high school to not have touched on basica finacial discussions and needs is a shame and disgrace.

    In a perfect world, well finacially educated parents would discuss these topics with their children, but that simply isn’t the case.

  7. Steve Austin says:

    I can think of something that I’d like my lawmakers to argue about instead: forcing 401(k) Plan Administrators to allow participants to disenroll once a year, roll the balance over into an IRA, and then immediately re-enroll for the next year. Any 401(k) summary plan description that I’ve read only allows disenrolling upon employment termination from the company administrating the plan.

    I think allowing 401(k) Plan Custodians one year with my money to rape my account with hidden fees is more than long enough. There is a good side to 401(k)s: large amount of tax deferral (if you want/need it) and company matching. I don’t want to lose such a critical benefit, but I also don’t like others (Custodians) making easy money off of my account balance for providing absolutely no value other than a little financial accounting.

  8. Robert says:

    First off, the 401k is a not a retirement savings account, it is a severace account for getting laid off or switching jobs.

    Second, the 401k WAS NEVER designed to be a primary retirement vehicle. It was set up to SUPPLEMENT existing pension benefits from employers. Where did those pensions go? That’s right, the neocons let the companies flush’em and hang current retirees out to dry.

    Finally, the 401k only serves the rich ultimately by pushing people into the stock market who have NO BUSINESS being there. They will ultimately loose all of their money to the rich investors via losses. I never saw 1% of gains in the 10 years I had a 401k and the only time it ever gained is when I contributed every paycheck. I have a 401k now, but all 100% is in the bond fund that makes about 7 cents a day on average.

    As a severance package, it is great, as a retirement account, it is worthless.

  9. debt free says:

    Re: Finally, the 401k only serves the rich ultimately by pushing people into the stock market who have NO BUSINESS being there.

    The investments in your 401k can be just about anything, not just stocks.

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