Here's some cheery holiday reading. The sad reality of retirement plans is that in the future most of us won't have them.
And workers still think unions are a bad thing?
First we're seeing the demise of pensions. Next companies are bailing out of 401(k)s.
And meanwhile they're cutting wages and benefits. What a deal!
http://www.cnn.com/2012/12/12/opinion/ghilarducci … ?hpt=hp_t3
I respect your sentiments which are on the downside in terms of optimism about financial markets and such...
Frankly, there is a wide sense of negativism about a lot of things in this country and world-wide these days...
For me, I look at investments with a sense of caution and careful selection. I don't always hit it right... but have the notion that (1) I am not going to take it with me to my grave and (2) "it is only money..."
There really isn't any choice...
Some people overlook the fact that their 401(k) consists of a portfolio that can be changed by the owner. When people qualify for entry into an employer's 401(k) they select an investment strategy (conservative, moderate risk, and venturesome)... Each category represents a number of stocks whose performance indicates a best fit...
Things change however... If a CEO changes the whole strategy for a company may change, as well. The new CEO might decide to withhold dividends and invest in new factories and equipment. The "bet" is that the company is looking long range... That is but one example...
The real point is that the owner of a 401(k) can revisit their portfolio and change where the money is invested.
A conservative stock might be earning little more than what one could draw in interest if you put that money in a bank savings account. The difference however is that the bank savings account is protected by the FDIC - investments in the stock market have no such guarantees backing them up...
Thank heavens we don't have a lot of Enron companies - but it only takes one such investment firm to take everything from everyone... Which highlights a key investment principle that is advisable and that is to diversify one's investments...
Diversity in investments can mean different levels of risk in the stock market - or, it can mean invest some in the stock market and some in bonds or mutual funds or IRA accounts... The choices are endless... and very confusing.
But, for me, I believe in the investment strategy that any investment should be for the long term. Generally, that means 10-years or longer...
My sister had the experience you allude to in your comments. She retired from being a school teacher after some 30 years. Her 403(b) hovered around $500k - within a short time in 2008/9 the value dropped by 50%... What she did in response, I do not know... But, she could have changed her investment portfolio and/or done some diversification to reduce the future propsect on rate of return...
Life is full of risk - to include savings accounts at banks and credit unions (though less so because of the FDIC)...
In the meantime, things like employee loyalty and well being have been lost. Employees are no longer part of the solution; they're just obstacles to making more money.
What companies don't seem to care about is that by turning this nation's workers into a workforce similar to China or Mexico there is going to be a tremendous loss in purchasing power that will ultimately wreck the whole economy. The workforce can't live on $8 an hour, much less buy all sorts of expensive goodies with it.
of course, one must have confidence in the US stock market to begin with...
any investment necessarily involves risk - "no risk... no gain..."
what galls me more than anything is the astronomical incomes awarded to CEOs... there is NO one person who is so valuable as to command such out-of-sight compensation packages...
examples:
(1) the President of Davenport University (11 campuses with about 11,000 student enrollment) gets: $319,997 (base), $155,000 (bonus and incentive), $18,319 (other), $74,635 (retirement and other deferred compensation), $13,633 (nottaxable benefits)
(2) the Hope College President receives $348,351
(3) the Calvin College President receives $244,319
(4) the Cornerstone President receives $195,627
(5) the Aquinas College President receives $181,091
[these are institutions with interests in west Michigan]
The above typify over-paid people... The CEO for my employer (two men previous) received $281,000 just to relocate from Europe to the US (he previously was the European President for an international hamburger firm... his annual compensation was around $500k together with 2million in stock options and miscellaneous incentives...
These are not uncommon...
Of course, the justification for such salaries are
(1) a survey to see what others pay analyzed by a board committee
(2) enactment/authorization by an "independent Board of Trustees/directors"...
In my humble opinion our corporate system is in sad shape. Their priorities are upside down. There is nothing independent about a board of trustees/directors.
When a company gets rid of their most experienced and talented employees (they "cost too much" are or are "too close to retirement") and replace them with fuzzy faced kids with a college degree the business actually saves $$$ in the short range but incurs a damaged reputation and impaired growth in the long range...
Unions will not fix such things - the "system" that creates,authorizes and provides oversight of corporate boards is in need of repair. The difficulty lies in the "system" - we need to fix it. Following the depression there were major legislative repairs that worked for many years - but in today's world things are not like they were in 1939 - we need further repairs and a fresh approach to fostering business, governmental oversight and regulation, and conceptualize a new approach that is fair to all....
FWIIW
My concern is this, and it gives some credence to QuiltGuy's statement that "when people get a few hundred bucks they spend rather than save it". What he really alludes to is the argument "live and be happy now, because tomorrow might never come". Borrow/spend today and maybe, JUST MAYBE, I'll pay tomorrow. Phenominal short-sightedness! Wonderful selfishness! Self-absorption in extremis!
As to Bear's comment that companies are "bailing on 401k's". He's right; They have long bailed on traditional pension plans. The real answer is to take charge of ur future, be ur own best advocate, SAVE AT LEAST 5% and invest wisely! Oh, and pray!
Wanna know what's next? the employer contribution to our health care premiums will soon be attacked as a "taxable" benefit. It's an expense item for the employer, so he gets to write it off. Big Uncle will have his hands in all our pockets looking for his share.
Means testing is ON THE WAY! If U have saved some in a 401, 403, IRA, WHATEVER, and, when it's time to draw on them, ur anticipated yearly income from those before taxed instruments should yield U money equal to or greater than the average, I THINK THAT U will find that ur once-anticipated social security will be reduced, or U will be pay more in ongoing Medicare premiums (that happens right now), or U will be taxed at a higher rate. It's called "redistribution of wealth", gentlemen.
Quilt has a point. I'm glad I'm not in my 20's either. I'm already on some list. (probably a different one than he'll be joining).