The Recession may be over (post #326)- part X

[CRM114]

Did anyone see the segment on 401(k)'s on 60 Minutes this past weekend?

I have always thought 401(k)'s were a scam perpetrated by investment banks to fleece the American people and to line the pockets of corporations and their shareholders at the expense of working Americans.

Summary: The 401k wasn't even designed as a retirement account but as a supplemental account to go along with a pension and social security - the three legged stool. Then corporate America realized they could improve their balance sheets by moving all retirement responsibility to the worker and offering him or her a 401K. Now the investment banks line up salivating over taking the money from millions of novice investors and skimming money off the top in mutual fund fees. Now millions have lost half of their retirements and the bankers are laughing in their luxury penthouses.

I am glad I have a pension AND social security.

And for those who wanted to privatize social security, tell that to the thousands of people who have lost everything in the past year and will need those benefits to survive day to day.

[Red Dog]

Can I assume that you believe that the federal government equivalent to 401k - the TSP - is also a scam? Federal employees who started work within the last 20 or so years do not get a pension either.

As for the preferability of the pensions, wouldn't pension funds be effected by the market downturn?

[fujishig]

Originally Posted by al_bundy

same thing as 2000 - 2002

rates are low and a lot of people are going to refi or buy new homes

Wasn't this the start of the housing bubble? I have no idea why the government seems intent on reinflating it again... to shift the collapse down a few years?

[parrotheads4]

Maybe it's changed, but I remember reading that people spend the most money in their 30's. I'm guessing that is when most buy a house and all the items that go with it.

This chart is from 2000 so add 10 years to each age group. To me it looks like there are fewer people in their 30's now vs. 10 years ago.

[sracer]

Originally Posted by CRM114

Did anyone see the segment on 401(k)'s on 60 Minutes this past weekend?

....

I am glad I have a pension AND social security.

And for those who wanted to privatize social security, tell that to the thousands of people who have lost everything in the past year and will need those benefits to survive day to day.

I think that the public needs to be kept aware of politicians and public figures who vocally support ideas that have or would have failed. Whether it is "privatizing social security" or "community reinvestment" give 'em a scarlet letter so that if they ever open their mouths again they can rightfully be dismissed.

[Ocelot]

Originally Posted by sracer

Is his quote too negative? Yes. Is it an accurate reflection of the reality of the situation? Yes.


If you believe that the worst is over then by all means get back into the market.

For your sake just make sure that the things that you think you know about the situation are true and not spin by those with an interest in manipulating perception.

Good point! There's no way i can prove my opinions, duh. So yeah, i'll take your words as precautions. Honestly, i really really want to see things start getting better. I mean, the market has been pretty good lately, so it's not a bad indication. Just that at the same time when i keep hearing unemployment news, i feel like the picture is not right...

This is happening in Spain:

http://www.nytimes.com/2009/04/21/bu..._r=1&th&emc=th

basically, prices are cut due to low demand (companies need to raise revenue), deflation...

[Ocelot]

Originally Posted by CRM114

Did anyone see the segment on 401(k)'s on 60 Minutes this past weekend?

I have always thought 401(k)'s were a scam perpetrated by investment banks to fleece the American people and to line the pockets of corporations and their shareholders at the expense of working Americans.

Summary: The 401k wasn't even designed as a retirement account but as a supplemental account to go along with a pension and social security - the three legged stool. Then corporate America realized they could improve their balance sheets by moving all retirement responsibility to the worker and offering him or her a 401K. Now the investment banks line up salivating over taking the money from millions of novice investors and skimming money off the top in mutual fund fees. Now millions have lost half of their retirements and the bankers are laughing in their luxury penthouses.

I am glad I have a pension AND social security.

And for those who wanted to privatize social security, tell that to the thousands of people who have lost everything in the past year and will need those benefits to survive day to day.

I'm never a fan of privatizing social security... especially not after what happened on Wall St. However, i believe most of us have both SS and 401K, no? I'm paying SS taxes and i'm contributing to my 401K, isn't that what most people do?

My real retirement plan? My kids, it's a lot of work (education and discipline, of course headaches, a lot of them), but ultimately, it's one investment bonded by blood

[fujishig]

Originally Posted by Ocelot

My real retirement plan? My kids, it's a lot of work (education and discipline, of course headaches, a lot of them), but ultimately, it's one investment bonded by blood

I don't see how they're going to be able to take care of you with all the taxes they're going to be paying...

[CRM114]

Originally Posted by Red Dog

Can I assume that you believe that the federal government equivalent to 401k - the TSP - is also a scam? Federal employees who started work within the last 20 or so years do not get a pension either.

As for the preferability of the pensions, wouldn't pension funds be effected by the market downturn?

Anything that puts the onus on the novice investor AND does not guarantee future payments is a scam, IMO.

[Ocelot]

Originally Posted by fujishig

I don't see how they're going to be able to take care of you with all the taxes they're going to be paying...

you're so right

[kvrdave]

Originally Posted by CRM114

Anything that puts the onus on the novice investor AND does not guarantee future payments is a scam, IMO.

Egads, that leaves Whole Life Insurance.

[Red Dog]

Originally Posted by CRM114

Anything that puts the onus on the novice investor AND does not guarantee future payments is a scam, IMO.

Then you would like TSP. TSP gives the investor only six options. It doesn't matter whether the investor is a novice or saavy.

Also, does a pension from a private company guarantee future payment? What if the company goes under? What if the people managing the pension investments fuck up?

I can see why you would be a fan of your pension. You're a gov't employee. The state of PA will certainly be around when you retire.

[CRM114]

Originally Posted by kvrdave

Egads, that leaves Whole Life Insurance.

Or pensions. You remember those? They were the retirement benefit employees would get before the management decided they could return that money to the shareholders and make it appear their bottom line was growing.

[CRM114]

Originally Posted by Red Dog

Then you would like TSP. TSP gives the investor only six options. It doesn't matter whether the investor is a novice or saavy.

Also, does a pension from a private company guarantee future payment? What if the company goes under? What if the people managing the pension investments fuck up?

I can see why you would be a fan of your pension. You're a gov't employee. The state of PA will certainly be around when you retire.

It still requires the person to pick from six losing propositions that some fund manager slapped together that aren't good funds.

Second, a pension plan should be separate from a company's finances. If a company underfunds a pension plan, that is a travesty.

[kvrdave]

Originally Posted by CRM114

Or pensions. You remember those? They were the retirement benefit employees would get before the management decided they could return that money to the shareholders and make it appear their bottom line was growing.

Yeah, GM offered those. That's guaranteed to you?

[CRM114]

Originally Posted by kvrdave

Yeah, GM offered those. That's guaranteed to you?

Are you saying the demise of GM had to do with it's pension plan?

Ever hear of the PBGC? That's who pays the pensions after the corporations underfund and ultimately default on their plans.

PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in about 32,500 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.

[kvrdave]

Originally Posted by CRM114

Are you saying the demise of GM had to do with it's pension plan?

Ever hear of the PBGC? That's who pays the pensions after the corporations underfund and ultimately default on their plans.

PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in about 32,500 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.

I'm saying there are no guarantees except death and taxes. Time to live in the real world.

[al_bundy]

Originally Posted by CRM114

It still requires the person to pick from six losing propositions that some fund manager slapped together that aren't good funds.

Second, a pension plan should be separate from a company's finances. If a company underfunds a pension plan, that is a travesty.

I think TSP offers Vanguard Funds

i've seen retirement plans that offer poor high fee funds, most don't. Most plans offer index funds with reasonable management fees.

[CRM114]

Originally Posted by kvrdave

I'm saying there are no guarantees except death and taxes. Time to live in the real world.

I do live in the real world. That's the thing.

95,000 Bethlehem Steel retirees get pension payments after the company promised them and then underfunded and ultimately defaulted on their promise.

Bethlehem Steel was as "real world" as it gets. And it wasn't the pension plan that caused their demise.

[CRM114]

Originally Posted by al_bundy

I think TSP offers Vanguard Funds

i've seen retirement plans that offer poor high fee funds, most don't. Most plans offer index funds with reasonable management fees.

My Vanguard funds dropped with the rest of them. But the fees were still collected.

As the 60 Minutes pieces showed, many funds never reveal the fees.

[al_bundy]

there have been a lot of ups and downs in the market in the last 100 or so years and over the long term it's always up

[CRM114]

Originally Posted by al_bundy

there have been a lot of ups and downs in the market in the last 100 or so years and over the long term it's always up

Sure. That's why self-managed retirement accounts are bad for most people. THe people that were 55 and up are screwed because of this current "down" trend.

[orangecrush]

Originally Posted by CRM114

Sure. That's why self-managed retirement accounts are bad for most people. THe people that were 55 and up are screwed because of this current "down" trend.

I see your point, but even companies that properly fund pension plans can go under. Your pension is only as good as the fund and company providing it. I would personally rather "own" my retirement account than have my company be responsible for it. The truth of the matter is that there is always a risk of losing retirement savings no matter how you have it saved.

[CRM114]

Originally Posted by orangecrush18

I see your point, but even companies that properly fund pension plans can go under. Your pension is only as good as the fund and company providing it. I would personally rather "own" my retirement account than have my company be responsible for it. The truth of the matter is that there is always a risk of losing retirement savings no matter how you have it saved.

"Pension Benefit Guaranty Corporation (PBGC) is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of nearly 44 million American workers and retirees in more than 29,000 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans."

[al_bundy]

PBGC also has a formula where they will reduce your pension depending on how much money they get from the bankrupt company. i hear a lot of airline retirees saw their pensions reduced by a lot in the last few years