Do you have a 401K?

[Zywiec]

Maybe I'm naive, but generally my 401K goes up when the stock market goes up. Why do some think the market hitting a new record only helps the top 10% of the country? I would think a majority of the people in the US have one. Does anyone have an accurate figure of people with this type of investment? Thanks.

[LSK]

1. I would only guess half the country has one, maybe less

[Common Sense Party]

16. There are 47 million active participants in 401k plans n/t

[LSK]

19. ahh, much less than half, thanks

[mainegreen]

32. That's it?

Jesus, that's bad.

[Common Sense Party]

36. Now, those are just 401(k) plans. Doesn't count SIMPLEs, SEPs,

defined benefit plans, etc.

But it IS bad.

There is going to be a HUGE retirement nightmare in about 30 years. Social Security will barely be there, corporate pensions will be a thing of the past, and millions of Americans will wake up and realize that they should have invested for retirement instead of buying that stupid Hummer.

[lovuian]

2. Yes have a 401 K and the luxury to pick my stocks

unfortunately some are not given that option and purposely put in crappy mutual funds

and yes doing well in the run up of the stock market
and I must say after seeing these pension funds being underfunded and screwed due to government stealing
the 401 looks like a blessing unfortunately people can't even afford saving a little in these things

[Common Sense Party]

18. Most funds are not crappy, and their returns are much better

than most people will get picking their own stocks.

[Virginia Dare]

3. A great reference material...

"The Great 401(k) Hoax".

http://www.amazon.com/Great-401-Hoax-Financial-Security/dp/0738208523/ref=sr_1_1/002-2449422-7964836?ie=UTF8&s=books&qid=1177539082&sr=8-1

[Zywiec]

7. I'm not familiar with the book

What is it about?

[Virginia Dare]

28. It should be available in your library..

I of course can't go into great detail here, but the authors outline how the 401(k) tax code was basically a big swindle by Wall Street of the American people's pensions, and that most Americans with 401(k)'s have limited say as to how the money is actually invested, goes into the Enron debacle, and the dangers of putting all of your retirement money into one basket (being Wall Street).

[antigop]

39. Excellent suggestion-- excellent book

It describes the hoax of 401(k)'s.

[seemunkee]

4. My wife and I each have one.

[ThomWV]

5. No - Retired Government Worker With Significant TSP

Same thing and I contributed to it to the max from the day I started until I retired over 20 years later.

[trackfan]

6. No - I don't have anything to put into one

[pitohui]

8. i would be surprised if most people have a 401k

my husband's employer employs dozens of people and yet setting up a 401k is too expensive for that business, i would assume most people working for smaller businesses or self-employed have no retirement fund or one of the alternative "simplified" retirement harbors if they can afford to fund it at all

[Horse with no Name]

9. I have one and haven't made more than $20 on it in the last two years

However, I have a 401B that I have made a considerable amount (relatively speaking to the amount that I started with).

[A HERETIC I AM]

14. I trust you know the lack of performance in the one vs the other has nothing to do with the type

of account, right?

BTW, i suspect you meant 403(B) not 401B

[Horse with no Name]

20. OOPS yes 403b

and yes I am aware.
It has to do with short term bonds that they invest on the 401k.
Interestingly, I have a great return on the 403b but I received a letter last year and they won't allow me to invest any more in it.

[A HERETIC I AM]

25. If you aren't able to change from the short term bond fund into an equity fund, you have a rare bird

indeed. The "they" that invest is YOU. Didn't you get a list of funds to pick from and allocate percentages toward? I find it very hard to believe it if you didn't. (It is possible you just don't recall picking that fund)

You should be able to change your allocations.

PM me if you care to as i can be much more specific in private than i can on a message board.

The letter you received is also strange. You work for the State or a School district or some other non-profit, right?
I am very curious why they won't let you contribute more to your 403(B)

[Horse with no Name]

29. Actually I didn't even elect to do the 401k when I elected my benefits

I only planned on being here for a little over a year. For some reason when my benefits went into effect, I had a 401k.
I didn't feel like hassling with it, so I just left it alone.
It is a very small amount that they take out.
I used to work for a county in Texas. Instead of deducting Social Security, they put it in this fund. It has an excellent rate of return and since I am in the process of packing, those papers are already packed so I don't have ready access to them.
In the 6 years or so that I have had THAT particular fund--my investment has nearly doubled.
Last year I received the letter that told me I couldn't contribute anymore to it.
I posted the letter here to get advice on it and when we aren't in Defcon mode, I will do a search on it and tell you exactly what they said the reasoning was behind it.

[Common Sense Party]

21. You must be in some lousy investments if you haven't made $20

Check your statements.

What funds are you in?

[SoCalDem]

27. Eek. just ONE of our choices on our 401-k went up $600 in one quarter

whoever's managing yours needs to be looked at, carefully..

[Horse with no Name]

30. I work for a hospital corporation

Need I say more?:eyes:
In fact, I work for a hospital corporation that is in financial trouble.

[xmas74]

10. My company does not offer one.

I'm happy that they've increased their insurance so I won't complain right now.

I plan on socking away a bit of money once I get paid from my part time jobs but I have to wait for everyone else to get paid before I get mine.

[sandnsea]

11. No. The majority don't.

"But currently only 55 percent of Americans working full time hold a job with a retirement savings plan; the rate is even lower for part-time workers and the poor. Thus the bottom 60 percent of taxpayers receives only 10 percent of the tax incentives for savings."

http://www.nytimes.com/2006/12/28/business/28scene.html?ex=1324962000&en=724a18d1ff80410b&ei=5088&partner=rssnyt&emc=rss

Do you know how fast a medical bill eats up retirement savings? They can't take your social security checks. Probably another reason Republicans hate SSI.

[A HERETIC I AM]

12. The articles i looked at seeking an answer to your question...

gave only percentages (roughly 70% of those eligible to participate in one actually do) or numbers {50 million Americans) that were 7 years out of date. Google "401k participation" and you will see what i looked through. (I admit i didn't look through every single hit, but about 6 or 7 of the articles)

The link the poster above gave about the "Great 401K Hoax" is a book written shortly after the collapse of Enron and while i am sure it is accurate in many respects, one must always take such things with a grain of salt. A lot of confidence was lost in such retirement plans because of Enron but some perspective is in order; If your company forces you to accept company stock as part or all of its contributions to your 401(K), just bear in mind Enron. If there is a huge position in any one company stock in your portfolio you have simply concentrated your risk. Diversification is important regardless of which retirement planning vehicle you use.

A rising market helps everyone that has not only a 401(K) but a Mutual Fund, Stocks, or almost any investments. You are smart to participate in yours but look into other ways of putting even more away outside of your company's plan.

A large percentage of Americans born after 1965 have too little put away for retirement.

[tammywammy]

13. I have one

It's doing fairly well. I can pick through various funds to have my money divided into. At least I'm saving something.

[Zywiec]

15. Luckily my company doesn't require me to choose their stock

as an investment option. I guess that was a problem at Enron. I can choose from many different options. Thanks.

[Common Sense Party]

23. Enron employees received their company match in Enron stock

That was one problem.

But then the employees CHOSE to invest huge percentages of their assets in Enron stock, even though they had good, diversified mutual funds available to them.

You never want more than 10% in any one stock, especially if it's your employer.

Then Enron switched 401(k) providers and the plan went into blackout, and in the interim Enron stock went into freefall and employees couldn't sell shares.

[Squatch]

17. Yes...plus a pension after 20 years.

[Captain Angry]

22. 401k returns depend on your choices.

Hi there,

A 401k rises with the market when you've decided to invest your contributions into a market tracking index fund. It will fall with the market as well.

The top 10% of the country will benefit in a greater amount than a 401k investor for many reasons.

1: The 401k is limited in scope as to what can be invested in.
2: The 401k is limited in contributions, currently you can only put $15,500 in this year if you're under 50 years old.
3: There are loads and management fees involved with mutual funds and the management of the 401k itself.
4: You can't sell your 401k into cash if the market is eating crap (in most 401ks, there is no cash fund option.)
5: If you decide to cash out your 401k for the wrong reason, or at the wrong age, you will take an unbelievable tax hit.

So, yes, if the market goes up, the 401k investor has a good chance at a gain. They have gained the pre-tax benefit, but lost a lot of flexibility and security.

As I understand it, the vast majority of employees in this country do not work for companies that carry or fund a 401k. Consider all of the small businesses that can't even help with health care for their people. Add to that the huge number of people in service jobs at restaurants, gas stations, etc.

[Alleycat]

Yes I have a 401k however

being that I am about 25 years away from retirement it really doesn't matter much to me. I can't use the money now to pay for gas, mortgage, food etc.. All the gains are paper and can be erased just as easily! Alot can happen in 25 years!!

[RC Quake]

31. I'm probably 20 years from retirement.

But, I've been putting at least 12% of my income into my 401k for 22 years and am not regretting it one bit. I never missed the income because I adjusted my debt to income ratio as needed. Sure, it's only paper transactions now, and sometimes I get a little nervous at the drops, but I know I will not have to rely on anyone or any other form of retirement income when I retire. It's a good feeling to know that I was very structured and conservative with my money from the time I started my first "real" job. I have my parents to thank for that!

[PreacherCasey]

24. up 6.5% so far this year

[Coyote_Bandit]

26. Most

of my employers have not offered a 401k plan. I've only been employed for a total of 2 of the last 20 some years at a company that had a 401k option. And then there was a waiting period to contribute. Even with maximum contributions and good investment performance I cashed out the measley sum after I was laid off. No 401k here.

Lots of employers do not make retirement plans available as a benefit of employment. Lots of employees who work for employers who do make such plans available opt not to participate. Many of them simply cannot afford to save money because their wages are insufficient to meet their obligations. Having previously worked as an investment portfolio manager I am certain you are mistaken in assuming that the majority of Americans participate and have a 401k plan.

May I also point out that any change in market value of your 401k is largely irrelevant to the economy as a whole? It is a savings and investment vehicle. The Enron debacle is evidence that gains in market value are irrelevant until such gains are realized. It is all paper. Retirment savings are not assets used to stimulate the economy by buying and trading goods and services. Increases in market value benefit those who realize those changes. You haven't realized any increase in value if you continue to hold the asset. More accurate measure is those Americans who personally own and trade investment securities.

[slackmaster]

33. Yes, plus two from previous employers that are now self-directed IRAs

I'm actually glad when stock prices are low, because a fixed amount of every paycheck goes into the 401k and buys securities.

[moez]

34. According to cnnmoney.com

About 70% of workers contribute to 401K plans: http://money.cnn.com/2006/08/08/pf/retirement/401k_newprovisions/index.htm

[A HERETIC I AM]

40. 70% of ELIGiBLE workers, not all workers...

"Currently, only about 70 percent of eligible workers participate in their 401(k)s."
That is considerably less that 70% of all workers. Meaning only 70 out of every 100 people who have a 401(K) available to them participate in it.

That line is about 1/3 of the way down the article.

[B Calm]

35. I preferred the days when corporations offered PENSIONS.. but

yes I do have a 401K and I hate the thought my pension is now determined with the stock market gamble!!

[kerry-is-my-prez]

37. Not anymore - I spent it all after being laid off. $60,000 down the drain.

n/t

[treelogger]

38. Yes. Several.

Both my wife and me each have a 403b (from working at an educational institution, in my case it was also from a federal agency cleverly disguised as a educational institution), plus a 401k (from private sector jobs). This is in addition to explicit stocks in a brokerage account, and mutual funds to store money that used to be in stocks (the stocks come from employee stock purchase plans, and stock options issued by employers). And a 529 plan for the little guy's college fund.

Among high-tech employers, all but the smallest ones provide 401k options. Given the easy availability of HR processing outsourcing companies, there really is no excuse for an employer to not provide a 401k. The cost of providing it is very low (matching is a different story).

What I find absolutely amazing: Colleagues in the HR department tell me that a good-sized fraction of employees do not take advantage of 401k funds. This is an extremely bad choice, in nearly all cases. Several employers have now changed it so that if you don't do anything and don't fill out a form, you get a default 401k (at something like 5% of your salary, capped at the $15.5K annual maximum). Supposedly, this has greatly increased the fraction of people who avail themselves of 401k. The amazing part: How come so many people are simply too lazy to use the 401k?