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Interesting article from the LA Times:
401(k) reality check -- latimes.com
I'm still contributing the max to my 401K but ....sometimes it DOES feel like one big ponze scheme. It only works if everyone buys into it.
401(k) reality check -- latimes.com
Even more infuriating are the "experts" advising people how to invest the money they plan to retire on. On several occasions, I have seen articles in which financial planners or academics discuss the optimum amount of money retirees should take out of their 401(k)s in their twilight years. Usually, that number is pegged at 4%. But one article in the New York Times suggested that this figure might be overly cautious. Based on a reasonably plausible projected rate of return, retirees might be able to take out as much as 6% and not have their nest egg run out before they buy the farm.
Presumably, this forecasting technique was developed by Rip Van Winkle, working in conjunction with Pollyanna and Dr. Pangloss. The idea that anyone could make solid, meaningful estimates of the amount retirees will be able to withdraw from their 401(k)s a few years down the road is top-shelf lunacy. If you started calculating how much you could withdraw from your 401(k) back in 1999, based on the "traditional" average annual return of 7% to 9% on stocks, you would be dining on Alpo today. Unless you were adept at ducking in and out of the market, or a master short-seller, or canny enough to buy Apple at six bucks, you haven't earned a nickel in the stock market since the millennium dawned. Even if you took the sage advice of the wizened pros and diversified across a wide spectrum of investments -- stocks, bonds, real estate, cash -- you still got annihilated
Presumably, this forecasting technique was developed by Rip Van Winkle, working in conjunction with Pollyanna and Dr. Pangloss. The idea that anyone could make solid, meaningful estimates of the amount retirees will be able to withdraw from their 401(k)s a few years down the road is top-shelf lunacy. If you started calculating how much you could withdraw from your 401(k) back in 1999, based on the "traditional" average annual return of 7% to 9% on stocks, you would be dining on Alpo today. Unless you were adept at ducking in and out of the market, or a master short-seller, or canny enough to buy Apple at six bucks, you haven't earned a nickel in the stock market since the millennium dawned. Even if you took the sage advice of the wizened pros and diversified across a wide spectrum of investments -- stocks, bonds, real estate, cash -- you still got annihilated
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