The Saving Advice Forums - A classic personal finance community.


No announcement yet.

60 Minutes Re-Run on 401k's

  • Filter
  • Time
  • Show
Clear All
new posts

  • 60 Minutes Re-Run on 401k's

    Did anyone else watch the 60 minutes re-run tonight and feel glad that we're part of this forum?

    The stories about how 'brutal' 401ks are, were from immediately after the market fall in 08. They showed 1 guy 60 years old who now had $140k in his 401k (after losing 50%ish) and was upset that he could no longer retire at 62. [As though he could retire early on $280k] He proceeded to claim that 'I'll probably never see it come back' [the market has made the majority of that back by now - only 3 years later]

    Another woman, showed her account history - where they focused on the graph, but in the upper right hand corner, you see a balance of $4,914.83. Where she had been 'contributing for 4 years' And on the left, it shows how the account began at $7,483.13. [you can thank TiVo for those numbers] Was she contributing $2,000 a year a hoping to retire on that? At 54 she claims that her prior 401ks had about 88 and 40k prior to the fall. So with 11 years til retirement, and $120k so far, only $2000/year to make it?

    Their highlight of the program was to bash the 401k account, and ignore the guy who said that it wasn't a problem with the account, it was a problem with the investment choices of the underlying investors. Which is completely true. [and those investments have largely recovered now]

    I hope you are all as glad as I am to have a place like this to learn about your finances. Simple guidelines frequently posted here on the forums could have saved them some angst. How about JimOhio's 25x rule? You need 25x current expenses before you can retire. Sorry guy with $280,000 - unless you can live on $11,200/year, you probably couldn't have retired early anyways.

    Or DisneySteve's 50/30/20 need/want/savings budget guideline? $2000/year won't make it to the 20% savings.

    If you follow the advice given here on the forums you probably won't have to worry about winding up on TV. Follow a budget. Trim it down. Save what you can and hope to save 20% a year. Save early and often. Wait until you have 25x expenses to prepare to retire.

    The program made me mad, honestly. It was a gross showing of financial ignorance. I expect more from what is supposed to be a credible news program.

  • #2
    I'm on other forums (soccer coaching, sports teams, etc.) and you should see the negative responses I get for what I consider sound financial principles. The concept of an emergency fund, probably, the most basic of tenet of personal finance isn't as common sense as you would think.


    • #3
      Oh and here's the segment if you want to watch it for yourselves:

      The 401k Fallout - 60 Minutes - CBS News

      I would love to see those responses well, it'd be kinda sad, but to have someone to explain why they hold them would be interesting to watch.


      • #4
        I don't think the 401k is the problem.

        I do feel that some of the funds they offer employees in a 401k could be better.


        • #5
          Originally posted by EconoMutt View Post
          I don't think the 401k is the problem.
          That's exactly my point

          It's like blaming the savings account, because you didn't have enough EF in it.

          Or blaming the brokerage account because your stocks went down. The 401k is just a type of account.

          I didn't see them try to slam the 'Roth IRA' lobbyists for the collapse - only the 401k.
          I do feel that some of the funds they offer employees in a 401k could be better.
          I agree. And I also agreed with the program that they should disclose more of the fees.


          • #6
            Originally posted by EconoMutt View Post
            I don't think the 401k is the problem.
            To give a little support for the other side, keep in mind that in most cases the 401k replaced a traditional defined benefit pension plan where the employer funded the account and the employee just reaped the benefits. It wasn't up to the employee to decide how much to contribute or how to invest the funds. No investment knowledge was required and participating didn't "hurt" or reduce take home pay at all. Employees got their regular salary and the pension benefits accumulated behind the scenes.

            At my old job, there was a pension/profit-sharing plan. I didn't have to do anything at all. I was just automatically enrolled. I left that job after 7 years. Some time later, I got paperwork from the plan administrator telling me that the plan was being shut down (the doctor retired) and the funds were being distributed. It turned out that I had over $22,000 coming to me (which I rolled into an IRA). And that was just after 7 years of employment. Had I remained at that job for 30 years with that plan in place, just think what my pension would have looked like. And that would have been above and beyond any savings I did on my own in my Roth or other accounts.

            So the 401k isn't a bad thing but it is a very different thing than what it replaced.

            All of that said, I totally agree with you, JPG, when you say that following some very basic guidelines that those of us here repeat over and over and over would avoid so many problems. Live below your means. Save 20% of your income. Spend no more than 3x income on your home with a mortgage payment no more than 28% of income. Buy a car with no more than a 3-year loan and a payment of no more than 10% of income. If everyone stuck to just these rules, most financial problems would cease to exist.

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.


            • #7
              Yeah I saw it. Sometimes you have to laugh to keep from crying lol