Thx. I also pour a little into mutual funds each month. You're right about the risk. I was wondering why the poll on that website only asked for 401k information - gave me the impression that those were the only good thing.
that could go either way, u might go broke supporting them going through yale, but u come out the winner in the end
I am 41 years old and retired as of right now. I make more money in investments each month than I spend on living. However, I am not satisfied and am starting a new company or two. I have never really contributed to a 401k, made most of my money starting and selling companies. I have investment accounts, but they are post tax dollars. The new company I am starting is going to have 401k baby ! DD
Keep it up Imma, I am a 401(k) specialist for a large retail chain based in DFW after leaving an HR Outsourcing firm in The Woodlands managing health, DC and DB retirement plans. Ideally, we should be contributing upwards of 15-18%, subject to IRS contribution limits, so that at retirement your 401(k) will be as close to a cool million as possible. You will need this amount and more with inflation to live at the same income level as you did while an active employee. With the death of Defined Benefit traditional pension plans, employee's must make up the difference with contributions and investment growth. Bet this--in 5 to 10 years, companies will move, either by legislation (federal/state) or employee pressure, to a managed 401(k) portfolio. That is, mandatory participation with the option to contribute more and a professional fund manager to guide the companies entire portfolio that offers a more consistent, higher yield to employees. Companies already have fund managers and guidance but this isn't extended to your individual return other than the optional investment advice engines and over the phone guidance. I can even envision companies offering a choice--participate in the institutional 401(k) where your contributions are professionally managed, contribute to a "traditional" 401(k), or even both.
I tivo-ed the Frontline episode last night and watched a bit this morning. The thing that jumped out to me is that private pension plans are currently $450 billion underfunded. Of course taxpayer are underwriting this shortfall.
You may be right wrt the professional management of the individual's account, but I see a cheaper substitute on the market as we speak. Target Retirement Date mutual funds (which everybody is now offering or planning to roll out) is way cheaper alternative, as compared to paying 1% per year to a professional manager.
I think it all depends on your standard of living. I invest around 10% and I'm cheap, so I think I should have enough when I stop working (maybe around 60). I'm trying to get into Real Estate now too though (rookie).
Those are definitely available--we offer about 15 funds that we call: Retirement Ready 2015, 2025, 2035, etc... They are definitely easier to track as you don't need to think about investment mix and or risk--they do it for you. What I am referring to is a total management whereby your individual return is affected by professional management and adjusted for your retirement date--not just an optional fund.
I have been in IT for over 20 years. I am going back to school for a degree in early childhood education. While I'm getting that degree I plan on paying off my house and being completely out of debt. Then I will work somewhere like a Head Start program for kids with Cerbral Palsy mostly for benefits and spending money and anticipate loving to do that as long as I'm physically able to.
I used to work for Schlumberger and when I started their 401k + profit sharing was all professionally managed (with some provisions for xfering monies to a fixed income fund as you approached retirement). Then they changed and added more mutual fund choices. The change was prompted by the employees who wanted more options (something those pesky employees always want more of). When I started at Schlumberger, I was surprised that they did not have mutual fund options for their 401ks, not that I minded though. I thought it was so *old school* at the time. So what you are suggesting is that 401k plans maybe going back to *old school* by let professional managers manage the monies in their entirity. I don't think that this is a bad thing, but I would not be surprised if most other employees felt otherwise. The reason I mentioned the Retirement Ready like funds is that they are viable alternative. Employees by default could have their 401K plus PS monies put into a Retirement Ready fund and get diversification in asset classes and within in each asset class. A very good thing. And a very comparable thing to a profesionally managed account.
I can afford to die, I prepared for it. Retirement? Looking at my 401(k) at my age it will be close which happens first.
So what do you guys think of these funds? I just lost 7% of my retirement account money in this stupid 5 day correction and the thrill of managing my money is at least temporarily abated. Thank goodness I have a rent house which will be payed off and will probably be close to paying off the residence by retirement. Thank goodness the wife is more conservative with her money.
I recommend them. They are a great investment vehicle for beginners who do not have a great deal of money, since beginners may not be able to diversify by buying into a handful of mutual funds. They are also a great investment for people who don't want the hassle of picking mutual funds and doing a periodic re-balance. On the downside, these funds may lack asset classes I like (or may have too small of an exposure of those asset classes), eg small cap domestic stock high yield bonds foriegn stock emerging maket stock REITs Also, the different fund families have different opinions about how aggressive/conservative the asset mix is. If your target retire date is 2025, you might want to pick the 2020 or 2030 fund to match your taste for risk. You just need to pay a little attention to which fund to select when you start. There are also mutual funds that target risk (aggressive, moderate, conservative) versus targetting a retirement date. If you want to be an aggressive investor until you 70, this would be the funds for you.
I finished viewing the Frontline program this morning. Here are some more factoids: People with 401ks save by retirement about $120K-$150K, which is aproximatimately 3 years pay. The 401k monies post retirement last about 7-8 years, with the life expectancy of about 18 years. This implies for the last 10 years of a average retiree's life social security may be he only source of income. It was suggested that one needs to save 15-18% of one's income in 401ks (or up to the limits) in order to have a proper nestegg at retirement. Interestingly the higher income people had better returns in their 401ks than the lower income people.
I don't think most of you can handle being retired. I have the highest capacity for slackerism of anyone you have ever met and sometimes I get bored. I'd really rather go back to work doing something but I don't want to be committed getting up every day to do it. The fantasy of being retired is better than the reality.
