401K's a sinking ship? Options Anyone?

[Katahdin]

I don't know about the rest of you, but the more money I put in my 401K, the less money I have.

5 years of Salary Deferral would have more than paid for that shiny new Kubota b26 I've had my eye on... and implements to boot!

We are now 5 years later. Welcome to 2014.

I went over my 401K statement from 2009 when this thread was started and compared it to my balance today. Here's what I found.

2009 401k balance: Roughly one times my salary.

2014 401k balance: Now 3.5 times my salary.

I'm pretty happy with that...granted there's been a lot of fluctuations in the market, but this is five years later. My 401k strategy has pretty much been the same. Defer 20%, or as close as I can to it, and take a spray-and-pray approach to the fund options I have to put my pre-tax dollars in. I have not made any knee jerk reactions and don't put more than 10% into any one fund, I also put about 30% into a low risk stable value fund. This seems to be working pretty well for me, I hope there other 401k holders who are finding similar success.

 

[ultrarunner]

I'm a little ahead from 2008 to last month...

I stopped all contributions and just let it ride when the match stopped.

During that time the company changed 401k plans twice and it looks like it will again.

The employer match was "Temporarily" discontinued in 2007 and has yet to return.

Recentlyt, I did have a mandatory vacation payout and put 100% in the 401k... just didn't want to deal with the tax implications and if the company closes... my earnings less the 401k contributions will make the Affordable Healthcare Act viable for me...

 

[MossRoad]

We've average 38.9% annually over the last 4 years.

 

[mbrule]

We've average 38.9% annually over the last 4 years.

WOW, Very Nice!

 

[MossRoad]

WOW, Very Nice!

And kinda scary sometimes. I got -33% in 2008! :shocked:
:laughing: I can laugh about it now.... sorta.
We lost about 30% of our net worth on paper in 2008, but listened to our advisor, stayed with our plan, didn't move funds around and kept putting 15% of our income into buying shares in our 401k plans which have several different mutual funds each while the price was down. By 2010 we were back to the same level as 2008, but with many more shares than what we would have had at high prices. So when the markets took off again, BOOM! off we went. So, it was a two year stagnation period that we had to ride out. Had I been closer to retirement, I would have had our funds in less risky mutual funds.... maybe.

When I was in my early twenties, I set a goal of having a million dollars in the bank when I retired. That seemed like a lot of money back then. But as you get older and wiser, you realize a million dollars is not all that much... unless you have nothing, then its a ton! :confused3:

I tell my friends to think of it this way.... if you make $25,000 per year for 40 years, you've made a million dollars. If you're married and your spouse also makes $25,000 per year, she'll do the same. So a married couple, each making $25,000 per year will have made a million dollars after just 25 years of marriage. We all got married around 24-25 years old. Now we're all 50ish..... and all of us make better than $25,000 per year.... then I look them in the eye and ask, "Where did your million dollars go?" Their eye focus almost immediately goes off to space as they try to calculate the numbers in their head and they go quiet real fast. While they're seeing visions of burning cash in their past, I tell them...
You ate it.
You slept under it.
You drove it.
You fed it.
You clothed it.
You sent it to school.
Some of you took it to Hawaii.
You drank some of it, too.(I was there with you) :laughing:
Hopefully you didn't lose your job.
Hopefully you didn't have a major health catastrophe.
Some of you divorced it, too.
Hopefully you saved some of it and invested wisely.
And that usually puts a damper on the evening. :laughing:
My wife elbows me. I take thanks in the fact that most of us are healthy, have good families and friends and the sun will rise again tomorrow. Money isn't everything.... but it sure helps to know you're going to eat tomorrow and sleep in a warm bed. Really all that matters is food and shelter. But then you're down to the animal level. You want a little more than that, like something better for your kids, maybe a nice tractor.
If you're in good financial shape and have a decent job, get to spend time with family and friends, be thankful. It could always be worse.

 

[Yandaddy1110]

I think you forgot one..


Paid taxes with it.:laughing:

 

[MossRoad]

Yeah. That's a big one, too. :laughing:

 

[California]

Before Christmas we started a discussion on family finances with our kids. They have come to realize how fortunate they are to graduate college (+ grad school for one, so far) without any debt. I used the chart below to illustrate how I was able to retire in 1998 age 54, put them through college a few years later, and today still have what I had the day I retired.

What worked for us was to put the full allowable amount into IRA's and Deferred Compensation every year after these were invented in the mid 70's. Also when we started out, it took a year of lean living to accumulate our first $1,000 in non-IRA savings. We used that for the down payment on a duplex, so the tenant paid our housing cost in those early years allowing us to save a good part of our income. Later we owned a couple more rentals for a few years, then in the 80's (when we were fed up with tenants) sold the real estate and invested it all in the market, mostly an S&P index fund.

Money hasn't been a problem ever since those first early lean years. And we didn't live too bad even then - vacationed to Hawaii, Virgin Islands, Baja California the year the new highway opened down the peninsula, and lots of camping all over the Sierras both before kids and with the kids. Later took them to Canada, DC, and London, and still later on in college they were all over - France, semester in India (where we visited one daughter), semester in South Africa, Mexico, Central America, and South America several times (we visited other daughter there), even China. Our austerity in our 20's paid off well later on.

Our particular plan wouldn't work today but I hope others can find their own way to get from zero to comfortable. So far as I can see owning, fixing up, reselling rentals is the best way to start with near-nothing and multiply it into a nest egg.


Whenever you have an opportunity for an employer match, by all means take advantage of that to the maximum! Even if you don't get a match (we never did), an IRA (particularly Roth) or 401k, 457 etc is still the best way to accumulate savings for retirement. And looking back over the 2009 posts that started this thread, I see some posters had plans with high fees. Those fees will kill your savings. An index fund with fees under a half percent will accumulate savings far more effectively than a managed fund that has to make a percent or even up to six percent or more, before your own money is used to earn anything for you. History has shown that low fee index funds outperform anything else available to the retail investor.

 

[ultrarunner]

Always like to hear success stories... you sound like a wise man California!

I've been on the job with the same employer 23 years and looking back... the bulk of what I've accumulated was done outside/pre work and in my 20's

Bought my first piece of Real Estate just before I turned 23... originally, I wanted to buy a nicer home in a better area and found I could not qualify for a mortgage being a fresh college grad with a series of part time jobs... I started paying into Social Security at age 12 and always worked... sometimes 3 part time jobs with my summer jobs.

I took the money I was going to use for a downpayment and bought a cottage scheduled for condemnation hearings in East Oakland California for cash... much to the shock of just about everyone I knew.

It was sink or swim and a real learning experience being a SF Bay Area homeowner without a mortgage just out of college... plan was to repair as I could afford, get a home equity loan down the road and buy the next piece of property keeping the others as rentals.

Worked real well for about 10 years until I was offered a job working at a local Hospital... thankfully, I kept my rentals!!!

Looking back the first 10 years, getting into income property during my 20's has provided more security and a nest egg than 23 years as engineering director... thing is my employer had all the benefits/perks at the time I signed on and over the years... one by one they ceased to exist.

The 401k with employer match was the deciding factor to become an employee plus the stock plan and profit sharing... too bad it all went away.

Hospital ownership changed and even though I was covered in the same desk rule... I forfeited 80% of my employer match and profit sharing which was devastating.

This left a real bitter taste because at one moment my retirement plan was more than on track and after the merge it was in shambles...

Every year I'm asked why I no longer participate in the plan... aside from high fees, limited choices... my answer was always the same... sign me up as soon as the match is reinstated.

Might all be a moot point.. I was asked recently if I would consider applying to be administrator... there was a time when I thought had thought about it.

Today, the administrator has all the responsibility with very little real authority, which rests with the board of directors/partners.

My first action would be restoring a minimal match which the board would never approve!

 

[RSKY]

Gonna put my 2 cents worth in.

I retired two days before my 57th birthday mainly due to my 401K. The factory I worked at closed when I was 52 and I lost half my pension due to my age at closure. I got another job for four years until I had enough in a second 401K to get me by to age 59-1/2. At age 59-1/2 I rolled my original 401K over into an IRA and I will draw from it each month until I turn 62. When I start drawing Social Security I will drop the amount I get from the IRA by a thousand a month and let it build up.

People do just the opposite of what they should do with their 401Ks.

When the stock market drops and everybody starts the gloom and doom talk that is when you max out the amount you are putting in.

Some of you think you lost money in 2008, and on paper you did. But you still owned the funds and their value will come back. I had the influence of a couple of blue-collar millionaires to guide me while I was working. They were electricians working in the factory I was at. When the market dropped, they maxed out what they put in their 401Ks. Couple of years later, when everybody was bragging about how much they had in their fund, prices being high, those two guys would only contribute the minimum. They did this over thirty years and when the factory closed they never worked again.

Simple, buy when the prices are low, sell when high.

There was a production worker at the last factory I worked at, a tire builder, who supposedly had $1.3 million in his 401K. I didn't see his papers but the department manager did and he was the one telling about it.

If your employer matches anything on your contributions a person would have to be insane not to jump at this deal. If you are in a 25% tax bracket and you put 8% of your pay in a 401K you are actually only putting 6% in because the other 2% would go for taxes anyway. Plus your overall percent tax burden is smaller due to your lower income.

I bugged both my daughters and sons-in-law until they all started 401Ks. Oldest daughter was told by the KEA rep that she was in better shape to retire at age 32 than most were at 52.

Put your money in, do it when you are young, and forget about it until you hit 55. Then retire and do what you want to do.

The only thing that worries me now is that the Commiecrats, excuse me, Democrats, keep talking about taking all 401K money and putting it in a fund for everybody to draw from. I believe this came up in 2008 but didn't go anywhere in Congress. Don't think it will ever happen but still worries me.

RSKY