There are lots of candidates for "biggest scam ever." Certainly the 401K's will help fund the govt's winding down of a host of other scams. It would be one of the last sources of fresh money. I've felt uneasy with 401K's since about 1997 and sensed something wasn't right with the whole "investment" game. I was a couple of years early and missed out on some big SM gains. But the author is certainly correct that all the boomers can't retire together on their 401K's. If everyone is doing it, it can't work....at least not in a fiat world.
Madoff and Ponzi wouldn't even make the top 100. Also on the top 10 list would be:
OTC derivatives Fractional Reserve Banking Fiat money system Social Security/ Medicare / Medicaid and similar entitlement programs Fannie & Freddie Proprietary trading systems
401k's can be tricky. I run/manage about eighty 401k's. In 2007 I had most go to all cash/money market and bonds within their 401k's. Missed the last part of the run up, but missed all of the melt down. Those with self directed 401k's were short the market in some form. (I did misplay the flight to dollar saftey trade in 2008) In 2009 I had most go to overweight in stocks. They have done very well are things considered. About twenty percent of these 401K's are self directed and I use options to hedge at times. As for what the future brings for 401k's as a vechicle I also have my doubts. While I admire the author he is often wrong or at least his timing is. MJ
Edited for clarity.
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Guess I don't fully understand the article. Is it the 401k that is bad? .... OR is it the investing in the stock market?
I can certainly understand if the concern is investing in the stock market. The market is totally rigged to favor the big boys, and usually at the expense of the small investors.
But, how is the 401k a bad deal if one gets a good match on the contributions, and invests in other options?
"But the author is certainly correct that all the boomers can't retire together on their 401K's. If everyone is doing it, it can't work..."
What can't work is the great leveraging of any hard cash that is going on. It grossly distorts the true liquidity of the system. The funds and the market and the financing of business and consequently our economy can not exist as it does now after the boomers start taking their cash out of the system. Right now, they account for a large amount of the real liquidity in the system as in...cash on hand. The current system is based on the boomer model but the players are exiting the playing field, in droves right now and soon it will be as thundering herds. The phrase "Burnt toast on a pointy stick" comes to mind when thinking of the boomer model in 10 years like 401k's, funds, ira's, and current savings vehicles.
But in the future lies innovation, it is a very fluid situation and the economic markets and sovereign economies are currently in an evolution phase. What pushes this evolution it terms of speed and effect is a very timely topic to monitor and pay attention to, new things are happening every day in the way finance is practiced. Boomers must move aside and gather their nuts for the winter and let this thing become what it wants to be. They need to put their cash in land and real estate and PMs and real things that you can touch and hold and I believe they will, first in droves then as a thundering herd. I don't think it's bad or good, it's just what it is...I'm sure they will deal with it, they always have.
I've stopped voluntarily contributing anything to my firm's 401(k). The problem is these plans present a very juicy target for politicians. The latest statistics I could find are that 401(k)s and IRAs together held $7.5 trillion in assets at the end of 2006.
These plans are creatures of tax law and the government can change the laws any time it wants.
There are easy ways for politicians to get ahold of this money. All they need to do is change the rules on withdrawals. For example rather than taxing people at "ordinary income" tax rates the government could tax withdrawals from these plans at a flat higher rate. Or tack on a surtax of some kind. There is a ready excuse for this (not that they need one): many of the people with big balances were shielding income during their peak earning years putting it in the 401(k) or IRA, so it's arguably unfair for them to withdraw it at retirement when their income is lower and pay a lower tax rate. Etc. etc. Once the politicians train their sights on these plans, it's Katy bar the door.
Another thing they could do is force people to buy an annuity provided by Uncle Sam.... you would have to give them your account balance at retirement, and they'd promise to make monthly payments of X amount to you for life. Talk about an easy way to finance the deficits! But I think this kind of change would trigger a lot more of a fight than just imposing a surtax on withdrawals.
401(k) plans and IRA are easy for politicians to tax -- too easy. I'm very wary about keeping my assets in them.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
If there is an employee match I believe it's a good investment to meet the match, but beyond that is iffy. I work for the govt' so my only work related investment is a 457 without a match. I used to dump about $600/mo into it, but backed off and do only about $200/mo and the rest goes into silver eagles and fractional gold
For those with 401k's it should only be one part of a retirement strategy. There should be no eggs all in one basket IMO. FYI- Where is MoneyLA these days? Is he ok? MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>For those with 401k's it should only be one part of a retirement strategy. There should be no eggs all in one basket IMO. FYI- Where is MoneyLA these days? Is he ok? MJ >>
Was wondering same myself the other day. Several regulars been quite & absent lately?
I think that 401k article is flaky. I don't do 401's or IRA because I have no interest in a government-controlled investment account. Means testing will happen, and frankly I don't have the money to pay other people's bills and my own too.
What people expect is low marginal rates when they withdraw their funds later in life, what they might get because of fiscally irresponsible politicians is much higher rates, possibly higher than paying your taxes now (taking you lumps)....
I'm not saying dont accept free "match" money from your employer, but it may not be the grand plan that everyone thinks it is 20-30 years down the pike....
gsa1fan
Posts: 5,566 ✭✭✭
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Madoff and Ponzi wouldn't even make the top 100. Also on the top 10 list would be:
OTC derivatives
Fractional Reserve Banking
Fiat money system
Social Security/ Medicare / Medicaid and similar entitlement programs
Fannie & Freddie
Proprietary trading systems
roadrunner
Edited for clarity.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I can certainly understand if the concern is investing in the stock market. The market is totally rigged to favor the big boys, and usually at the expense of the small investors.
But, how is the 401k a bad deal if one gets a good match on the contributions, and invests in other options?
That's not counting "if & when" gov't starts messing with the money.
What can't work is the great leveraging of any hard cash that is going on. It grossly distorts the true liquidity of the system. The funds and the market and the financing of business and consequently our economy can not exist as it does now after the boomers start taking their cash out of the system. Right now, they account for a large amount of the real liquidity in the system as in...cash on hand. The current system is based on the boomer model but the players are exiting the playing field, in droves right now and soon it will be as thundering herds. The phrase "Burnt toast on a pointy stick" comes to mind when thinking of the boomer model in 10 years like 401k's, funds, ira's, and current savings vehicles.
But in the future lies innovation, it is a very fluid situation and the economic markets and sovereign economies are currently in an evolution phase. What pushes this evolution it terms of speed and effect is a very timely topic to monitor and pay attention to, new things are happening every day in the way finance is practiced. Boomers must move aside and gather their nuts for the winter and let this thing become what it wants to be. They need to put their cash in land and real estate and PMs and real things that you can touch and hold and I believe they will, first in droves then as a thundering herd. I don't think it's bad or good, it's just what it is...I'm sure they will deal with it, they always have.
These plans are creatures of tax law and the government can change the laws any time it wants.
There are easy ways for politicians to get ahold of this money. All they need to do is change the rules on withdrawals. For example rather than taxing people at "ordinary income" tax rates the government could tax withdrawals from these plans at a flat higher rate. Or tack on a surtax of some kind. There is a ready excuse for this (not that they need one): many of the people with big balances were shielding income during their peak earning years putting it in the 401(k) or IRA, so it's arguably unfair for them to withdraw it at retirement when their income is lower and pay a lower tax rate. Etc. etc. Once the politicians train their sights on these plans, it's Katy bar the door.
Another thing they could do is force people to buy an annuity provided by Uncle Sam.... you would have to give them your account balance at retirement, and they'd promise to make monthly payments of X amount to you for life. Talk about an easy way to finance the deficits! But I think this kind of change would trigger a lot more of a fight than just imposing a surtax on withdrawals.
401(k) plans and IRA are easy for politicians to tax -- too easy. I'm very wary about keeping my assets in them.
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Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>For those with 401k's it should only be one part of a retirement strategy. There should be no eggs all in one basket IMO. FYI- Where is MoneyLA these days? Is he ok? MJ >>
Was wondering same myself the other day. Several regulars been quite & absent lately?
I am with you on that comment......
What people expect is low marginal rates when they withdraw their funds later in life, what they might get because of fiscally irresponsible politicians is much higher rates, possibly higher than paying your taxes now (taking you lumps)....
I'm not saying dont accept free "match" money from your employer, but it may not be the grand plan that everyone thinks it is 20-30 years down the pike....