Author Topic: 401K ?  (Read 6625 times)

Offline surfivor

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401K ?
« on: November 04, 2013, 12:20:38 PM »

Are many people still contributing to 401Ks ? I stopped the whole thing some time ago, but all our bonuses go into a 401k account so I have one for that. I think our company matches all contributions which I had forgotten that detail, but despite that I don't have any money taken out of my pay for that at least not currently

Offline Jack Crabb

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Re: 401K ?
« Reply #1 on: November 04, 2013, 12:54:13 PM »
I am doing the max $17.5k plus the $5k catchup now that I am over 50.

Offline fritz_monroe

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Re: 401K ?
« Reply #2 on: November 04, 2013, 12:59:30 PM »
Yes, a 401k is still part of my financial planning.  My company matches part of it, I think 50% up to 6% contributed.

Offline hanzel

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Re: 401K ?
« Reply #3 on: November 04, 2013, 01:05:42 PM »
I am doing the 401M ( m=mattress).  I had the fear long ago that the Feds would "confiscate" 401's and place replace the funds with something else ( this is your retirement .. long time from now .. you dont needs those funds now right ?? only the RICH have 401k's)   Reading some of the other news reports that have been coming out on that very idea I am not thinking a 401k is that safe at this time. 

Offline Prodigy

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Re: 401K ?
« Reply #4 on: November 04, 2013, 03:54:25 PM »
Why would you not take free money, assuming you could afford to put some aside each pay check?  There is no way in hell the government could confiscate or permanently 'borrow' all 401k's at the drop of a hat.  There would be riots at almost every level of society.  If it actually does happen, it will be very slowly over time.  As long as you keep your ear to the financial ground somewhat regularly, there is a very low chance you'll get your 401k taken by surprise.

Tell me any other place where you can be guaranteed a 100% interest rate of return... (or 50% in some cases)

Offline fred.greek

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Re: 401K ?
« Reply #5 on: November 04, 2013, 04:50:25 PM »
For a long time, we were making maximum deposits to my 401k type account, but years ago dropped to just the matching amount.

A significant reason I retired at the earliest opportunity was to get the money out and into an account with much greater investment options.

Offline SloSheepdog

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Re: 401K ?
« Reply #6 on: November 04, 2013, 05:29:57 PM »
Tell me any other place where you can be guaranteed a 100% interest rate of return... (or 50% in some cases)
This. Company matching is huge, even if only fifty cents to the dollar. We have to plan for if times get tough, or even if they don't. Might be that the Fed Rev, etc can go kicking the economic can down the road for longer than any of us live, and we can make money and live comfortably in the meantime. I hope so. Worse case if you change you mind you can take it out early and get hit with the fees. Which the company match would offset.

Online FreeLancer

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Re: 401K ?
« Reply #7 on: November 04, 2013, 08:23:29 PM »
The 401k match is the only thing I'll miss about not working for the man.  It's a nice perquisite, but it's not worth killing myself, one day at a time, for.

Offline ag2

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Re: 401K ?
« Reply #8 on: November 04, 2013, 09:17:35 PM »

Tell me any other place where you can be guaranteed a 100% interest rate of return... (or 50% in some cases)

Are you sure about this?  I expect inflation around 500% over the next 10-25 years.  The 401K would be a huge loss.  Certain tangibles do better against inflation.

This is the one scenario which concerns me.  If this occurs, I would do much better with other investments.  With that said, I am still contributing to my 401K with a small Co match in case I am wrong.  Obviously, I'm also contributing in other areas also.

Offline surfivor

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Re: 401K ?
« Reply #9 on: November 05, 2013, 08:39:31 AM »

 I was between jobs a while back and had bought a house and needed money. I was unimpressed with the financial system and when I started my new job I did no contributions whatever to my 401k. Things are turning around for me a bit and if the company matches contributions, maybe I should think about it but I have been burned by the banking system/financial system to the point of nothing I have ever invested in really made any money whatever despite my father years ago and everyone encouraging me to do all this stuff

Offline ag2

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Re: 401K ?
« Reply #10 on: November 05, 2013, 08:43:54 AM »
I was between jobs a while back and had bought a house and needed money. I was unimpressed with the financial system and when I started my new job I did no contributions whatever to my 401k. Things are turning around for me a bit and if the company matches contributions, maybe I should think about it but I have been burned by the banking system/financial system to the point of nothing I have ever invested in really made any money whatever despite my father years ago and everyone encouraging me to do all this stuff

This is true for most of us who started our professional careers in the 1990s and took the investing advice of our parents.  Those rules do not apply anymore. We are no longer in a "buy and hold" economy/market, but rather a roller coaster.  The ups an downs are the new normal.

Offline Prodigy

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Re: 401K ?
« Reply #11 on: November 05, 2013, 08:45:34 AM »
Are you sure about this?  I expect inflation around 500% over the next 10-25 years.  The 401K would be a huge loss.  Certain tangibles do better against inflation.

This is the one scenario which concerns me.  If this occurs, I would do much better with other investments.  With that said, I am still contributing to my 401K with a small Co match in case I am wrong.  Obviously, I'm also contributing in other areas also.

That is certainly something that we need to be prepared for, but what happens if there is massive deflation?  In any massive economic depression there is the chance for massive deflation as the total debt - and therefore total money supply - contract as loans are defaulted on.  That's a big reason QE started to begin with - to fight the fear of deflation.  I think if there is a large economic collapse, it makes sense that we will see both massive deflation at first, then massive inflation as the government prints it's way out.

I guess the whole point is

1) Be prepared for anything - having investments in 401ks and retirement accounts can be balanced by also having investments in real estate, precious metals, etc.

2) Take free money while it's still good, which right now and the near future is the case.  Deal with that money later on if things change enough to warrant it. 

Offline Jack Crabb

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Re: 401K ?
« Reply #12 on: November 05, 2013, 12:05:36 PM »
I guess the whole point is

1) Be prepared for anything - having investments in 401ks and retirement accounts can be balanced by also having investments in real estate, precious metals, etc.

2) Take free money while it's still good, which right now and the near future is the case.  Deal with that money later on if things change enough to warrant it.

Now that there would be some good advice.

Offline SloSheepdog

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Re: 401K ?
« Reply #13 on: November 05, 2013, 02:13:49 PM »
I guess the whole point is

1) Be prepared for anything - having investments in 401ks and retirement accounts can be balanced by also having investments in real estate, precious metals, etc.

2) Take free money while it's still good, which right now and the near future is the case.  Deal with that money later on if things change enough to warrant it.

Summed it up better than I could.

Offline surfivor

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Re: 401K ?
« Reply #14 on: November 06, 2013, 10:03:51 AM »
I was sort of leaning towards making some sort of contribution but a guy from Hungary here was saying how Hungary and perhaps other European countries nationalized retirement accounts and was saying it's likely to happen with 401Ks here eventually which means you won't get all the money. I think I had heard that type of story before.

I realize I could try to pull the money out with penalties ahead of time, but it all seems like a complex game that I am not sure I want to play so I am back to being uncertain again.

Offline Prodigy

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Re: 401K ?
« Reply #15 on: November 06, 2013, 12:20:01 PM »
I was sort of leaning towards making some sort of contribution but a guy from Hungary here was saying how Hungary and perhaps other European countries nationalized retirement accounts and was saying it's likely to happen with 401Ks here eventually which means you won't get all the money. I think I had heard that type of story before.

I realize I could try to pull the money out with penalties ahead of time, but it all seems like a complex game that I am not sure I want to play so I am back to being uncertain again.

What does 'nationalizing' the accounts even mean, in this case?  What do you think will happen here?  Even if the .gov takes over control of them, you still have a retirement account that will supposedly be there when you retire.  What's the fear? 

It's pretty clear that 401k's are already somewhat 'nationalized' here in the US in the sense that they are taking away cash options and favoring government bond funds as the only real "safe" options.  Even so, putting 5% or whatever into your 401k is still advantageous.  If the US defaults and takes your 401k with it, then all your cash everywhere will be worthless and we'll be in the uncharted territory of a massive world wide economic collapse.

By not contributing, you are betting only on that failure.  And not only that, but you are making your 'bets' based on fear.  Both of those concepts can only lead to bad things...

We still live in the most economically and militarily powerful country in the world - our currency isn't going anywhere any time soon.  Not only that, but we've proven to be the masters of kicking the can down the road - as someone said earlier there's a good chance it might get kicked down so far you'll never live to see the 'coming collapse'.



Just for the record, I hate 401k's with a passion, but I contribute up to the max that my employer matches.  If I stop working here, I will do what I did last time I changed jobs - simply roll my 401k over into a private roth IRA, penalty-free, over which I have muuuuch more control.  Apparently there are some serious loopholes in the Roth IRA system that allows you to access your money with a minimum of penalties, but I haven't looked into that first hand.

Offline Jack Crabb

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Re: 401K ?
« Reply #16 on: November 06, 2013, 12:49:50 PM »
Keep in mind too that one's 401k contribution is pretax. The $1000 one contributes to a 401k would be $700 or so if taken as income.

In other words, the government is kicking in a third of one's investment in addition to the employer's contribution.

Also, everyone complains about investment options, however investment management results are abysmal across the board. The only 401k investment option one needs is an S&P index fund.

Online FreeLancer

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Re: 401K ?
« Reply #17 on: November 06, 2013, 07:32:52 PM »
By not contributing, you are betting only on that failure.  And not only that, but you are making your 'bets' based on fear.  Both of those concepts can only lead to bad things...

Yep.  Nobody makes good decisions based on fear and the only way to rationally deal with an uncertain future is to be diversified amongst a range of assets, which for me means having significant exposure to the stock market.

Offline fred.greek

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Re: 401K ?
« Reply #18 on: November 06, 2013, 09:27:15 PM »
If you have higher "life support" priorities covered, yes do a 401k, IRA, etc.  In the "investment" world of today, just don't be mislead by claims of rates of return.  If the folks inside D.C. finish destroying the dollar, and the ability of US companies to compete in the global market, any dollar denominated account (IRA, 401k, pension, annuity, life insurance, etc.) could fall to zero value. 

True retirement value is a paid for homestead that meets your life-support needs without the need to keep dumping in cash.

Offline bigbear

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Re: 401K ?
« Reply #19 on: November 11, 2013, 02:30:24 PM »
Are you sure about this?  I expect inflation around 500% over the next 10-25 years.  The 401K would be a huge loss.  Certain tangibles do better against inflation.

This is the one scenario which concerns me.  If this occurs, I would do much better with other investments.  With that said, I am still contributing to my 401K with a small Co match in case I am wrong.  Obviously, I'm also contributing in other areas also.

Even if there is a 500% inflation, stocks will also be bouyed by rising inflation.  Stocks may not maintain the full relative value to the dollar, but there will still be more dollars chasing that share of a company... 

I'm contributing enough to get the full match of my company.  My next step is deferring to a Roth IRA before contributing another cent to my 401k (less red tape for an IRA withdrawal).

Offline RitaRose1945

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Re: 401K ?
« Reply #20 on: November 11, 2013, 04:12:37 PM »
Agreeing with the others.  It's free money if your company matches and it reduces your taxes.

I had a 401k that my former employer matched 100%.  It was just plain awesome.  My balance just went up and up and up, twice as fast as it would have otherwise, and a bazillion times as fast as doing nothing at all.