Comments on: Retirement Dreams Disappear With 401(k)s

60 Minutes: Older Americans' 401(k)s Have Plummeted; Many Fear They Will Never Get To Retire

[Yadyee]

When I go to the Dentist, I know what tooth they are going to fix and how much my Dentist will charge me to fix the tooth. When I go to my financial planner and ask for a full disclosure of their fees and interests, I got a packet of materials that I have no clue how to understand them. I need a Ph.D. in Investments. Something needs to change.

[NickKY1979]

CBS has taken 401k accounts completely out of context. Let's look at the options.

IRA - limited to $5000/year (currently), 1/3 of what you can save in a 401k. Company match? Nope. Still have the risk of the stock market.

Annuity - I don't know as much about these but am told they can be much more expensive than a 401k.

Pension - Great when the company can afford it, but a lead weight in bad times as GM is finding out. Essentially a trade-off between retirement security and job security to get you to retirement.

Social Security - Pay the government a piece of your check, earn 2%/year, have Congress rob the fund at every turn, and probably insolvent before many of us retire.

401k - Tax-exempt savings up to $15,500/year, or three times that of an IRA. Company match that can be adjusted according to the profitability of the company (in good times and bad), which is an automatic and positive investment return. Choice of investments from very conservative to very aggressive. Portable between companies, or move it to an IRA if necessary. Still your money even if the company goes broke.

All things considered, I'll take my 401k over the options any day of the week, and I WILL TAKE THE RESPONSIBILITY TO LEARN HOW I SHOULD INVEST.

It's very popular to cry "foul" because someone else made money and you didn't, but like he mortgage crisis this is about each of us taking responsibility for our future. Nobody guarantees an investment return. Nobody forced an investment on you. Nobody forced you to ignore your investments while the market headed south. If ou want to take the government's paltry return and bet your sunlight years on them, have at it, but leave MY 401k alone!

[virgosal]

So a lot of poor contributors like me suffered huge losses while those handling our accounts made tons of money over us . . . is anyone doing anything to correct this anomaly? Or is it business as usual so that the contributors continue losing and the administrators continue gaining while slapping us with fees after fees until all our money is gone . . . and no one is stopping them? Very sad indeed!

[FVBE]

I have to strongly agree with Michael who posted at 10:59 today. As a fee based financial planner for over 25 years I have seen people save money in 401Ks they would have never otherwise saved. Your report left everyone who has seen a drop in their accounts saying "how unfair this is to me" and probably will move their money into money market or out of the 401k altogether and will never recover any of their losses when historically the market always recovers eventually. And if diversified among stocks, bonds and fixed rate accounts anyone will certainly do better in the "long run" than in a 2% (if they can get that right now) money market account. I also could not believe the inference that Mutual Funds were to blame. When Mutual Funds were created it allowed those with small amounts of money to invest a small amount into the market over a long period of time thus sharing in the historically higher returns of stocks or equities over bonds and money markets. I have watched 60 minutes over the years and assumed that much research and thought went into your reports. But obviously there was no research into the past stock market ups and downs or the story would not have inferred that the market will not return to previous highs in the next 10 years and that all 401k's are to blame for those not being able to retire within the next 10 years. Perhaps a story on those who invested during the Depression at rock bottom prices might be in order.

[ryanfolgmann]

I'm here to say a lot of this story was true a great other piece on 401ks is the bloomberg video. If you go to yahoo and type in bloomberg 401k hidden fee video it will come up.

[mysteryauthor]

Kathleen Coleman's tears are "real" and it was evident from the segment that David Ray and his colleagues, not only don't care, but don't see that their lack of self regulation is not only amoral, but criminal.

In my book, "Final Audit," and on my new web site: http://worthanopinion.net, I address the criminality of those that have gotten us into this financial crisis that eats at the very heart of the American people. Thanks to 60 minutes the pain of Kathleen and others is brought excruciatingly to our attention. Everyone who saw the show should write their representatives and demand that they support the efforts of Representative George Miller.

Otherwise, 401K's will continue to decline at an alarming rate taking away everyone's ability to retire despite all their hard work.

Jim Worth
Author, "Final Audit"

[Lenlab]

The producers of this story missed several key investment issues. The issue is much bigger than 401Ks. A lot more retirement money was put at risk than mentioned. The producers of this 60 minutes piece should have done their homework better. The issue is bigger than 401Ks. It involves a ton of money in IRAs and cash balance retirement plans.. First many people have converted their 401Ks to IRAs. Some did it on their own and some had their arms twisted. Also many people have 401ks and IRAs. Many people have just IRAs. The issue is the same no matter what the form of the investment. Also some number have cash balance retirement plans with money invested in company stock or the market. People who did not know what they were risking or fully understanding the market risks put a lot of their money in the market. Sometimes with advice and sometimes on their own and not fully understanding the risks. We can point fingers in many directions but a lot more retirement money is gone than the producers identified in this piece.

[cctidepools]

I'm not an expert and cannot refute or correct of the details regarding this feature. However, I do know that I worked for 30 + years and trusted my financial advisor. I put the maximum allowed in my 401k each year; always paid my bills; never defaulted on any bill or loan; and was debt free a year before I retired. I have not ever taken money out of the 401k but, I've lost over 60%.

I recognize that much of this was due to stock market gains but, it has dropped to a point where I have also lost some of what I paid into it. When it dipped below 8,000, I had it moved to a fixed rate but, the damage was done. If my losses, like millions of others, is due in part to corruption at any point all the way, it should be traced and made public.

Being a realist, however, those of us over 62 who always paid our bills and lost most of our retirement are becoming a very large group of people who are considered "collateral damage".

No one is going to care about my little post or those of us who are now known as the newest group of collateral damage. But, writing it out, helped me see the reality of it.

[hickfrmmt]

Despite what you call onerous regulation and reporting standards, I still believe there should be full disclosure of all fees taken out of my account. The prospectus tells you what percentage the fund charges, not what the charge is, and it doesn't tell you what your broker is charging. It's like going to the grocery store telling the clerk your bank account number and not getting a receipt. Then when you get your bank statment just accepting whatever balance they share with you.

[monkey8473]

ctomp1 - You were not taxed three times. 1. The amount you contributed was not reported in your taxable wages on your W-2 2. When you took a withdrawal, 20% was withheld under law from what had never had withholding taken on it 3. When you filed you income tax return, the money you withdrew WAS reportable as taxable ioncome, but the 20% withheld when distributed should have been reported in addition to your other withholding. You need to have someone knowledgeable about income taxes review your tax return, and or explain it to you. You were not taxed three times.

[Richard_in_Seattle]

ACTUALLY YOU CAN GROW MONEY WHILE PROTECTING IT

It's interesting how many times the "rest of the story," or at least another point of view, isn't presented. The fact is: 401(k) deferred money isn't limited to stocks, etc., unless the company plan limits the choices.

Since I'm in a financial business, you'll probably dismiss what I'm saying as biased. But let me at least point something out that could well save you from the next meltdown. Since 2001, I've been marketing fixed indexed annuities as a way to grow money without market risk. (Don't confuse these with variable annuities--which are loaded with fees, and can suffer market losses.)

With over 200 clients now, I can honestly prove that NONE of them have lost a dime, while ALL of them who have additional money in the market in 401s, IRAs, or unqualified accounts have lost roughly half of their invested money.

They have all made money within their fixed index annuities, and are guaranteed to continue to make more -- regardless of the market.

There is no reason companies couldn't use these safe products, other than that it would reduce the money earned by the brokers who continue to push stocks so they can earn ongoing fees and commissions.

If you're interested in learning more information, and in the Seattle area, check out "sensible retirement" at a Y site.

[popscampbell]

I was very disappointed in Ms Schlessingers story about 401K's. The lead-in mentioned that George Miller has tried to legislate transparency in knowing what ALL the fees are that 401K managers and sponsoring companies charge and how he gets no-where because of the lobbyists. 60 minutes even got the chief lobbyist to admit the industry likes hiding fees structure. Unfortunately, your "reporter" sold out on the story and simply quoted the industries party line that fees aren't the issue. But fees are a huge part of the issue and the public can once again be fleeced out of substantial amounts of their retirement savings if openness is not mandated. I got the impression your station supported the industries position rather than caring about the millions of consumers and investors who are impacted.

[mhowley]

Mr. Kroft,

I have been a life-long fan of the show and respect your career in reporting. However, I do feel strongly that this particular report could have been much more constructive, balanced, and not the typical Wall St & Big Business wrecked my life etccc.

Like everyone around the world right now, I do feel terrible for those who lost 40-50% of their assets in this credit crisis, those waiting in line at the unemployment offices and those that are working less than fulfilling jobs to feed their families. I am also a strong supporter for lower and full transparency of fees in the financial industry. With that being said, I think the report missed the mark.

Mutual fund performance numbers are reported on a net ( after fees) basis. Therefore, if there are higher than average fees one would be able to detect it via lagging performance numbers over time. Secondly, the largest problem in the 401k marketplace is not the fund fees, it is the misappropiation of funds and lack of 'fiduciary responsibility' by the employer/trustee and their advisors.

Your report lacked the cold facts that most Americans are working for 'small businesses' and as such their largest risk is going to come directly from those signing their check. That risk will come generally in three forms - 1. their employer directly spending their money to pay other debts, etc. 2. their employer mismanaging the profit sharing/401k themselves and not following the proper codes (generally because they want to save some additional recordkeeping or investment managment expense) 3. the employer not doing the proper upfront due-dilgence when searching for 'professionals' to provided a solid plan and/or lack of oversight for those professionals & investments on an ongoing annual basis.

I would have loved to have seen you contact at least one independant fee-only financial advisor with their AIF certification, The Center For Fiduciary Study, the National Associattion of Personal Financial Advisors, Paladin Registry, SEC or some other independant 'expert' party on the topic.

At an absolute minimum you should have visited the government agency in charge of oversight for all 401k plans - Employee Benefits Security Administration - while you were there in DC talking to the lobbist. I am sure they would have loved to provide you with press worthy data, like this info that I found in just miniutes on their site:

Through its enforcement of the Employee Retirement Income Security Act (ERISA), the Employee Benefits Security Administration (EBSA) is responsible for ensuring the integrity of the private employee benefit plan system in the United States. EBSA?s oversight authority extends to nearly 700,000 retirement plans, approximately 2.5 million health plans, and similar numbers of other welfare benefit plans, such as those providing life or disability insurance. These plans cover about 150 million workers and their dependents and include assets of approximately $5.6 trillion. Total monetary results for FY 2007 were approximately $1.5 billion.

Prohibited Transactions Corrected and Plan Assets Protected
$719.7 M +62%

Plan Assets Restored and Participant Benefits Recovered
$642.1 M +136%

Voluntary Fiduciary Correction Program
$130 M +2,995%


Civil Investigation Statistics Demonstrate Success In Targeting

In FY 2007, EBSA closed 3,236 civil investigations, with 2,402 (74.23%) resulting in monetary results for plans or other corrective action. Because of improved targeting, the proportion of investigations closed ?with results? has increased by 30% since FY 2001.


EBSA Investigations Led To The Indictment Of 106 Persons For Crimes Related To Employee Benefit Plans

EBSA has responsibility to investigate potential violations of the criminal provisions of ERISA and those provisions of Title 18 of the United States Code that relate to employee benefit plans.

In FY 2007, EBSA closed 188 criminal investigations. Since FY 2001, the agency has also increased the number of criminal investigations closed with either a guilty plea or with a criminal conviction by 43%.

Best regards,
Michael

[sandslf]

Terry and Donna McNally please contact me to see if you have the skills I am looking for. I worked thirteen years and built up a quarter million in sales company only to have the owner pass away and sell the company. In two years we were bankrupt.

I am looking for some dedicated people to help me with my new company. If you are interested, please call me at 520-298-7131.

Sincerely,
Sandra Fatovich
520-298-7131

[sandslf]

Kathlene Coleman, I can sure understand your anxiety. I had built a company over 13 years for my husband and my retirement. When the owner died and the company was sold, we were bankrupt in two years--everything gone!

I am building again and looking for just such people as you--very energetic and motivated. Please call me to see if we could possibly work together and make a great income again.

Sincerely,
Sandra Fatovich
520-298-7131

[ctomp1]

Watched the story on 401K. You failed to mention the problems when getting money out of the 401K after 59 1/2 yrs old. I took money out last year to survive and also for my son's wedding. Little did I know, that taking money out of my 401K put me in a higher income bracket on my income tax, and I had to pay almost $1500 in taxes. Tax was taken out of my paycheck, then they took out the money for my 401K, then when I took the money out of my 401K, they took out 20% income tax. Then when I filed my income tax return for 2008, my 401K money was considered income and therefore put me in a higher tax bracket and I had to pay almost $1500 to IRS. What is wrong with this picture?? I was taxed 3 times on my money. If I had to do it all over again, I would not have gotten a 401K (especially all the money I lost on it and then this). Same goes for the IRA. Same thing happened to me on that.

[JudiVance]

I would love to talk with Kathleen Coleman as I may have a job opportunity for her. Can you please help me get in touch with her?

Sincerely, Judi Vance, [e-mail]

[jnta123]

My employer offered a deferred compensation plan for the first time in 1983. For every tax-deferred dollar I contributed to the plan, my employer would add 4 cents. The plan offered several options for investment, including mutual stock funds and a stable income fund. (The fees for this account can be seen at any time on line.) The latter offered an interest rate well above the yields available through banks. Since I viewed this plan as a supplemental retirement account, I never used it to gamble with volatile investments such as stock funds, even though I have been investing in stocks since 1967. Hence, I have never sustained a loss in my account.
In your emotionally laden report on 401k's, you have opened the door for progessive politicians to "protect" us from those bad guys on wall street by having the government taking control of these plans or eliminating they entirely in order to generate tax revenue. If these plans are eliminated or controlled by politicians, the average worker stiff will have to rely on that ponzi scheme euphemistically referred to as social security.
Although you had a lobbyist representing this "industry", your reporting was slanted and failed to include those of us who take responsibility for our financial future by not taking unnessary risks and then looking to government to bail us out when we do so.

[Caldreamin]

What a lousy story. People lost tons of money because the stock market crashed not because of the fees they paid to manage their 401k plans. No correlation at all. Why not a story about the role Congress played in the whole mess? No one appears to holding our elected officials accountable for the housing meltdown that caused the financial sector to collapse. Let's look at the idiots that thought that everyone should own a house and thus structured Fan and Fred so that the mortgage folks including bankers, mortgage brokers etc would have a place to sell these risky loans. Fees were not a factor in the debacle.

[landbanker]

I am 28 year old single female, I have been interested in investments.. well actually retirement since I got out of college. I started working right out of college at a respected government laboratory. For the first 5 years I was contributing to their retirement plan which was a 403(b), it was a 403(b) because the University of California was running the laboratory. Then it switched hands to an LLC, we now have a 401(k) that we contribute to. So I had multiple different retirement accounts, an IRA, a 403(b) which I was no longer contributing to, and a 401(k) which I contribute to currently. In late 2007 I learned if I wanted to retire comfortably at a reasonable age I would need millions in my retirement account. So I started looking for alternative investments, I was thinking maybe I would take the money out of my retirement accounts and invest in real estate. That is when I met someone who is now a close friend of mine who taught me about land banking, and that I could use my IRA to invest in it. I attended a presentation about land banking and instantly felt the universe had brought me in the right direction, this was the perfect long term/lazy investment I was looking for. For those who do not know, land banking is the process of acquiring raw land in a pre-developed and high growth area. After learning about this opportunity I went home and transferred all my money in my IRA and 403(b) to the money market, so I wouldn't lose any to the market. I then mentioned this to a close friend of mine and he was interested and did the same thing. The two of us decided to partner and purchase a parcel of land together. A few months later the perfect parcel came up, and we jumped on it. We transferred our IRA's to a custodian that allowed self-directed IRA's and we purchased the land with it. In less than 30 days we were proud owners of land! Well I should say our IRA's were the proud owners. And the best thing of all we didn't get taxed on our IRA, because it was a simple roll-over. We bought the land in April 2008, I am so thankful I was able to take that money out before it went down in the market. And not only did I not lose money, but the value of my parcel of land went up almost 300% in less than a year!
I have attended many seminars for real estate, wealth building, and stocks. And I have found no better or easier way to save for retirement. Unless you take things into your own hands and find out the possibilities out there then you could get stuck in the situation so many people are finding themselves in today. I feel so bad for everyone who has suffered in this market and I am more then willing to help anyone interested in learning more about this little known secret.
I have learned not to trust my money with a fund manager who considers themselves to be having a good year if they are outperforming the market index. That means if the market index is negative so long as the fund is not "more" negative then they are doing great.
Best regards to all!