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The 401k Fallout

April 19, 2009 8:47 PM

Checked your 401k lately? The recent financial collapse has devastated this retirement resource. Older workers are hardest hit, as their financial futures may now be at risk. Steve Kroft reports.

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by TheBetterCashBunker July 30, 2009 7:21 PM EDT
If you want real solutions to this puppy, go to www.mycashbunker.com. They've got a financial instrument, Mutual Benefit Life Insurance, that is unlike anything you've seen in recent memory. The Life insurance part is only a small portion of what this instrument can do. Actually, it's what our parents and grandparents used back before the illusion and sex of the stock market. In fact, it's a tool that's been used for over 1400. Really worth learning about. www.mycashbunker.com
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by laserfg May 13, 2009 5:03 PM EDT
GREAT exposition! I hope more and more news outlets will focus enough attention on this specific topic.

Why should financial planners (so-called) have retirees or those close to retirement invested directly in the stock market?

Check out this financial strategist who have been blogging about this fact. Good stuff. May be 60 minutes can invite him on. http://laserfg.blogspot.com
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by schuckn May 9, 2009 10:24 PM EDT
If anyone on here is in CA or NV Email me on some stragities to protect your life savings from market risks and is retired or nearing retirment. finalexpensetrust@gmail.com
Thanks
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by skiking226 April 24, 2009 7:13 PM EDT
Anybody who was dumb enough to "invest" in the stock market have nobody to blame but themselves. It's a gamble, like going to vegas. If you want a good retirement, (all you young people) invest in property, land, real estate. Now is a great time to buy up homes. I own 12 homes and will never have to worry about retirement. And I didn't lose a dime in this mess. I knew 30 years ago, I'm 45 now, that gambleing was just that. And I was not willing to take the risk!
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by ristainb April 23, 2009 11:09 PM EDT
Ms. Coleman please email me you are exactly what I am looking for; for my company. please email me at brendan.ristaino@primevest.com
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by DAVIDJOHNSPA April 23, 2009 5:45 PM EDT
As a CPA, I had hopes that the story on retirement plans would open the truth about these shams.
Unfortunately that didn't happen. People tend to think of retirement contributions as interest free loans from the government. Not so, as if you make a profit on your investment, the government is going to take 25% to 30% of it. When you start to take money out of your retirement plan, it's going to make your social security taxable. Probably to the tune of taxes on a couple hundred thousand dollar. If you die, you spouse or beneficiary will pay taxes on the retirement plan distributions. There is no step up in the basis of the assets, unlike savings outside a retirement plan. And your estate may pay taxes on the taxes your beneficiary will pay.
Let's talk about the investments. Your mutual fund and financial adviser are taking 1-2% each year. In 25 years, they took 25% to 50% of your portfolio. And stocks, you have CEO and others buying your equity in stocks at pennies on the dollar with stock option plans, and they don't even have to report it as a company expenses. All in all, a bad deal.
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by LOVECALIF April 23, 2009 4:40 PM EDT
The 401k money did not disappear, it went in somebody pocket. Any characterization that differs from this is just flawed. The best "snake oil" from Wall Street got the money. Blaming Americans for the promises and representations made by Wall Street that didn't pan out is outrageous.
Mr Wray now wants his industry to be "truth tellers", how funny and absurd is that?

Read this, many Americans will never invest on Wall Street again.
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by scoates29 April 23, 2009 12:23 PM EDT
Is it possible to get a dvd of the 401K segment?
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by d_sprague1 April 23, 2009 8:05 AM EDT
I don't have a 401(k) anymore - cashed it out over a year ago so that I could care for my mother fulltime. I do have money in an Employee Stock Ownership Plan that I can't get to for another 2 1/2 years because of an IRS regulation that allows my ex-company (proudly 'employee' owned) to control my funds for six years after I left the company. it's not just the 401(k)s that are a problem - it's also CEOS that just like to have power and control over people - it feeds their ego I guess.
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by thrush6 April 23, 2009 2:15 AM EDT
Mr. Wray: Your comments make me so glad that Bernie Madoff ripped off a whole bunch of stupid rich people and their stupid charities. I guess there really is no honor among thieves.
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by JMLAYMAN April 22, 2009 10:51 PM EDT
Ms Coleman please call me 870-919-5121
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by bkusilka April 22, 2009 3:13 PM EDT
Mr. Wray:

I could not help but feel indignant in regards to your remarks on 60 Minutes. It was you and people like you that told all 401K investors that we had to invest in tax sheltered investments. You told us to diversify our investments inside of these 401K's. You told us if we were younger we could be more aggressive. I can tell you in five years in my most recent 401K I have never seen anyone from the firm managing the fund. Let's not forget the government in this recent down turn as they have let you and people like you run unchecked throughout your industry. And, let us not kid ourselves that the government?s real motive in allowing us 401K tax shelters is so that they could reap the tax rewards off of our investments when we began to withdraw the funds. It is amazing to me a person like you could become president of an organization with the arrogance you displayed on 60 minutes. You have convinced me to stop all of my future 401K contributions and turn my investment strategy toward land and real estate. Probably the best investment you could have been in all along. It is insolence of you and many of the people in your industry that have contributed to the state of the union and the state of our 401K?s.

Regards,

Bryan Kusilka
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by DPORTER44 April 22, 2009 2:19 PM EDT
Kathleen Coleman,
I may a have a great opportunity for you in Hilton Head, South Carolina. Please e-mail your resume to dporter@belfair1811.com.

Your skill set and attitude sound like just what our company needs.
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by thrush6 April 22, 2009 3:20 AM EDT
Young people don't care about this stuff because it's about people over 50--but they are facing a pretty bleak future themselves. Our national debt is $11 trillion and growing, and the burden of paying it is going to fall on them, after all of these 50 and 60 year-olds die. That stupid Oprah told young people to go to college, and now they have to start paying off their average $22,000 in student loans. That one lady said that employers want fashion models who can type . If you think age discrimination is bad now, just wait. It's going to get worse for the current crop of 20-something workers.
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by timman300 April 21, 2009 10:33 PM EDT
Are you kidding me? They talk to a 61yr old guy who?s complaining because his 280,000 401k is down to 140,000?. Then they talk to a 54 year old who?s 88,000 401k is down to 50,000? Are you serious? What delusional world were those people living in when they thought 280k or 88k was enough to retire on? The guy is complaining that he lost 140,000 and now he?s retiring at 70 instead of next year? Hello! Even if he was getting 6% on that 140k that would be 8k a year!!! He can?t retire now because he?ll get 8k a year less? Where was he working that 8k a year makes that much difference?

Some of these people need to get a clue, obviously they waited way way way to long to start saving for retirement and now they are paying the price. They?re problem is that they waited so long they now can?t ride out the ups and downs. It?s their fault not the 401k industry. Everyone knows you need to start saving young. The market will come back, yes it may take 10 years but it will come back. It took 7 years to come back after the .com bubble but it did come back. Stop blaming the 401k industry and go back to blaming McDonalds because your fat.
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by kmk4037 April 21, 2009 7:14 PM EDT
I remember one teacher during my high school years (1970's) who taught us that you shouldn't invest what you can't afford to lose, especially in the stock market. Have we learned nothing from history (Great Depression comes to mind), or does history always need to repeat itself?
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by shazameen April 21, 2009 12:07 PM EDT
I honestly think depositing money in the bank without relying on all these dubious financial institutions is a sound strategy. It may not give you enormous gains, but at least you'd have what you earned and saved over the years. These stories about old people looking for jobs and stressing themselves breaks my heart.
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by jimmy19551 April 21, 2009 1:43 AM EDT
Fortunately, I learned early-on financial advisors are simply salesmen.

Like used car salesman- only you'll never get to drive the car.
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by lmjt40 April 20, 2009 8:34 PM EDT
this has nothing to do with not knowing how to invest. it goes back to the greed on wall street . why nobody from the rating agency is in jail. aaa rating on junk. the market is built on trust and that is now gone.......
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by ptully April 20, 2009 5:32 PM EDT
A very misleading piece. There is no way that the people interviewed, with the former and current account balances discussed, were going to be able to retire in the timeframes given. The sad part of this is that they did not have enough money unless markets grew rapidly and significantly. It is true that 401k plans are much cheaper than defined benefit plans, but if defined benefit palns were still the norm, the cost of those would have been reflected in lower wages, fewer employees, lower dividends etc. Most people are simply not saving nearly enough to retire at 62/65 and live what may be a 25 to 30 year retirement. Assuming one is still working, which should have been the real point of the feature, today's 401k contributions are purchasing investments at the lowest prices in years. If you assume/believe that markets will recover, as they have every other time in US history, the recovery period to past acocunt values may be much shorter than 10 years.Fees are confusing, probaly need more disclosure, but they are competitive with each other and are not the cause of these shortfalls. What is an issue is that employees often have little interest (especially those many years from retirement) and little guidance. Employers want many choices, employees are not always equiped to make the proper selections.
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