Corporations, 401k & Gov't never ending cycle of pressure?

[Dhiana]

A thought that has been rolling around in my head lately with all of the conversations about Corporations, Gov't & 401k type programs...

It seems like there is a lot of pressure on the individual to save for retirement, and many of us put money into these 401k type of programs, then if value of our retirement savings isn't ALWAYS increasing then we start stressing/panicking to the corporations & gov't to fix it, which leads to things such as tax incentives for corporations, which helps our retirement savings temporarily, but then it slows again and then there are layoffs by corporations or more incentives, or they move operations overseas, etc, etc.

Not saying we should drop/change the individually powered 401k type of savings programs since I don't know of a better solution...

Not sure that I'm writing this very well but it seems to me to be a big cycle of pressure or musical chairs and I'm wondering how some of this pressure could be relieved? Everything is so much more interconnected, it's like a big global soap opera :)

Removing incentives loses jobs, at least temporarily...
I like having the ability to handle our own 401k/retirement...
With the Gov't in the middle trying to satisfy both sides, yet being unsuccessful...

[ApatheticNoMore]

It would never have occured to me to try to pressure goverment to maintain the value of my 401k, yea it's scary when you have 2008 type crash but so it is. I'd sooner blame myself for being too heavy in stocks when it happens. What it would occur to me to pressure goverment to maintain: actual government safety nets like Social Security. The poor performance of many 401ks does I think testify to the need for this.

[Rogar]

A thought that has been rolling around in my head lately with all of the conversations about Corporations, Gov't & 401k type programs...

It seems like there is a lot of pressure on the individual to save for retirement, and many of us put money into these 401k type of programs, then if value of our retirement savings isn't ALWAYS increasing then we start stressing/panicking to the corporations & gov't to fix it, which leads to things such as tax incentives for corporations, which helps our retirement savings temporarily, but then it slows again and then there are layoffs by corporations or more incentives, or they move operations overseas, etc, etc.

Removing incentives loses jobs, at least temporarily...
I like having the ability to handle our own 401k/retirement...
With the Gov't in the middle trying to satisfy both sides, yet being unsuccessful...

I agree.

It actually seems to me like there is a lot of government pressure and incentive to invest in the risky stock market to support an economy we all may not totally believe in. And at the same time a dis- incentive away from extremely low interest safe savings that are not even keeping up with inflation.

It wasn't too long ago that only the sophisticated and well-off would dabble in stocks. Everyone else put savings into the bank. A proliferation of modern mutual funds and the ease of investing in the market, and in 401Ks has changed that. In taxable accounts, the tax rate for capital gains is generally less than interest income, so again there is a stock market incentive. Meanwhile the Fed has kept interest rates historically low.

As the last financial crisis showed, a lot of retirement savings were lost due to that pressure to have an ever growing 401K by investing in the more risky investments.

[awakenedsoul]

I never would have felt comfortable investing in a 401K. I like the control of investing myself. The places I worked that offered 401K's didn't manage their own money well. I didn't trust them to manage mine. It's so different when it's your money.

[ApatheticNoMore]

I'm not sure in what sense a company manages one's 401k, 401ks are usually done with big investment firms (like vanguard etc.), so I figure they are doing any real management once the contributions arrive. I mean unless you are worried about the company stealing from the 401k which is just outright theft plain and simple, I guess there's a small risk of that (though I'm really not sure how that even happens, the bad cases you hear about are usually company stock which is not typical for a 401k). It's true one might not like the mutual funds that are offered in the 401k.

[sweetana3]

I am not sure where you have your 401K's but ours has increased over 10% this year. We do consider it only a part of a balanced and diversified investment portfolio which includes taxable accounts, cash, and our IRAs.

It is critical to have a whole overall plan with goals for your life and investments. One investment method does not provide diversity.

We have invested since the 70s and ridden all the ups and significant downs of the overall market and met all our goals over this time period. In fact, we have retired with even more than we planned for.

Do any of you know what your 401K is invested in and what types of diversification is in the plan? Are all your eggs in one basket as the cliche goes? Having these accounts means that you are now responsible for your retirement cushion and must be involved in the decision making. It is not the government's role to provide 100% protection.

[Rogar]

My company's 401K was through Fidelity and offered a variety of products from a stable value fund, bond funds, several categories of stock funds, and retirement funds that would automatically adjust the stock to equity ratio as you approached retirement. In spite of this, it always amazed me how many would have all their 401K in stocks. To me it was an example of what might happen if we privatized social security. I have the opinion that many people spend time planning for a vacation than planning their retirement investments.

[sweetana3]

rogar, you are so very right. I hear only talk about spending spending and more spending and little about security and forward planning. We have planned a fully diversified investment portfolio and taken a number of classes to try and become more involved. Gradually we got out of individual stocks, ala Peter Lynch, when we found out that we would never have the info necessary to make such decisions. Gradually we have moved from individual managers of funds to index funds of a wide variety.

We never expected 10% last year. The market is crazy.

[Spartana]

There are many 401K, IRA's and 457 accounts that can be held outside of stocks or mutual funds and are insured - some for the entire amount some just for the principal. because I'm a saver rather then an investor (and very risk adverse) I put my IRAs in bank or credit union CDs. They are insured by the Feds up to $250K each. Same with my 457 plan (like a 401K for government workers). I put it in something akin to CDs (fix rate thing) rather than mutual funds or stocks because it was insured. Of course I don't/didn't make the same kinds of returns as I would have if they were invested in MF or stocks, but I was able to have the same tax-deferred benefits of IRAs and 401Ks without the risks. I knew they were safe and would grow...slowly.