PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)

[HellToupee]

Any TSPers here?

 

[IC FBGCav]

Either you have the wrong link or you are mixing something up.

What I see in the link is various returns (1 yr, 5 yr, etc). What you want are expense ratios, something like this (see arrow)

http://cbsnews1.cbsistatic.com/hub/i/r/2013/07/29/077dc7bf-1c4e-11e3-9918-005056850598/thumbnail/620x350/942babd6637e8aa5f7cfbb0829ffa5bd/Screen_Shot_2013-07-29_at_8.18.35_AM.png

edit to add: I see them now

I almost threw up

1.6-1.8% ERs. That is about as bad as it gets.

Are those really your only options?

Final edit - FatJerry, imagine if this 401k provider reached into 'About-to-retire' FatJerry's pocket and took 1/3 of his retirement. That is what your 401k company is doing to you and fellow employees

Take an hour and watch this http://www.pbs.org/wgbh/frontline/film/retirement-gamble/if you haven't (the reason this thread was started)

Is our financial advisor from our company the one screwing us? The funds? Both?Are all the options(not just bonds) out of line with expense ratios?

 

[Johnnymac]

Either you have the wrong link or you are mixing something up.

What I see in the link is various returns (1 yr, 5 yr, etc). What you want are expense ratios, something like this (see arrow)

http://cbsnews1.cbsistatic.com/hub/i/r/2013/07/29/077dc7bf-1c4e-11e3-9918-005056850598/thumbnail/620x350/942babd6637e8aa5f7cfbb0829ffa5bd/Screen_Shot_2013-07-29_at_8.18.35_AM.png

edit to add: I see them now

I almost threw up

1.6-1.8% ERs. That is about as bad as it gets.

Are those really your only options?

Final edit - FatJerry, imagine if this 401k provider reached into 'About-to-retire' FatJerry's pocket and took 1/3 of his retirement. That is what your 401k company is doing to you and fellow employees

Take an hour and watch this http://www.pbs.org/wgbh/frontline/film/retirement-gamble/if you haven't (the reason this thread was started)

Those are some very high expense ratios.

 

[lod01]

If you believe those are the worst case scenarios I would suggest you are limiting yourself to a very narrow view of economics. Here's one counterpoint

http://www.thedigeratilife.com/images/nikkei-chart-mint-large.png

Japan. Meh. They can't print their way out of trouble & they are a tiny island with no room to grow anymore. We can and have and we can again....unless you believe we will collapse and if that is the cvase, you may as well spend your money now while it has some value.

 

[FUBAR]

Any TSPers here?

of course. Best deal going if you can get into it.

 

[Random]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

FWIW, lots (most?) of the people doing what I'm doing don't contribute to retirement accounts. I personally know of a few that have cashed out all available retirement accounts to purchase rentals. I do things a little different, as to not need as much cash out of pocket, so I haven't touched the majority of my retirement (I did take some IRA $ to purchase properties a few years ago, and subsequently quit contributing for a few years), but have never touched my 401K. We have continued to contribute (to the max match) to the 401K and recently started back into the IRAs.

I'm just not confident the retirement accounts will ever amount to much unless people do what you do.

 

[wilked]

Either you have the wrong link or you are mixing something up.

What I see in the link is various returns (1 yr, 5 yr, etc). What you want are expense ratios, something like this (see arrow)

http://cbsnews1.cbsistatic.com/hub/i/r/2013/07/29/077dc7bf-1c4e-11e3-9918-005056850598/thumbnail/620x350/942babd6637e8aa5f7cfbb0829ffa5bd/Screen_Shot_2013-07-29_at_8.18.35_AM.png

edit to add: I see them now

I almost threw up

1.6-1.8% ERs. That is about as bad as it gets.

Are those really your only options?

Final edit - FatJerry, imagine if this 401k provider reached into 'About-to-retire' FatJerry's pocket and took 1/3 of his retirement. That is what your 401k company is doing to you and fellow employees

Take an hour and watch this http://www.pbs.org/wgbh/frontline/film/retirement-gamble/if you haven't (the reason this thread was started)

Is our financial advisor from our company the one screwing us? The funds? Both?Are all the options(not just bonds) out of line with expense ratios?

Hard to say exactly, but if I were you I would get some employees together, organize over a few lunches, benchmark yourselves against similar sized companies in similar industries (linkedin is your friend), and then make a proposal to management.

Guidance here

https://www.bogleheads.org/wiki/How_to_campaign_for_a_better_401(k)_plan

If you plan to stay at this company, it will make a HUGE difference to your bottom line at retirement

 

[Dentist]

I'm just not confident the retirement accounts will ever amount to much unless people do what you do.

Most people's retirement accounts don't add up to jack squat.

A million bucks really isn't what it's cracked up to be anymore... and so few people will ever even approach that.

I have a couple of solid earning long long term employees in my office, and while they do contribute enough to their 401k to get the match, that's literally all they do... they don't utilize Roth IRA's (at least when I've mentioned them in passing, they ask what they are, I tell them, and then they'll ask the same question a few years later.. telling me they never did them.) and then their 401k's are invested completely inappropriately... generally WAY over-conservative... and they think because at like 50 they have over 100 grand!!! ZOMG! that they are doing great... when the reality is that their sums are so paltry that they are doomed to a craptirement or a notirement.

Roth IRA sums are paltry... it's pretty hard to get somewhere at $5500 a year... even if you have a spouse... 11k a year really isn't that much to get excited about, and a really low percent of people even open one, or beyond that max it.

 

[Gawain]

I'm just not confident the retirement accounts will ever amount to much unless people do what you do.

Most people's retirement accounts don't add up to jack squat.

A million bucks really isn't what it's cracked up to be anymore... and so few people will ever even approach that.

Roth IRA sums are paltry... it's pretty hard to get somewhere at $5500 a year... even if you have a spouse... 11k a year really isn't that much to get excited about, and a really low percent of people even open one, or beyond that max it.

Please, please tell me you don't say this at your practice. All your employees must want to burn you in effigy.

Someone socks 11K away for 35 years, they have 1.3M @ 6%. You're saying that's not much to get excited about. You're in such a different realm that it's going to be impossible for you to relate to your employees if you're saying that 1.3M isn't much more than a pittance.

 

[NutterButter]

I'm just not confident the retirement accounts will ever amount to much unless people do what you do.

Most people's retirement accounts don't add up to jack squat.

A million bucks really isn't what it's cracked up to be anymore... and so few people will ever even approach that.

I have a couple of solid earning long long term employees in my office, and while they do contribute enough to their 401k to get the match, that's literally all they do... they don't utilize Roth IRA's (at least when I've mentioned them in passing, they ask what they are, I tell them, and then they'll ask the same question a few years later.. telling me they never did them.) and then their 401k's are invested completely inappropriately... generally WAY over-conservative... and they think because at like 50 they have over 100 grand!!! ZOMG! that they are doing great... when the reality is that their sums are so paltry that they are doomed to a craptirement or a notirement.

Roth IRA sums are paltry... it's pretty hard to get somewhere at $5500 a year... even if you have a spouse... 11k a year really isn't that much to get excited about, and a really low percent of people even open one, or beyond that max it.

Not when you're talking about your type of retirement. Most people don't need to be drinking rum cocktails on a tropical island throughout their retirement.

 

[Dentist]

Not when you're talking about your type of retirement. Most people don't need to be drinking rum cocktails on a tropical island throughout their retirement.

a million bucks gets you 40k a year and then some SS.... definitely enough to live on... but that's not going to be much money in 30 years... and that's the CEILING for a lot of people

 

[IC FBGCav]

Either you have the wrong link or you are mixing something up.

What I see in the link is various returns (1 yr, 5 yr, etc). What you want are expense ratios, something like this (see arrow)

http://cbsnews1.cbsistatic.com/hub/i/r/2013/07/29/077dc7bf-1c4e-11e3-9918-005056850598/thumbnail/620x350/942babd6637e8aa5f7cfbb0829ffa5bd/Screen_Shot_2013-07-29_at_8.18.35_AM.png

edit to add: I see them now

I almost threw up

1.6-1.8% ERs. That is about as bad as it gets.

Are those really your only options?

Final edit - FatJerry, imagine if this 401k provider reached into 'About-to-retire' FatJerry's pocket and took 1/3 of his retirement. That is what your 401k company is doing to you and fellow employees

Take an hour and watch this http://www.pbs.org/wgbh/frontline/film/retirement-gamble/if you haven't (the reason this thread was started)

Is our financial advisor from our company the one screwing us? The funds? Both?Are all the options(not just bonds) out of line with expense ratios?

Hard to say exactly, but if I were you I would get some employees together, organize over a few lunches, benchmark yourselves against similar sized companies in similar industries (linkedin is your friend), and then make a proposal to management.

Guidance here

https://www.bogleheads.org/wiki/How_to_campaign_for_a_better_401(k)_plan

If you plan to stay at this company, it will make a HUGE difference to your bottom line at retirement

I got total power, I can change plans anytime I want. Just have to find a better option and financial adviser.

I appreciate the help wilked, thanks!

 

[dino259]

I'm just not confident the retirement accounts will ever amount to much unless people do what you do.

Most people's retirement accounts don't add up to jack squat.

A million bucks really isn't what it's cracked up to be anymore... and so few people will ever even approach that.

Roth IRA sums are paltry... it's pretty hard to get somewhere at $5500 a year... even if you have a spouse... 11k a year really isn't that much to get excited about, and a really low percent of people even open one, or beyond that max it.

Please, please tell me you don't say this at your practice. All your employees must want to burn you in effigy.

Someone socks 11K away for 35 years, they have 1.3M @ 6%. You're saying that's not much to get excited about. You're in such a different realm that it's going to be impossible for you to relate to your employees if you're saying that 1.3M isn't much more than a pittance.

What percent do you think are putting the full amount in for both them and their spouse and actually started early enough to get 35 years in? Not a very high percent.

 

[NutterButter]

Not when you're talking about your type of retirement. Most people don't need to be drinking rum cocktails on a tropical island throughout their retirement.

a million bucks gets you 40k a year and then some SS.... definitely enough to live on... but that's not going to be much money in 30 years... and that's the CEILING for a lot of people

it will get you more b/c that million is still going to be earning some interest. at the bare minimum, it will match inflation so you're talking like 40k + another 30k for SS if you're getting the max which is pretty darn good especially if you have no mortgage. After health care, prop taxes, other misc expenses, you're looking at like 50k of disposal income. That's more than enough for me to be mighty comfortable.

 

[Dentist]

Roth IRA sums are paltry... it's pretty hard to get somewhere at $5500 a year... even if you have a spouse... 11k a year really isn't that much to get excited about, and a really low percent of people even open one, or beyond that max it.

Please, please tell me you don't say this at your practice. All your employees must want to burn you in effigy.

Someone socks 11K away for 35 years, they have 1.3M @ 6%. You're saying that's not much to get excited about. You're in such a different realm that it's going to be impossible for you to relate to your employees if you're saying that 1.3M isn't much more than a pittance.

I don't talk about any of this stuff at work... i save it for a message board where people can hate me anonymously.

I don't discuss investments or anything.

But the employees know I "like the play the stock market" because they've seen my computer screen on google finance from time to time.. so they ask about what they should be investing in with the 401k or what a Roth IRA is.

As an employee i am not their financial adviser and can get in trouble for advice that may be sound but doesn't turn out right.. so i usually just give them a general information source to read about a Roth or basic age appropriate investment strategy for their 401k.

If someone did put in the 11k a year for 35 years you're right that would be a decent sum... but no one is doing that... so it's not worth talking about anyway.

 

[Dentist]

Someone socks 11K away for 35 years, they have 1.3M @ 6%. You're saying that's not much to get excited about. You're in such a different realm that it's going to be impossible for you to relate to your employees if you're saying that 1.3M isn't much more than a pittance.

What percent do you think are putting the full amount in for both them and their spouse and actually started early enough to get 35 years in? Not a very high percent.

I imagine maybe 0.5%

 

[Johnnymac]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

 

[Dentist]

Not when you're talking about your type of retirement. Most people don't need to be drinking rum cocktails on a tropical island throughout their retirement.

a million bucks gets you 40k a year and then some SS.... definitely enough to live on... but that's not going to be much money in 30 years... and that's the CEILING for a lot of people

it will get you more b/c that million is still going to be earning some interest. at the bare minimum, it will match inflation so you're talking like 40k + another 30k for SS if you're getting the max which is pretty darn good especially if you have no mortgage. After health care, prop taxes, other misc expenses, you're looking at like 50k of disposal income. That's more than enough for me to be mighty comfortable.

You made so many assumptions that your point is nearly moot. Who gets the max with SS? So few it's barely worth mentioning. No mortgage or other toxic debt, great idea, so few do it.

I agree that if you had a million, no debt, and a SS max that you'd be fine... TODAY.... but in 20 years? that 50k might not look as nice.

Again... with ideal circumstances, sure... but in a more real world scenario you need more... a LOT more.

An article discussing this http://livingstingy.blogspot.com/2011/02/retirement-scenarios-for-401k.html

 

[Dentist]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population.

As an aside.. it may be "possible" for you... but would require such cuts to your lifestyle that it's not worth it for you at this time... at some point the now is more important especially with younger kids with health issues

 

[Johnnymac]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

 

[Bob Sacamano]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

Don't take what I'm about to say personally. I don't know your particular situation. But my beef with people who say things like this is that many of them have the ability to do it if they were willing to make some sacrifices. I grew up with parents who would talk about their lack of money, while I watched them spend on frivolous things all the time. Still do. Don't get me started on the Occupy Wall Streeter tweeting from their brand new iphone 5 about the things they can't afford and how disadvantaged they are.

You have a budget? You stick to it? You have nothing that can be trimmed to allow some contribution to a Roth? $120/mo to Verizon? $100/mo to DirecTV? $300/mo dining out? You take lunches to work rather than hitting the local deli? Nights out at the bar? $100/mo on beer?

I'm a gigantic wino. Nobody pisses away more money than I do (literally and figuratively), but I make sure I pay myself first. Always. If you know what you're spending and there's no place to redirect some disposable income, that sucks. Keep fighting the good fight and keep trying. But have you looked hard for it?

 

[humpback]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

It's a very simple equation: income-spending=savings. If you want to increase savings, you can either increase your income or decrease your expenditures. I know neither is easy for most people, but it is possible (for most). Maybe not $6K, but something. I think that's a big part of it- most people figure that an extra grand or two per year isn't going to make any difference down the road, so they'd rather keep their daily Starbucks run instead. The reality is, it all adds up. Not saying this is you specifically, just in general.

Divorce really throws a monkey wrench into things- I don't recall the exact numbers, but there's a very high correlation between divorce and wealth.

 

[Bob Sacamano]

Damn. Missed Starbucks. That's a good, easy one.

 

[Dentist]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

could be, i don't know what your expenses are like, if there's much room to cut if we're being real.

I mean if I was making under 60K a year and had 2 children.. i wouldn't be able to afford cable, I'd be driving a 10+ year old car, I'd be using republic wireless as my cell phone carrier, i'd never go out to eat, most of my clothes would be second hand when possible, and I'd be living a very very meager existence... if I could afford to put the 6K away given all those life sacrifices, then go for it.

If there's no where else to cut, then I'd probably pass on the retirement savings because who cares about my retirement if I can't even make ends meet.

But most people who make under 60K still have cable, full price cell phone packages, a car they make payments on, eat out all the time, etc.

At least this is what I see from interacting with hundreds of patients, employing multiple people, and with family and friends over the years...

 

[Dentist]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people

Divorce really throws a monkey wrench into things- I don't recall the exact numbers, but there's a very high correlation between divorce and wealth.

Divorce eliminated 66-77% of someone's net worth on average

 

[NutterButter]

Not when you're talking about your type of retirement. Most people don't need to be drinking rum cocktails on a tropical island throughout their retirement.

a million bucks gets you 40k a year and then some SS.... definitely enough to live on... but that's not going to be much money in 30 years... and that's the CEILING for a lot of people

it will get you more b/c that million is still going to be earning some interest. at the bare minimum, it will match inflation so you're talking like 40k + another 30k for SS if you're getting the max which is pretty darn good especially if you have no mortgage. After health care, prop taxes, other misc expenses, you're looking at like 50k of disposal income. That's more than enough for me to be mighty comfortable.

You made so many assumptions that your point is nearly moot. Who gets the max with SS? So few it's barely worth mentioning. No mortgage or other toxic debt, great idea, so few do it.

I agree that if you had a million, no debt, and a SS max that you'd be fine... TODAY.... but in 20 years? that 50k might not look as nice.

Again... with ideal circumstances, sure... but in a more real world scenario you need more... a LOT more.

An article discussing this http://livingstingy.blogspot.com/2011/02/retirement-scenarios-for-401k.html

You provided so few details when you said that $1M isn't what its cracked up to me, you left me no choice but to make assumptions. Like you said so few people have a million to begin with so those are the people we're talking about in this scenario. I'm going to assume again that the type of people that have saved up that much are also the type of people the don't have toxic debt and have their mortgage paid off.

I don't know why say again that a certain amount of money today won't look as good X # of years from now. Of course now, but that amount of money is also increasing over time. You're 401k is still going to be generating interest; certainly enough to match inflation. Social security is already adjusted for inflation.

 

[FUBAR]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

could be, i don't know what your expenses are like, if there's much room to cut if we're being real.

I mean if I was making under 60K a year and had 2 children.. i wouldn't be able to afford cable, I'd be driving a 10+ year old car, I'd be using republic wireless as my cell phone carrier, i'd never go out to eat, most of my clothes would be second hand when possible, and I'd be living a very very meager existence... if I could afford to put the 6K away given all those life sacrifices, then go for it.

If there's no where else to cut, then I'd probably pass on the retirement savings because who cares about my retirement if I can't even make ends meet.

But most people who make under 60K still have cable, full price cell phone packages, a car they make payments on, eat out all the time, etc.

At least this is what I see from interacting with hundreds of patients, employing multiple people, and with family and friends over the years...

Health issues can make saving extremely difficult. I don't know if there are millions of people with the health issues, far more just spend more than they should.

 

[SFBayDuck]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people

Divorce really throws a monkey wrench into things- I don't recall the exact numbers, but there's a very high correlation between divorce and wealth.

Divorce eliminated 66-77% of someone's net worth on average

Mine wasn't that bad, but yes it still can be a big hit. Giving her half of one of my IRAs (a 401K rollover funded completely during our marriage) cost me about 30% of what net worth I had. And we managed to do everything via a mediator, so only spent a few thousand bucks on the divorce itself instead of tens of thousands on attorney fees. Of course you add in alimony (now done since she's remarried) and child support (even though I have my kid 50% of the time), and that has tightened the budget enough that I have had to reduce my contributions over the past few years. Just now trying to inch that back up, but it's tough.

I've done the back of the envelope calculations on it, and I figure between what I had to give up from my IRA and what I missed in contributions over the past few years, divorce probably cost me $300K-$400K at retirement time.

 

[Gawain]

I've done the back of the envelope calculations on it, and I figure between what I had to give up from my IRA and what I missed in contributions over the past few years, divorce probably cost me $300K-$400K at retirement time.

I wouldn't worry too much about it.

If you don't have at least 10M in stocks/bonds, five kilos of gold doubloons and a semi-autonomous gristmill, you're going to live in an old refrigerator box, subsisting on rainwater, the occasional captured frog and ABC gum.

(Seriously, think about how much more expensive retirement would be if she was still around)

 

[Dentist]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

could be, i don't know what your expenses are like, if there's much room to cut if we're being real.

I mean if I was making under 60K a year and had 2 children.. i wouldn't be able to afford cable, I'd be driving a 10+ year old car, I'd be using republic wireless as my cell phone carrier, i'd never go out to eat, most of my clothes would be second hand when possible, and I'd be living a very very meager existence... if I could afford to put the 6K away given all those life sacrifices, then go for it.

If there's no where else to cut, then I'd probably pass on the retirement savings because who cares about my retirement if I can't even make ends meet.

But most people who make under 60K still have cable, full price cell phone packages, a car they make payments on, eat out all the time, etc.

At least this is what I see from interacting with hundreds of patients, employing multiple people, and with family and friends over the years...

Health issues can make saving extremely difficult. I don't know if there are millions of people with the health issues, far more just spend more than they should.

This I can agree with wholeheartedly. I didn't want to bag on johnnymac. I have seen kids with health issues... it's really rough. It tears families apart (I think the divorce rate for kids with health issues is off the charts high) and destroys wealth building.

So when he says he can't do that 6K... maybe he's already made almost every cut he can, and it's just not going to happen... and if that's the case, such is life... and my sympathies

 

[SFBayDuck]

I've done the back of the envelope calculations on it, and I figure between what I had to give up from my IRA and what I missed in contributions over the past few years, divorce probably cost me $300K-$400K at retirement time.

I wouldn't worry too much about it.

If you don't have at least 10M in stocks/bonds, five kilos of gold doubloons and a semi-autonomous gristmill, you're going to live in an old refrigerator box, subsisting on rainwater, the occasional captured frog and ABC gum.

(Seriously, think about how much more expensive retirement would be if she was still around)

Tell me more about gristmill allocation. And why semi-autonomous, are fully-autonomous ones banned?

 

[Johnnymac]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

Don't take what I'm about to say personally. I don't know your particular situation. But my beef with people who say things like this is that many of them have the ability to do it if they were willing to make some sacrifices. I grew up with parents who would talk about their lack of money, while I watched them spend on frivolous things all the time. Still do. Don't get me started on the Occupy Wall Streeter tweeting from their brand new iphone 5 about the things they can't afford and how disadvantaged they are.

You have a budget? You stick to it? You have nothing that can be trimmed to allow some contribution to a Roth? $120/mo to Verizon? $100/mo to DirecTV? $300/mo dining out? You take lunches to work rather than hitting the local deli? Nights out at the bar? $100/mo on beer?

I'm a gigantic wino. Nobody pisses away more money than I do (literally and figuratively), but I make sure I pay myself first. Always. If you know what you're spending and there's no place to redirect some disposable income, that sucks. Keep fighting the good fight and keep trying. But have you looked hard for it?

No problem Bob, I appreciate your posts in this thread. You are correct that many people spend money on wants instead of needs, I do too. I do have a budget(have to on my income) and I generally stick to it. I have a mortgage, student loan thats almost paid off(long story there), and a car loan that is also close to be paid off. I have zero credit card debt so my financial situation will be brighter in the future. I do contribute to a Roth, I just cant afford to fully fund it every year.You definitely make good points and I'm sure I could cut a few expenses here and there, but not enough to fully fund right now.

 

[Johnnymac]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

could be, i don't know what your expenses are like, if there's much room to cut if we're being real.

I mean if I was making under 60K a year and had 2 children.. i wouldn't be able to afford cable, I'd be driving a 10+ year old car, I'd be using republic wireless as my cell phone carrier, i'd never go out to eat, most of my clothes would be second hand when possible, and I'd be living a very very meager existence... if I could afford to put the 6K away given all those life sacrifices, then go for it.

If there's no where else to cut, then I'd probably pass on the retirement savings because who cares about my retirement if I can't even make ends meet.

But most people who make under 60K still have cable, full price cell phone packages, a car they make payments on, eat out all the time, etc.

At least this is what I see from interacting with hundreds of patients, employing multiple people, and with family and friends over the years...

Health issues can make saving extremely difficult. I don't know if there are millions of people with the health issues, far more just spend more than they should.

This I can agree with wholeheartedly. I didn't want to bag on johnnymac. I have seen kids with health issues... it's really rough. It tears families apart (I think the divorce rate for kids with health issues is off the charts high) and destroys wealth building.

So when he says he can't do that 6K... maybe he's already made almost every cut he can, and it's just not going to happen... and if that's the case, such is life... and my sympathies

Well I have to say my daughter's illness has had a major affect on my financial well-being. She is 25 now so that has curtailed somewhat. She has cystic fibrosis and if you dont know what that is I can tell you it's an illness a person is born with that mainly affects the lungs. I call it a lifetime cancer because in many cases that is exactly what it is. Imagine the medical bills for someone with a terminal cancer that lasts 30-40 years. The drugs alone are astronomical.

Anyway, such is life. She is one of the best things that ever happened to me (I have another child who does not have CF) and no amount of money is more important than her.

Sorry, not trying to ask for pity here. It's very true when people say "as long as you have your health, you are rich".

 

[Judge Smails]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

could be, i don't know what your expenses are like, if there's much room to cut if we're being real. I mean if I was making under 60K a year and had 2 children.. i wouldn't be able to afford cable, I'd be driving a 10+ year old car, I'd be using republic wireless as my cell phone carrier, i'd never go out to eat, most of my clothes would be second hand when possible, and I'd be living a very very meager existence... if I could afford to put the 6K away given all those life sacrifices, then go for it. If there's no where else to cut, then I'd probably pass on the retirement savings because who cares about my retirement if I can't even make ends meet. But most people who make under 60K still have cable, full price cell phone packages, a car they make payments on, eat out all the time, etc. At least this is what I see from interacting with hundreds of patients, employing multiple people, and with family and friends over the years...

Health issues can make saving extremely difficult. I don't know if there are millions of people with the health issues, far more just spend more than they should.

This I can agree with wholeheartedly. I didn't want to bag on johnnymac. I have seen kids with health issues... it's really rough. It tears families apart (I think the divorce rate for kids with health issues is off the charts high) and destroys wealth building. So when he says he can't do that 6K... maybe he's already made almost every cut he can, and it's just not going to happen... and if that's the case, such is life... and my sympathies

Well I have to say my daughter's illness has had a major affect on my financial well-being. She is 25 now so that has curtailed somewhat. She has cystic fibrosis and if you dont know what that is I can tell you it's an illness a person is born with that mainly affects the lungs. I call it a lifetime cancer because in many cases that is exactly what it is. Imagine the medical bills for someone with a terminal cancer that lasts 30-40 years. The drugs alone are astronomical.Anyway, such is life. She is one of the best things that ever happened to me (I have another child who does not have CF) and no amount of money is more important than her.Sorry, not trying to ask for pity here. It's very true when people say "as long as you have your health, you are rich".

Sorry to hear about your daughter. A guy I worked with had a son with CF. Very tough disease. They found a new drug that treated his specific gene mutation. Life changing. Captain of high school football team, etc. Hope something similar becomes available to your daughter.

 

[Doctor Detroit]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

Yep, there are.

 

[pecorino]

As a teacher I feel bad that our students are graduating with little to no background in finance. The thought of folks maxing out their Roth or their 401k contributions is laughably rare. The question should be: what % of 20 and 30-something's know anything about saving for retirement or what a Roth is, and how many are contributing to one? Starting early, in a low tax bracket often, they all should. But the knowledge and most importantly the discipline is missing. I haven't seen the show that inspired this thread but it must address this point and we as a country and as educators are dropping the ball.

 

[Johnnymac]

As a teacher I feel bad that our students are graduating with little to no background in finance. The thought of folks maxing out their Roth or their 401k contributions is laughably rare. The question should be: what % of 20 and 30-something's know anything about saving for retirement or what a Roth is, and how many are contributing to one? Starting early, in a low tax bracket often, they all should. But the knowledge and most importantly the discipline is missing. I haven't seen the show that inspired this thread but it must address this point and we as a country and as educators are dropping the ball.

I tell both my kids they need to open a Roth. I wish I would have done it way earlier than I did. You can watch the Frontline program online. I highly recommend it. In fact, it's an episode everyone should watch.

 

[Johnnymac]

I make just under 60K a year, divorced with two kids (one with a serious illness), and there is just no way I can contribute 6K to a Roth every year. It's not possible. I suspect there are millions of people just like me in this country.

yes, like 90%+ of the population

So it's really not a saving problem, it's an income problem, at least for me and many others.

could be, i don't know what your expenses are like, if there's much room to cut if we're being real. I mean if I was making under 60K a year and had 2 children.. i wouldn't be able to afford cable, I'd be driving a 10+ year old car, I'd be using republic wireless as my cell phone carrier, i'd never go out to eat, most of my clothes would be second hand when possible, and I'd be living a very very meager existence... if I could afford to put the 6K away given all those life sacrifices, then go for it. If there's no where else to cut, then I'd probably pass on the retirement savings because who cares about my retirement if I can't even make ends meet. But most people who make under 60K still have cable, full price cell phone packages, a car they make payments on, eat out all the time, etc. At least this is what I see from interacting with hundreds of patients, employing multiple people, and with family and friends over the years...

Health issues can make saving extremely difficult. I don't know if there are millions of people with the health issues, far more just spend more than they should.

This I can agree with wholeheartedly. I didn't want to bag on johnnymac. I have seen kids with health issues... it's really rough. It tears families apart (I think the divorce rate for kids with health issues is off the charts high) and destroys wealth building. So when he says he can't do that 6K... maybe he's already made almost every cut he can, and it's just not going to happen... and if that's the case, such is life... and my sympathies

Well I have to say my daughter's illness has had a major affect on my financial well-being. She is 25 now so that has curtailed somewhat. She has cystic fibrosis and if you dont know what that is I can tell you it's an illness a person is born with that mainly affects the lungs. I call it a lifetime cancer because in many cases that is exactly what it is. Imagine the medical bills for someone with a terminal cancer that lasts 30-40 years. The drugs alone are astronomical.Anyway, such is life. She is one of the best things that ever happened to me (I have another child who does not have CF) and no amount of money is more important than her.Sorry, not trying to ask for pity here. It's very true when people say "as long as you have your health, you are rich".

Sorry to hear about your daughter. A guy I worked with had a son with CF. Very tough disease. They found a new drug that treated his specific gene mutation. Life changing. Captain of high school football team, etc. Hope something similar becomes available to your daughter.

I believe you may be referring to a drug called Kalydeco. Definitely a life-changing drug for people with certain mutations. Unfortunately my daughter has the most common mutation DDF508 and Kalydeco is not effective for it. They are working on others and have come out with a new drug called Orkambi for people with DDF508. It is not the life changer that Kalydeco has been.

Anyway, didn't mean to get this thread off the tracks.

 

[Buck Bradcanon]

Good luck Johnnymac. You seem like a standup dude and a great father. All the best.

 

[humpback]

As a teacher I feel bad that our students are graduating with little to no background in finance. The thought of folks maxing out their Roth or their 401k contributions is laughably rare. The question should be: what % of 20 and 30-something's know anything about saving for retirement or what a Roth is, and how many are contributing to one? Starting early, in a low tax bracket often, they all should. But the knowledge and most importantly the discipline is missing. I haven't seen the show that inspired this thread but it must address this point and we as a country and as educators are dropping the ball.

I don't know what level you teach, but have there been any discussions about incorporating at least basic personal finance into the curriculum where you are? I have a hard time coming up with many topics that are more important, it's ridiculous that it's left out.

 

[IC FBGCav]

Either you have the wrong link or you are mixing something up.

What I see in the link is various returns (1 yr, 5 yr, etc). What you want are expense ratios, something like this (see arrow)

http://cbsnews1.cbsistatic.com/hub/i/r/2013/07/29/077dc7bf-1c4e-11e3-9918-005056850598/thumbnail/620x350/942babd6637e8aa5f7cfbb0829ffa5bd/Screen_Shot_2013-07-29_at_8.18.35_AM.png

edit to add: I see them now

I almost threw up

1.6-1.8% ERs. That is about as bad as it gets.

Are those really your only options?

Final edit - FatJerry, imagine if this 401k provider reached into 'About-to-retire' FatJerry's pocket and took 1/3 of his retirement. That is what your 401k company is doing to you and fellow employees

Take an hour and watch this http://www.pbs.org/wgbh/frontline/film/retirement-gamble/if you haven't (the reason this thread was started)

Is our financial advisor from our company the one screwing us? The funds? Both?Are all the options(not just bonds) out of line with expense ratios?

Hard to say exactly, but if I were you I would get some employees together, organize over a few lunches, benchmark yourselves against similar sized companies in similar industries (linkedin is your friend), and then make a proposal to management.

Guidance here

https://www.bogleheads.org/wiki/How_to_campaign_for_a_better_401(k)_plan

If you plan to stay at this company, it will make a HUGE difference to your bottom line at retirement

Talked to the FA and he said there is no upfront load on the "C" so that is why the expense ratio is higher and that on "A" when you invest a 100 dollars only 96.5 get invested and is why they expense ratio is lower............they he kind of babbled about getting me into the A class share but not everyone. Thoughts?

 

[wilked]

I think he is talking a bunch of nonsense.

How big is the company?

 

[slackjawedyokel]

Backdoor Roths. Can someone please explain the mechanics of when and when NOT to use it? Other than having existing funds in a traditional IRA, why wouldn't everyone use this route while it's still available?

 

[IC FBGCav]

I think he is talking a bunch of nonsense.

How big is the company?

10 employees, less than 600K in plan assets.

Employer stopped matching a few years ago and I am the only active participant. (other people have their money still invested there though)

We bank at Wells and I know the people there, inquiring there because they have Vanguard funds.

 

[Tiger Fan]

Backdoor Roths. Can someone please explain the mechanics of when and when NOT to use it? Other than having existing funds in a traditional IRA, why wouldn't everyone use this route while it's still available?

A Backdoor Roth IRA is a technique for contributing to a Roth IRA when your income exceeds the contribution limit. There is no income limit on contributing to a nondeductible Traditional IRA, nor on converting a Traditional IRA to a Roth IRA.[1]

https://www.bogleheads.org/wiki/Backdoor_Roth_IRA

When not to use it? That's a pretty open question. The "existing funds in a traditional IRA" is a sticking point for many, b/c they might not have the available funds to pay the taxes on for the conversion. Too many personal factors come in to play on whether you should or should not use it.

Personally speaking, my order of operations is:

1. Maximize all matching options or stock purchase programs where you get "free money"

2. Max 401k

3. Max 529 (monitor as your kids grow older if you're reaching total 529 value that nears cost of education)

4. Max backdoor roth

 

[wilked]

I think he is talking a bunch of nonsense.

How big is the company?

10 employees, less than 600K in plan assets.

Employer stopped matching a few years ago and I am the only active participant. (other people have their money still invested there though)

We bank at Wells and I know the people there, inquiring there because they have Vanguard funds.

Check here

https://investor.vanguard.com/what-we-offer/small-business/overview?Link=facet

and read this thread

https://www.bogleheads.org/forum/viewtopic.php?t=111322

Check this one

https://www.myubiquity.com/retirement/

I would ask them for a quote

 

[wilked]

Another

https://www.bogleheads.org/forum/viewtopic.php?t=157858

 

[IC FBGCav]

Another

https://www.bogleheads.org/forum/viewtopic.php?t=157858

Do you know about Form 5500?

Our expense for 2015 were around 2500 which are inline with these plans. Unless fees are hidden somewhere.

www.pai.com is our current provider.

https://www.pai.com/financial-advisors/products-services/co-pilot-401k

 

[wilked]

Read this one...almost exactly your situation

https://www.bogleheads.org/forum/viewtopic.php?t=32630

This is about all I can do for you. Suggest getting a quote from Ubiquity, see if you can talk to someone and ask him/her to help you clearly compare your quote to the existing. Present that comparison to your cfo

 

[IC FBGCav]

Read this one...almost exactly your situation

https://www.bogleheads.org/forum/viewtopic.php?t=32630

This is about all I can do for you. Suggest getting a quote from Ubiquity, see if you can talk to someone and ask him/her to help you clearly compare your quote to the existing. Present that comparison to your cfo

Thanks again. I did fill out the quote for Ubiquity.