Vanishing 401Ks and IRAs - actual dollars from real peoples' wages

[Phoebe Loosinhouse]

Those dollars were the cars you didn't buy, the vacations you didn't take, the old furniture you made do with, the concerts you didn't see, the hamburger instead of steak - in other words all the daily sacrifices both large and small that were made in order to do the RESPONSIBLE thing and save for your own retirement.

Who would have thought that the financial big boys were a bunch of looting, plundering, lying crooks who MADE UP STUFF like "credit default swaps" so that they could pad their books with monopoly money while they took your REAL money - Actual cash dollars from real paychecks.

They and all the people who were supposed to oversee them FAILED the Joe Averages and Jane Q Publics who provided the dough that funded these miscreants. Speaking for myself, I have learned a valuable lesson. Future dollars will go into plain old boring vanilla credit union and bank accounts until some day in the dim and distant future when I believe that the wrongdoers have been punished and the system has been reformed to protect the little guy from the predators.

[unpossibles]

1. sad. But who's to say the banks don't do the same thing with your money? nt

[dmallind]

2. Well sort of

Those dollars were investments in your retuirement fund, which should have been only lightly in equities if you were close to retirement anyway. If you're still heavily in stocks and sensible, then the numbers are just that - only numbers - just as much as the huge gains were last year. They only become cash when you retire, which again if you are sensbile, should be a long way in the future if this stock value drop has hurt you significantly.

They were taken out pre tax, so a $100 deposit would have been a $60-80 bump in pay.

Chances are your employer matched at least some percentage of them - so that $100 started out as maybe $150 in your retirement funds instead of $60-80 in your wallet.

Almost certainly you bought every month, every week, or every two weeks, so you bought shares when the DJIA was at 7900 and shares at 14000 too. If you've not only just started your 401K chances are you bought some at 3500 or so when Clinton took over too, or in the glory years of the 90s when it was going up. Because of that dollar cost averaging, a loss of a cherry-picked high noiminal value to a cherry-picked low nominal value has affected you very little even if you are close to retirment.

Unless of course you are one of the simply MILLIONS of people who started a significant 401K last year, one year from retirement, with one lump sum and put it all in equity funds.....

In which case you are screwed, but have a screw loose anyway.

Personally - and I'm no investor Midas, my funds have dropped significantly too - with matching and diversification combined with pretax withdrawals I am still up counting JUST this year with the payments I have made this year. Even with a market dropping 40% or so, the matching and tax benefits mean I am better off even now than I would have been not putting that money into those funds.

[mrreowwr_kittty]

6. The problem with that

Is that when you lose a substantial percentage of your retirement account, you have to play catch up before you are at the place you were before the drop happened. Employer contributions and dollar cost averaging are nice and all but retirement accounts are sold to people by projecting 20 to 30 years of uninterrupted growth of the market, when that is not what happens. People start these things being told by the sales rep that they will retire with X million dollars if they (and their employer if applicable) invest Y amount of money for the specified time at Z percent interest. It never works that way. And retirement accounts are so frequently raided due to unemployment, illness, etc., that they've lost a lot of their perceived function as a nest egg.

There's also taxation to consider. People who put money into IRAs in the early 80s did so when the highest tax bracket was 70%. Those people are retiring now paying the taxes on those tax-deferred accounts at the lowest tax rate in history. OTOH people saving for retirement now might be looking at the reverse situation. They are deferring taxes at historically low rates while facing the high probability that taxes will be raised to pay for 30 years of Trickle Down lunacy and military adventures. I don't mean to discourage people from IRAs and 401ks but we need to be realistic about them.

[The_Casual_Observer]

3. No kidding. I accidently left "profit sharing" contributions directed into

stock funds this year. Seems as though it was just about been completely wiped out, vanished like there wasn't any at all this year.

Fortunately most everything else has been in money market for the last year.

I think that people who have lost 50-60 of the dollar value of their accounts will
be lucky if their accouts are back up to where they were last year 5-10 years from now. Some retirement account!

[formercia]

4. And miss out on all those matching funds

that your employer has already spent on executive bonus packages?

[KansDem]

5. This morning, the BBC reported on how *alleged* Wall Street fraud led to world economic crisis...

I thought alleged? You mean we're using $7.7 trillion of our money to fix a system broken because of allegations?

That's REAL money... How about we give these bastards $7.7 trillion in alleged cash and see what happens?

________
al·leged (-ljd, -ljd)
adj.
Represented as existing or as being as described but not so proved; supposed.

[specimenfred1984]

7. 70% of Americans are "invested" in the Military Complex

We're a fascist country that sells death. We create wars to sell our products in, create crisis to fuel hatred, perpetuate violence and sell to both sides, promote cheap labor slavery, have torture camps, have a huge propaganda network, have a corrupt crony government and rigged elections, have a for-profit health care industry, a criminal insurance racket (AIG for example), a paid-off corporate media, the list goes on and on and on.

"Investing" in America at this time is investing in crime.

[Phoebe Loosinhouse]

8. The Wall Street/Congressional Lexicon is missing some entries

It seems like they have never heard of the following concepts:

accountability, avarice, conversion, earn, fiduciary, greed, morality, oversight, plunder, responsibility, social contract, transparency

[deaniac21]

9. You haven't lost a cent from your 401k if you don't cash it in.

Those dollars will all come back and more. Don't be stupid.

[intheflow]

10. "Who would have thought that the financial big boys were a bunch of looting... lying crooks"

Um, anyone who'd been paying attention for the last 30 years?

[melm00se]

11. Personal 401K's are impacted

but also so are company run, defined benefit plans. Those funds are invested in the market too

[mrreowwr_kittty]

13. At least there is some Federal insurance behind many pension funds.

Of course, that fund has lost value too but defined pensions have a little more security than personal accounts, which have none.

[melm00se]

14. you mean the

Pension Benefit Guaranty Corporation?

that only kicks in when the corporate sponsor abandons them (like when the company files for bankruptcy protection). it does not cover them when the investments they make lose money,

[Laelth]

12. Who would have thought?

Many on the left did, and said so, loudly. And neither the overseers nor the Republican Party failed, here. They succeeded brilliantly in looting both our national treasury and the middle class. That was their goal all along.

Peace.

The United States is a LIBERAL Country.

:dem:

-Laelth