401(k) Automatic Enrollment Becoming Standard Practice

Mainstreet:

Automatic enrollment in 401(k) plans, touted by President Barack Obama as a way to increase retirement savings, are gaining in popularity, even as the stock-market crash wiped out more than $1 trillion in retirement accounts, two studies show.

Read the whole story: Mainstreet

Comments

[msjimmied]

Every trader on Wall Street will tell you that "buy and hold" does not work in this market. There can be no gains unless you know enough to invest your money yourself and you are there actually trading it. That leaves 99.9% of the people out of the game. Right now it is little better than a casino. All the gains in the DOW for the last 10-12 years were wiped out in 6 months. Nasdaq's cataclysm was more violent in terms of time frame and money. It is not a safe place for fragile nest eggs.

It was the public's contribution to the market that caused the spike in values, notice the correlation between the rise and the launching of IRA's in 1974...

http://www.the-privateer.com/chart/dow-long.html

I think we need to look at other ways to invest for the future. Real estate? Agricultural endeavors? businesses? All we are doing is feeding the beast. Until regulations are fully implemented, I would recommend to stay out.

[Gernuser]

To make matters far worse, consider what the US government has actually done to fix the underlying problems? Nothing

good articles; http://iamned.blogspot.com

The government has put the same punch bowl out that got us into the mess in the first place. More debt and consumption and don't worry about paying it back. (Berbnanke= Greenspan II)

[FreedomCorpse]

If anyone reads the detailed descriptions about many of the 'investment options' in a 401k, you will notice often if not all of them have a portion of YOUR money used in derivative trading, usually a small amount like 15% or so. So by having your money in these 401k's the bankers and fund managers continue their crooked games with government blessings.

[sonoffestus]

Since there are so many "2 cents experts" out there, I thought I'd throw my pennies in.The stock market will be relatively stable for the next 10 to 12 months.We will see moderate swings up and down. It may even fool us as stimulus $s start to be put to work and it hits 10 to 11,000. Then it's mattress time as stimulus finds dry up and the economy finds the "recovery" does not have a leg to stand on. Have a plan.

[Antiks]

My 401k check is on the way, and that baby is going into a regular old credit union savings account, for now.

[DosGatos2]

We need portable defined benefit plans--yes, the old-fashioned pension--far more than we need opt out 401(k) plans.

Many people are not financially sophisticated to invest their retirement money properly and outlive their savings. Pensions are better for seniors because they have the security of knowing something is coming in every month for the rest of their lives. Pensions also allow money to stay in the Social Security trust fund longer and help keep the elderly from becoming impoverished.

I am very concerned about the long-term consequences of this financial crisis on baby boomers household wealth. While it is true that the stock market is up this year, those who are more economically vulnerable tend to have more of their wealth in their home equity rather than in stocks. These people do not have enough working years to re-earn what they have lost assuming they still have, or can find, jobs.

[lucite]

After the crash I switched my 401K into GOVERNMENT bonds and my account has stopped bleeding

[ErnestineBass]

You were one of the smart ones, friend.

[collima]

I like the idea of saving and investing... Just not the wall street pigs ability to make ridiculous bets (credit default swaps and derivatives) without strict regulations...

[Jen0141]

"Automatic enrollment in 401(k) plans,..., are gaining in popularity,..."

There's a blatant grammatical error in the first sentence. I wish people who write for a living would pay more attention to the way they write. ('are' should be 'is')

[eilish]

I know, petty, but it bugs me as well.

[hypnotoad72]

Perhaps they did, but MIcrosoft Word said the incorrect way was the correct way to write it... :)

I'm no expert in grammar, but I know enough to know when IT is wrong.

[Temblor]

After reading Matthew Taibbi's article in Rolling Stone, I'll be going with the mattress technique. I'm not giving one dime for those crooks to play with

[Hisham2]

That's right, it's not your 401(k) that paid out for the stimulus program & the Wall Street bailout. Also, a 1% - 2% in 401(k) fees can actually mean a whole reduction of 25% - 40% of your retirement savings when you retire (say at the age of 65). There was a video on youtube about this, search on there for 401k fees and you'll find it.
As for automatic enrollment for 401(k) plans, that is a good thing, I don't know why people are complaining about it??

Here's why one person suggests automatic enrollments in 401k plans are useful
Automatic 401(k) Enrolments
Some companies will automatically enrol you in their 401(k) plans unless you send a refusal letter in writing. This is known as automatic enrolment and a percentage of your salary will be contributed to the retirement plan in biweekly payroll deductions.
Source: http://www.research401krollover.com Most of the times, the company has a selection of investments for you to choose from. You have to sometimes contribute a little more than what your employer deducts to make the 401(k) retirement saving more worthwhile, as the amounts deducted may not be sufficient upon retirement.

[FoonTheElder]

Wall Street needs more money to prop up the manipulated stock valuations on corporations that produce phony financial statements and allow them to use their stock to monopolize or oligopolize their industries.

Just what I need to support, corporations and Wall Street crooks that have sent our jobs overseas so that their CEOs can become multi-millionaires.

[dbailey]

oh, and another thing. I bet they would like for us to build us our savings to record levels so we'll have money to give to the next wall street bail out. right about now I wish they would stop taking social security out of my check because it's drying up fast

[cowtippor]

your 401k money didn't pay for the bailout

it's quite the opposite. with your money in a 401k, you're directly paying a tax to your broker or bank... in the form of a 1-2% fee that you never notice (because the bank takes it right off the top), and you have to dig deep to find.

[rbchilds]

That my friend is called a 12b-1 fee, the little rascal that most mutual funds in a 401K fail to mention, along with a high turnover ration (the death bed that can cost an investor 4-9%).

[hypnotoad72]

Oh good. Where else can they find cozy nooks and crannies to hide fees and/or taxes in?

[hypnotoad72]

I agree; that's been worrying me too. Until the middle class is stabilized, there's no way the "great recession" scenario won't be duplicated again.

One day at a time...

[cowtippor]

the idea:
we consistently teach (in our schools) basic financial principals to our children at a young age so that they'll have no excuses for not knowing how to balance a checkbook, how compounding works, or the idea of consistently saving a part of your income by the time they graduate high school.

the reality:
it's human nature to spend to the limits of our income. get a 10% raise, spend 10% more on stuff. and it's been found (in practice) that it's easier to just take it out of a person's paycheck and put it in an account in their own name. this way they never see the money and don't mentally spend it. that's why 401k's work. they force people to put money away by never telling them they had the money to begin with.

[amdezurik]

well, no that stuff is not taught in our schools, in particular after the disater called NCLB

[cowtippor]

ugh, NCLB... don't even get me started on that

[dbailey]

I agree with DJreedps. It's just another rip off. I am in a 401 but like many others saw that savings take a huge loss. I chose to be in one but how can you mandate that someone take their chances on the stock market!? To some people it's just like gambling and they don't gamble. I'm tired of hearing about mandate on the public. Where's the mandates on everyone that ripped us off in the 1st place? Oh yeah, they're now counting all the billions in their bonus pools and deciding how best to divy it up without causing more public outrage. If they want to do a mandate, make the employers provide pension plans. AND NO, THEY CAN'T INVEST IT

[cowtippor]

the writing was on the wall in 2007 that the stock market was being pumped up for a dump.

i put everything into bonds, and have been gaining a steady 4% while the market tanked 40%.

with respect to retirement savings, it's about avoiding losses, not chasing the highs.