My dad didn’t worry too much about retirement. He was a truck driver, and the Teamsters offered a pension plan. He figured that with Social Security in his future, he didn’t need to spend too much time fretting about money for his golden age.
My, how times have changed!
The 1980s were the halcyon days of pensions. Some 38% of workers had a pension back then. They mostly were defined benefit plans in which the company contributed a certain amount of money toward their employees’ retirement. I think I worked for one company that had a pension, but I didn’t stay there long enough to vest.
Today, many government workers can still count on pensions, but only about 18% of us in the private sector have a pension, according to the Bureau of Labor Statistics. Part of that decline is due to employee turnover (you usually have to remain with an employer for at least 3-5 years before you are fully vested in a plan, and today, employee turnover is about 40% annually), but the advent of the 401k plan, to which employees and many employers contribute (under a defined contribution plan)—as well as pension fund mismanagement—actually sounded the death knell on the defined benefit plan.
Even if you are lucky enough to have a pension, you may not be able to count on it being there when you retire. I mentioned mismanagement, and that’s a big issue. According to Mercer’s 2020 Defined Benefit Outlook, only 85% of pension plans have the funds necessary to meet their obligations. Mercer lays the blame on “poor investment decisions and greedy assumptions.” But to be fair, one can also blame historically low interest rates that haven’t returned the gains predicted in the funds.
Mercer also projects that “63% of companies with defined-benefit pensions are considering termination of the plan within half a decade. That would mean the pensions would be closed off to future participants.” Ouch!
For those of us still working—with or without a pension—the reality is that we had better take control of our own retirement. There are lots of vehicles to save for retirement, including IRAs, Roth IRAs, Simplified Employee Pensions (SEPs), Keough’s, and 401ks. Today, I want to focus on 401ks because most of those plans offer you “free” money.
Read the feature article in this month’s magazine now to get a comprehensive look at all of the possibilities with your 401k and some other retirement vehicles.
When you read this article in the June 2021 issue of our Magazine, you get an overview of the history of 401ks and how they work—plus, the rationale behind taking advantage of “free money” that’s available to you!
And when you read this article now, you’ll learn:
- How to choose your 401k investments. From mutual funds to ETFs, get educated about your choices for investing your 401k money—when you read this article now.
- Which is the right investor profile and strategy for you. With conservative, moderate, and aggressive strategies for your 401k investing, find out which strategy is best for you, given your situation—in this article now.
- All about the different types of mutual funds. With equity funds, index funds, value funds, growth funds, blended funds, sector funds, bond funds, balanced funds, and foreign funds, you have tons of choices—learn the differences and what’s best for you, when you read this article now.
- Key factors when choosing mutual funds. Learn how to examine fund performance and how to review all the costs and expenses that can come with mutual funds—when you read this article now.
- What to do after you start your 401k. Should you sit back and let your 401k grow? Or should you do periodic reviews, and what should you look for? Find out in this article now.
- What happens if you change jobs? Discover all of your choices for your 401k if you change jobs—and what not to do with your 401k if you change jobs, when you read this article now!
- Can you borrow from your 401k? Yes, but understand the implications—when you read this article now!
- When can you start taking your 401K money? Find out the key minimum age for starting to take your 401k money penalty-free, when you read this article now!
- What about IRAs? Learn how IRAs can still be a part of your financial planning for retirement, in addition to your 401k—in this article now!
- Can self-employed people have a 401k? Get the answer to this question, and discover all of your retirement-investing possibilities if you’re self-employed—in this article now!
In this feature article in the June 2021 issue of our Magazine, you’ll learn about how to make your 401k work harder for you now, to build wealth for your retirement. Read this article now, and get everything else in this issue of our magazine, too, including:
- Supercharge Your 401k: How to leverage matching contributions and the power of compounding—read all about it now!
- How to Invest in the World: Taking a more global perspective when investing is a crucial strategy that pays off for long-term investors.
- Why Biden’s Proposed Tax Hikes Won’t Affect Stocks: There’s undoubtedly fear that possible higher capital gains tax rates could affect investors, but do they actually correlate to the return on equities?
- How Long Can the Housing Market Stay This Hot?: The white-hot housing market brings to mind the mid-aughts, but is this really another bubble or are we experiencing a new normal?
- As the U.K. Reopens for Business, Consider these 7 Stocks: With global lockdowns in constant flux, identifying the next economy to reopen can be a great way to invest. Here are 7 British blue-chip stocks poised to benefit when the U.K. reopens.
- 3 Micro-Cap Stocks Trading at Value Prices: You may think that growth and value investing are incompatible, but there is one useful strategy for getting rapidly growing companies at value prices.
- These 2 REITs Pay Dividends Every Month: With persistently low interest rates, investors looking for income can no longer turn to bonds. Try these two REITs instead.
- 3 ETFs to Hedge Against Rising Inflation: With a rising concern about inflation among investors, many are looking for ways to hedge their portfolios—here are 3 ETFs that can help lessen inflation’s sting.
- How Catalysts Can Jumpstart Your Stock Performance: Significant company moves, or catalysts, can help turn market dogs into attractive value investing targets. Here are three we like.
- Explaining the Archegos Capital Collapse: The collapse of Archegos Capital shows us that Wall Street is ruthless—and it’s not always the little guy that ends up in the gutter.
- QuantumScape Stock Looks Like a Better Version of This Former High Riser: The rise of QuantumScape offers hope for EV power and an important lesson about what happens when something “everyone knows” turns out to be wrong.
This latest issue of the Federation’s Magazine is ready for you to access now, to discover how to supercharge your 401k today … and so much more. Read it now!
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