Op-Ed Column in the NYTimes: My Faith-Based Retirement

[atelierk]

Interesting op-ed piece. Comments too. Is the 401k a failed experiment? Thoughts?

http://www.nytimes.com/2012/04/28/opinion/nocera-my-faith-based-retirement.html

[velocistar237]

When I first invested in my 401k, I had no idea what to do or where to learn. I think I put half in an S&P500 fund and half in a mid-cap fund. If they're going to give people the freedom to choose, they should help them learn how to make sensible choices.

[atelierk]

When I first invested in my 401k, I had no idea what to do or where to learn. I think I put half in an S&P500 fund and half in a mid-cap fund. If they're going to give people the freedom to choose, they should help them learn how to make sensible choices.

Same here. I was 24 in 1981 when I first started my 403(b), the woman in HR asked me how I wanted it split and I guess I must have looked like a deer in the headlights. So she said, "Most people split it 50/50". I now know that I should have been in 80% stocks and if I had, I'd have a lot more in my stash than I do. I literally just set it and forgot it. For decades.

I think that's the biggest problem for the boomers. They're the first generation to have almost total responsibility for their retirements; their parents for the most part had pensions. But we do an abysmal job of teaching financial literacy including investment skills in this country, so most people follow in their parents' footsteps. And in the case of the boomers, their parents never thought or said much about retirement, it was just there when it needed to be.

Add to that the jargon of investing (as with any other specialized field) that the experienced people on here use and my head just spins trying to keep track of what it all means, how to make smart decisions and what the consequences might be.

[fruplicity]

And in the case of the boomers, their parents never thought or said much about retirement, it was just there when it needed to be.

This is actually true of my parents, who are boomers with state pensions. My mother firmly believes no one should have the responsibility of planning for their retirement and they never talked about it with me. When I asked them for advice when I was faced with my first 403b, they told me they had no idea. That was one of many clues that I better learn about these things on my own sooner than later. I firmly believe it's a good thing for people to educate themselves on their finances and how to plan their own retirement savings, but there should be way more resources and incentives to do so. It seems the "natural" human state really doesn't support saving for the future, and we're ALL going to be hurting because of it really soon.

[Rich M]

I guess I have a different experience.  The retirement account (for me it's 403b) for me was not faith based.  It made me see my money and made me pay attention to it.   

Joe Nocera seems to be making excuses for his situation and implying that ignorant people are burned.

The solution for that is to have the motivation to learn.

[arebelspy]

Joe Nocera seems to be making excuses for his situation and implying that ignorant people are burned.

Right.  He had 3 big issues.
1) Divorce (may or may not be controllable)
2) Underdiversified (he said he was heavily in tech stocks) - completely controllable
3) Took money out to remodel his house - completely controllable

It was mostly his poor decisions that lead to his situation.  I feel some sympathy, but disagree with his wanting to shift the blame to the markets or anything like that.  The problem is, his situation is more common than not.

[Guitarist]

This is just another reason why I clamor for a personal finance class being required for graduating high school. I think the 401(k) times we live in should be enough of a reason for it.

[BenDarDunDat]

This is just another reason why I clamor for a personal finance class being required for graduating high school. I think the 401(k) times we live in should be enough of a reason for it.

It really won't do any good. So much in finance is a zero sum game. Even if they all manage to be super personal finance whizzes, either someone who is more of a whiz than they are is going to figure out how to separate them from their money or someone with more money is going to lobby the congress critters to change the rules. If we are all millionaires, suddenly a million dollars doesn't buy so much.

[AJ]

This is just another reason why I clamor for a personal finance class being required for graduating high school. I think the 401(k) times we live in should be enough of a reason for it.

It really won't do any good. So much in finance is a zero sum game. Even if they all manage to be super personal finance whizzes, either someone who is more of a whiz than they are is going to figure out how to separate them from their money or someone with more money is going to lobby the congress critters to change the rules. If we are all millionaires, suddenly a million dollars doesn't buy so much.

Wow, you don't see many defeatists around these parts. We don't need to all be millionaires, we just need folks to know that they should save money for the future first before spending it on home upgrades, that money doesn't magically appear in their bank account. There is a lot of wiggle-room before all personal finance becomes a zero-sum game.

And you don't have to be a financial whiz "to figure out how to separate them from their money." Just show them a shiny-widget and tell them all the cool kids buy it. Maybe flash a commercial with a sexy lady. No financial whiz-dom required.

[Guitarist]

This is just another reason why I clamor for a personal finance class being required for graduating high school. I think the 401(k) times we live in should be enough of a reason for it.

It really won't do any good. So much in finance is a zero sum game. Even if they all manage to be super personal finance whizzes, either someone who is more of a whiz than they are is going to figure out how to separate them from their money or someone with more money is going to lobby the congress critters to change the rules. If we are all millionaires, suddenly a million dollars doesn't buy so much.

Disagree with the premise. It is not a zero sum game. There will always be richer and poorer, that's fine. The one thing I completely agree with you about is that the government will change the rules.
If we are all millionaires because we learn to save (not even to MMM standards, but saved better in general) then a million bucks would still buy quite a bit. But if we are all millionaires because the government made it so, then yes, that million is not worth much at all.