dbeck: Saving money for retirement is a very low priority when you are young. It is much like the saying, "When you are up to your ass in alligators, it is hard to remember that the objective is to drain the swamp." It is a real shame there isn't some way to instill the saving habit and the beauty of compound interest in the early school years. Learning it at age 40 or 50 is like discovering sex at 60.
Javen: I have been saving part of my income since I was about 13. I was helping my mom with her home decoration business, and got something like $2 or $3 an hour. The only catch was that I had to invest half of it. My dad helped me invest it in mutual funds, and I've been investing ever since. Now I have that original investment plus an IRA in mutual funds, and I invest 10% of every paycheck.
When you ask, "Should there be a set amount your employer contributes toward your retirement fund?", it means, in today's time, "Should your employer be forced into withholding part of your paycheck, portions of raises, and other benefits so that the money (which is yours anyway) can be put into a fund that barely keeps up with inflation (when you could make more with it from other investments), just because you or someone else (i.e. government, union, etc.) doesn't think that you can handle your own money wisely?"
My answer...NO! I'll take MY money and invest it or spend it as I see fit! I don't mind retirement plans, or Social Security for that matter, as long as they are purely voluntary. I may not use them, but I don't care if others do. You shouldn't have to have withholdings or a Social Security tax if you don't wish.
Basically, we have the present system because people aren't confident in their own financial ability -- so a "safety" net is a very comforting thought for some.
M.S.: The issue of retirement planning is
rather scary... and I earn a decent
living!! Schools (or Tripod!!!) can
teach us how to maximize our chances
of not winding up like Aqualung. Let's
take advantage and not allow ourselves
to be at the mercy of others. Power
to the (financially prudent) people!!!
richsunlimited: I believe that, with proper financial research, anyone can retire within ten years. People need to get out of the "9 to 5" mind frame. The world is full of opportunity to make a name for yourself; people who work for others all their lives are only making a name for their employer (the one who dared to dream!). People should start by reading the book "The Richest Man in Babylon" -- that is a great foundation book! From there they should research the vast opportunities in offshore banking and investing. The U.S. has tried to indicate that this is unstable,that "good" citizens should keep their money in America. My comment to this is, "most of these financial institutions have existed longer than the U.S.!" They are no longer just for the rich and famous; they have become very affordable for the average American! Another great book to read is "Tax Havens" by Hoyt L. Barber. The book is easy to read and full of helpful information for thinking about retirement planning.
timboy: Hmmm... I don't suppose 'richsunlimited' happens to be author of 'The Richest Man in Babylon'? I think we should be told... ;-)
moyaco: The most fundamental concept is to put away 10 percent of everything you earn. If your employer has a good payroll deduction plan, you'll get used to the size of your paycheck, and before you know it -- you have money in the bank. I am lucky because my employer contributes 50 cents for every dollar I put in -- and the aggressive stock funds show good long-term potential. I may be poor now -- and who knows how bad it will get later -- but at least I won't be homeless when I'm old.
sclayton: It is all well and good to be self-sufficient. The rule I have followed is to save (pay myself first) 20% of income each year. I have beat that figure for each of the past 8 years and now have a reasonable chance to retire when I decide it is time.
However, some form of required savings is necessary. I work for a major Silicon Valley corporation with a very fine 401(k) plan and generous stock plan (400% + return in the past 8 years - not bad). From my point of view, an employee has to have the IQ of a carpet not to fully participate in both the 401(k) and the stock plan. Yet, in this major multinational with a highly educated workforce, last time I checked only about half the employees were even enrolled in the stock plan and less than 2/3 in the 401(k) -- most not were not deducting even close to the maximum.
Many of my friends, university educatied folks in their late 40s and early 50s, esentially have zero retirement savings and will work 'til they die. What if they lose their jobs and are unemployable at age 63? Whoops, mom and dad forgot to mention to save.
Social security is a bust. Reagan and his greedhead horde stuck all the "trust fund" money in the general fund then spent it on shiny weapons that are now rusting junk.
We need a system that keeps the govenrment from touching the money invested for retirement.
If the highly educated employees of our major corporations fail to save when the opportunity is handed to them, it is clearly indicative that a substantial portion of the population is unable to save. Or unable to save at a rate which will ensure thm a reasonable retirement. It is all well and cool to say they will get what they deserve and let them move to cardboard boxes and eat Alpo -- it was their choice, let them live with it. But that is socially unacceptable (when I was 17, I lived in southern India for a year. I was amazed at the commonness of beggers on the streets -- I figured that could never happen in America) and besides that the non-savers are voters who probably have sufficient numbers to vote themselves part of our hard-made savings.
So some kind of system in which the government mandates withholding and investment of a certain part of wages/income is good for the long range strength and stability of the country. There must be no ability to opt out of the system. Portability is required, I cannot think of any reason why it would not be. People are then free to invest more anywhere and anyway they want. I have heard the government is Chile has a very fine program of this sort which may serve as a model.
nosugar: As an agent and registered representative for a major financial services company I can only echo the sentiments of Sclayton. People are STUPID if the do not take advantage of a matching 401(k) plan. Its free money! Most 401(k) plans have equity portfolios available. Equity markets are the only way one will accumulate the wealth required to retire at the standard of living one is expecting.
One can expect Social Security to provide 19 or 20 percent of post-retirement income. Another 20 percent will come from the typical pension plan. That leaves 60 percent of post-retirement income to come from other savings. Sixty percent!!!! Start now! 10 to 15 percent of your income must go to your retirement.
The Social Security system must go to a self-directed separate account for each worker. Phased in over 30 to 40 years to cover the existing population, this will provde each worker an opportunmity to live their retirement in relative comfort. The separate account will be required to provide a minimum return so the totally inept will receive something.
People must come to the realization that they can rely on a financial professional. They don't just want to sell and run. Keep in mind that you are not buying something, but you are reallocating assets to a more productive vehicle.
Good luck and do the right thing.
smouer: Having jumped at an offer of early retirement at age 53, and having been enjoying it in the form of pursuing a PhD, a nest egg of some sort is definitely a help. What is a major problem for "early birds" like me is the government! The IRS wants me to pay a whopping penalty of over 35 percent for retiring early. Of course, no matter that I might have been downsized anyway if I didn't go voluntarily. Fortunately I got to my lump sum before the IRS had a chance and "spent" it all -- though they will be after my annuity soon. No wonder militia's are growing. I think we are all responsible for ourselves, and should reap the benefits or pain of our own planning or lack of it. AND GET THE GOVERNMENT OUT OF IT!!!!!
IvyleJolie: I like the idea of letting us take our investments from job to job -- no one stays at one job from their 20s until retirement -- that's ancient history.
Lots of people work at places that don't offer 401(k)'s or anything else. Giving them their entire paycheck without deducting for Social Security or anything else would be good for some people, but disastrous for others. So I think some sort of mandatory system needs to be installed. However, I don't see a problem with letting an individual have control of how it is invested, which folder it sits in, etc.
But really, do you think it'll happen in our lifetime?
