Bank On Yourself Round-Up for week of June 23, 2011

Here are short summaries of three of the most interesting and thought-provoking items that have crossed my desk this week.  Enjoy!roundup

What would it be like to retire on $260 a month?

Have you ever thought about what kind of lifestyle you would have if your retirement plan only threw off $260 a month?

It’s a question a lot of Americans are going to have to start asking themselves.

A shocking article appeared this week on SmartMoney.com 1 revealing how much money the typical person approaching retirement actually has saved in their 401(k) and/or IRA.  And it’s not a pretty picture…

What would it be like to retire on $260 a month?

A typical pre-retiree taking withdrawals the way most people actually do would only be able to take $260 a month.

Oh, yeah – the article didn’t even mention you gotta pay the taxes you deferred all those years on that money!

How much do you think is going to be left for food, housing, utilities, car expenses, medical expenses not covered by Medicare, etc.? You’ll be lucky if you can scrape by at all, let alone enjoy even the smallest of life’s luxuries.

Of course, maybe you’ll have Social Security and Medicare to rely on.  Or maybe not…

The article’s author, Alicia Munnell, concludes that as more 401(k) plans automatically enroll and increase employee contributions, the better the outlook will be.

Retirement_Gambling

You may disagree with me (and if you do, don’t be bashful about sharing your reasons in the comments box below), but she’s flat out wrong401(k)’s are part of the problem, NOT the solution.  They encourage gambling as the preferred method of saving for retirement.

Even an employer match is little consolation if you can lose 45% or more of your savings in a market crash, as happened to so many people in 2000, and again in 2008.

The solution to this problem that is becoming more critical every year is surprisingly simple…

Save more. Gamble less.”

Want to Know What Your Nest Egg Will Be Worth on the Day You Want to Retire?

You can when you Bank On Yourself. Find out how an asset class that has increased in value every single year for more than 160 years can give you financial security and peace of mind. You can find out the guaranteed, predictable value of your plan when you request a free, no-obligation Analysis. Stop hoping and start knowing what your financial future will be.

Check out my new Family Financial Literacy blog on one of the most-visited websites!

I’m thrilled and honored to announce that I was invited to host my own blog on “Family Financial Literacy” on one of the 25 most-popular websites in the country – AOL Huffington Post.

Check out my first post on how you can create great family memories this summer and earn money doing it! 2

If you enjoy the article and you’re on Facebook or Twitter, please click those buttons at the top of the article to share them with others you care about.

More than half of Americans aren’t happy with their job

According to a new survey,3 one in three workers are seriously considering leaving their job, and another 21% aren’t happy with their job, though they don’t want to quit (probably only because they fear they’ll end up jobless).Unhappy Employee

This should be a warning to employers.  But if you’re one of those people not happy with your job, remember that life’s too short to spend over one-third of your life doing something you dislike!

Which is one reason you’ll want to stay tuned for details on how to become a Charter Member of our new website launching next month that will give you the tools and support you need to be self-reliant and secure in every important area of your life!

We want to hear from you!

How do you feel about your job?  If you’re not happy with it, what’s keeping you there?  And if you left a job you don’t like, what helped or allowed you to do that?  Tell us in the comments box below…

1. ”How Much Are We Really Saving in Our 401(k)s?,” by Alicia Munnell, SmartMoney, June 20, 2011
2. “Fond Summer Family Memories Can Include Earning Money,” by Pamela Yellen, Huffington Post,  June 21, 2011
3. “One in Three U.S. Workers Wants to Leave Job, Mercer Survey Says” by Devin Banerjee, Bloomberg.com, June 20, 2011

Comments

  1. How do I feel about my job? Well I dont really have one right now as I am soon enrolling for my masters degree soon.

    When I did have one (it was a call center) I hated the place!! You are like a little caged rat in a cubicle, with constant monitoring…People on the other side of the line can be so mean rude and just plain nasty! To top it off, my efforts were never good enough!

    What kept me there to tell you the truth were friends, sort of a camaraderie thing, I also only had a 2 year degree…so I figured I could not get any higher because most jobs will not work around a school schedule…and I did not want any debt.

    But then one day…something awesome happened…I got one of the nastiest customers who just cursed and cursed at me despite me being helpful….and then I just exploded on him….I just did not care anymore, if I was monitored or not, I realized I had power…not him! LOL He demanded my supervisor..I cursed him out and said “#%$ your demand” I dont have to do anything you say! He said he would have my job…I said take it and shove it!

    From then on I just said I am out…no counseling to keep me there…I just walked…and said I dont care about student loans or debt…im getting out of this life here, Im smart enough to fly through college.

    Since then…I got my B.S. in IT….going on to get a masters in Mathematics as well as Industrial Technology and am considering a BSEE…but not sure.

    Despite not having a job right now…it is liberating…..to quote Tyler Durden from Fight Club…….

    “It’s only after we’ve lost everything, that we’re free to do anything”.

    Had I not lost everything…I would have been complacent…”satisfied”!
    My reasoning with why some people dont change….They are satisfied with life!

  2. I have heard some seniors are leaving the country (expat style). They got tired of barley making ends meet, and to stretch their dollars further (almost double) they just learned another language and moved to places like Panama or Costa Rica.

    Some even opened business up there to cater to the booming tourism. I was at first sad they had to do this, but when I saw their living conditions….Beach views, clean food, great weather…I was then jealous and happy for them.

    Some seniors have decided to stay in the U.S., but are going “back to the Land” so to speak, sort of a hippie movement, but unplugging from the grid, and saving good money too….I can only imagine what their plans would have looked like with a BOY plan in both scenarios!

    To quote Tyler again…..

    “It’s only after we’ve lost everything, that we’re free to do anything”..;)

  3. Bill Liebler says:

    Pamela – most folks will go down the 401-K route as they believe that is the only route to retirement funding – just as they go down the 529 route as the only means of college funding – I know I was there prior to BOY.

    I do wish you had chosen a site other than HuffPo – just not a fan of strongly biased left wing websites – but I guess they are very popular and at least I know there is one opinion writer who has some good ideas and views 🙂

    The job issue is a tough one – w/ real unemployment around 22% the idea of simply jumping into a new job is scary for many and they are willing to hang to what they have – they did it when unemployment was much lower. The idea of getting “free” and doing what you love and want to do is a great idea and look forward to your new venture in that arena.

    Best Wishes – Bill

  4. You said not to be bashful so I won’t. 401K plans with a generous employer match are a good thing. Your point about gambling and the potential to lose 45%, etc. are spot on. However, if you contribute the minimum necessary to capture the full employer match and you make sure your money is invested very conservatively within the menu of 401K options and you are careful to evaluate the hidden costs embedded within the 401K plan to avoid losing too much to fees, THEN the return can be very good due almost wholly to the “free” money coming from the employer match (it is tough to beat 100% or 50% return – even though that return comes only in year 1, it lasts in overall performance over time).

    Admittedly, that is a lot of if’s, and’s and but’s and Wall Street is always pushing people into the gambling mode where the fees are higher so it takes discipline and in depth understanding to get it right. But it can be done.

    • Dan,
      Assume you put in $6k a year and employer matches $3k and you have $100k in your 401k. Morningstar says the average fees in mutual funds is 3.03%, which is most of what is in 401k’s, how much would your fees be on that $100k? About $3k, right? So much for gaining from the match. Yes you would gain some early on, but if you were ACTUALLY successful in building wealth the amount you pay in fees would be higher and higher and higher as your balance grows. The fees would then be the highest in retirement when you were pulling money out…a time I’d argue is the absolute worst time to be taking “extra” money out to pay fees.

      Don’t forget you then get to pay taxes on the money coming out, you are required to pull the money out at 70 1/2 whether you need it or not, and it is taxed when passed to your heirs.

      Dalbar says the average investor earned less than 4% over the last 20 years BEFORE FEES. If fees are around 3% that’s less than 1% on your money over 20 years and your money is at risk. Some will argue 3% is too high, okay say fees are 2% and now you’ve earned less than 2%. Which is less than the 2.7% inflation we’ve experienced over that 20 years AND you still get to pay taxes on it.

      The 401k is a horrible place for the average American to have their money even with the employer match.

    • Dan, I did just that! for 20 years with the post office matching 6% and very conservative, only to find after a review last year that we had lost 45% of all the we contributed. (they do not have to disclose their fees) so we paid the penalty,taxes and now save differently. I have lost all faith in this scam.

      • Mark, was that 45% lost due to fees or market? If it’s due to fees, it that even possible for a 401K? If it’s due to market, doesn’t make sense since you said you invested conservatively.

  5. sanford says:

    I work for a package delivery company for the pass 36 years and can retire after 30 years but I have a 16 year old son in high school and his health care would not be covered. I would receive a pension of about 3,000$ a month but would have to cover my own health care. Would this help me???

  6. I actually disagree with you thoughts regarding company sponsored 401k if used responsibly. Diversification is really key to a healthy portfolio. For a conservative optioning many 401k’s invest in high quality bond funds. I have 30% of my 401k in a munisiple bond fund that has averaged ~8% per year the past 10 years. This is what the insurance campanies we purchase our BOY funds invest in. With a 100% company match up to 6%, I will continue to invest in my 401k. Maybe we can agree to disagree here… 🙂

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