Checked your 401k lately? The recent financial collapse has devastated this retirement resource. Older workers are hardest hit, as their financial futures may now be at risk. Steve Kroft reports.
Arie Fraiser They won’t because people will see what the 401k would’ve done if you did not cash out and contributed. Many either cashed out and/or stop contributing and will never get it back. All the people I work with that only had their money in the credit union savings account and money market of the 401k have more than $500k after 30 years. Wasn’t affected at all by stock market. I was 70% in stocks and affected by the stock market and down as low as $260k but my contributions wasn’t touched. I kept maxing out my 401k,dividends/interest continue to reinvest and compounding through it all, broke even by 2012 tripling to 1.5 million since. And you got to be really stupid risking your money like that over 50 years old especially with no pension and savings. I’m retiring next year. After the rollover I now have about $600k in Pretax IRA and $1.7 millions mega Roth IRA. Have 40% in gas/oil ,REITs,and Dividend Achievers making $43k/yr dividends with 60% credit union and money market making $19k/yr. interest.. When I retire next year I have a $2400/mo. pension,$3k/mo. social security at FRA.and other savings to pay over 20 years of my current living expenses. But also have the option of $500-$1500/mo. taxable and $2k-$6k/mo.tax free from my pretax and Roth IRA. Thanks to my 401k. Did you notice that when that guy said there were other options to put your money into not connected to the stock market the guy ignored what he said? They really should have discussed that part. And as far as fees go I just did a Fidelity BrokerageLink rollover with my 401k and the fees weren’t bad at all (0.33%) because I’m proactive and did not buy mutual funds(fees) or use the fee services like most do.
@@blackworldtraveler3711 Agree with most of what you said. Everyone in the video blamed 401ks like they were supposed to carry zero risk. The market drop in 2008 was around 35%. If you had your money in an index funds you should have lost around that much. However if you had your money in company stocks you very well risked losing everything. And as you touched on if they were that close to retirement they should have had a 70% stock/30% bonds and/or CDs split at the most. If they invested in index funds and that split then the 35% market drop would have resulted in about a 23% portfolio drop. As risked adverse as some of them seemes they should have gone with a 60/40 split. In any case the main point is with the 401k and IRA increasingly being the only retirement option for people it is your responsibility and duty to ensure you understand it as much as possible and know what the risks are and ways to minimize the risk. Too many people don't even take time to review their 401k at least once or twice a year.
Arie Fraiser The value of investment was less but nobody lost anything unless they cashed out or sold.. And even though my stock value was down I was still averaging $2500-$5k a month in reinvested dividends including interest,stock/company splits,compounding,etc.. Half of the companies were increasing dividends each year regardless. If these people didn’t sell and kept contributing they would be very happy now. Another thing is I would like to know what these people were doing with their money for 30 years. That diva lady showed that statement with only around $8k.and another $80k she says that.dropped to $50k......after 30 years Wall St. executive assistant and no kids? And what bothers me about her is what she said about her age and younger prettier women which should not matter if she’s good at her job. The first guy and the couple would have at least $500k to million now if he didn’t cash out and kept contributing. I know this because for the past 8 years I’ve been going to the two retirement seminars/workshops at the company I work and heard it all. Ive known these people for 30 years hearing a lot of rationalizing and excuses to throw money at things, no saving,and borrowing from 401k,etc And all the living beyond means and keeping up with the Joneses has caught up to them big time. Also found out I’m one of about 75 out of 9k employees that are 401k millionaires out of over 9k in my group but probably more in the system there are over 100k employees. This video and others like it do no good for anyone except cause panic and confusion without all the fact,details,or follow up. Also you don’t have to put money in a 401k.
Solowolf Either working until they die if they sold and/or cashed out their 401k or retiring comfortably or even early like me if they left it alone and kept contributing.
Many likely cashed out around this time. This was filmed during the teeth of the recession (March of ‘09 was the bottom by most stats) and these folks are unemployed and seeking work in their late 50’s most had no other option than to liquidate regardless of the potential for the market to bounce back. Some may have kept their accounts though. Here’s hoping they weren’t invested in any securities/funds which never recovered...
This was so heartbreaking to watch. I also agree with the comments here that state that there should be a 10 years later follow-up story to this... maybe even a "where are they now"?
These older investors should have known better. They should have had some cash on the side and tapered off into bonds/lower volatility securities as they neared retirement. Sure ‘09 put these folks in a tough spot but they saw some of the greatest 20 years the American economy ever had prior.
For a millennial like me, it was a huge wake up call. Made me become far more critical any advice that a financial guru insists that everyone should hurry up and throw money at. Also, taught me job are never a sure fire thing.
For those that were still far off form retirement and didn’t need to access the funds, if they left it alone they would have made out phenomenally going out nearly each and ever year after this video was made.
We lost a lot from our 401k during the financial crisis. We sat tight, and did not sell anything. We continued to contribute to our 401k at the same level as before the crisis. It was scary as hell. But eventually we got it all back, and made good money on what we added during the meltdown. People who sold their stocks after the crash will never recover. I knew an older couple at church that was deep in retirement, and heavily invested in their 401k. When the crash hit, they were smart enough to sit tight. They only took out what they needed to live on. Their finances recovered.
Jj looks like you need to go back and study your economic history. There always has been and always will be crashes. But what happens after EVERY crash.....? It comes back. Not only does it come back, but it continues to go up.
@andrewheffel....I read your post. You folks did a lotta good things correct by sitting tight, but. Yep there's that "but" we still don't know if YOU or the rest of us could have tripled our investment. Did you miss it somehow?? All the hidden UN-Disclosed fees (of which no invester knows their amount) created to rob us all. There's more than a dozen. I'll list a few. 1 Legal fees 2.Trustee fees. 3. Transaction fees. 4. Stewardship fees. 5. BookKeeping fees. 6. Finders fees and the list goes on. You may have quad- rupled your investment for all you know (which is nothing) had those wall street goons NOT robbed you blind. No pun intended, but it is what it is: literally robbing you blind and you don't even realize it. If you don't know the cost of those fees or that they even exist, you are blind.
This is why you don’t rely solely on a 401k or any kind of investing for your nest egg. I make mine own savings interest rate by being debt free and living below my means.
Beast from the East the issue is ‘what options allow my capital to grow the fastest’. 401k lets your capital compound tax free. The risk you place on that capital is up to you through investment choices/knowledge.
No, no! It is the professionals you have to watch out for! Don't confuse experienced elders with professionals that make a living at risking your money!
It kind of sounds like the people interviewed didn't have a big amount in the market anyway. A 200k pre-crash value is quite low if you plan to live off of returns.
Thomas Reedy yeah, it’s low in the grand scheme of what’s needed to retire, but it’s high relative to what the average person has in their 401k/403b, etc.
It's pretty pathetic when you hear people talking in tears about how much they lost, only to find out they had $10 grand in the first place. I knew a couple people at work who said their retirement was ruined after divorce took around that much from their 401k.
This post and replies - - thumbs up. If you didn't sacrifice by not buying/leasing new cars, not taking vacations every year, etc. ) then you don't have the several hundred thousand saved and can't retire. Oh yeah - - AND screw Wall Street and their frickin' "fees."
I lost my job in the financial sector a few weeks before this clip was posted. It was real tough trying to find a job as there were thousands of people in the same situation as I, my Roth IRA dropped 50% in value and it wasn't until 2013 that it was back to normal. I also had a 401K which I was forced to sell and roll the funds into an IRA because the company was being sold and the new owner was dropping the plan.
Does everyone here not realize that the people who lost money in their 401ks basically quadrupled their money ( assuming they did not cash it out) by the end of 2017?
That's just what I was thinking. You don't lose your money until you sell or the companies you invested in go under. Assuming their 401k follows the S&P, they should be up right now.
Jonathon Haug im sure most of them sold... they likely didn’t have enough savings outside of the 401k to keep them afloat which as you said is terrible because they could have 3-4 X’d their money.
@@luisvalencia9180 The US stock market rising overtime is as close to a guarantee as you can get. That being said, I believe there is a lesson here for those of us who are still young. If you rely solely on your 401k for retirement, you will not have the luxury of choosing when to use it. You must wait for a rise in the market / gain in your portfolio. Expect a recession every 10 years or so.
JB Bonilla: There have been 10 year periods where the USA stock markets go nowhere “Lost Decades”. The 54 and 60 year olds don’t have that time to wait and see
How taxes and fees work in your 401k. Basic assumptions. $1,000 contribution a month for 30 years at an average rate of return 7% (industry average). Fees are charged annually and come before taxes (taxes are deferred in qualified plans) $1,000 x 12m x 30yrs at 7% = $1,227,087 Gross (before taxes and fees are factored) According to morning-star and dalbar the average 401k fees are anywhere between .5% - 1.5%. I teach personal finance and have found most plans total expense ratio to be closer to 1.5%. This includes all fees, mutual fund fees, 401k administrator fees, custodial fees, transfer fees, etc. If you put away $1,000 for 30 years with an average return of 7% with 1.5% in fees your total = $917,799. That is over a $300,000 dollar difference. At a low expense ratio of .5% (best i have seen) total fees are still over $100,000. Most plans seem to have employer matches now days. I have found that the employer match is drained by the employer fee. As an example. I had a client a couple months ago that worked at BOA. His company has an investment division and manages and administers employees 401k plans. He was offered a 100% match from his employer (rare). He maxed out his 401k every year. He put away 18,000 and employer matched 18,000 (above average). His total expenses totaled 2% (above average). If he funded this plan for 30 years, BOA and himself would have both contributed $540,000 over those 30 years. That is essentially a free $540,000 from his employer, right? With 2% in fees and a 7% return, BOA will make north of a $1,000,000 in total on this account. Not a bad investment on one employee right. Front 540 thousand in "free money" to generate a million in revenue $500,000 net. Taxes work very similarly in these plans. Same basic assumption, $1,000 a month x 30yrs at an average return of 7%. Lets also assume .5% in fees. We will call this a low feed strong performing 401k plan. Total contributions over 30 years = $360,000 Total earnings net of fees = $752,169 Total account balance = $ 1,112,169 Tax deduction or incentive (whatever you want to call it) is calculated on your deposits ($360,000). Lets assume you are in a 1/3 tax bracket. Total tax savings equals $120,000. In other words you didn't have to pay taxes on $120,000 over a 30 year time frame. Pre-taxed contribution plans are taxed when you start taking withdrawals. Instead of a capital gains tax, your taxed as ordinary income. If you are in the same 1/3 tax bracket, you will be paying north of $365,000 in taxes. Isnt that how credit cards work? You are borrowing money today, to only pay taxes on all your money tomorrow, contributions (principal) and interest earnings. In other words, you are deferring taxes on your seed so you can be taxed on your harvest. "Do you really want to invest in a system where you put up 100% of the capital and as the mutual fund shareholder you take 100% of the risk, and you get 30% of the return?" ~ John Bogle Hope this helps.
So what do you suggest I do??? 37 yr old dad with 2 kids (7 & 4 yr old) only making $15 HR... Please help me with suggestions on how/or best way to save
rico211 wow your in a tough situation I would try to get a trade job Plumber or electrician My girlfriends sons are union plumbers making over a 100 thousand a year working in San Francisco My nephew is an electrician making 32 dollars an hour as a apprentice electrician In three years he’ll be making over 50 dollars an hour The only other thing is try saving 10% of your income every paycheck
Bryce Roenicke - My employee just changed their fees structure on our 401k and you are auto enrolled with auto contribution increase each eligible year. Something felt off when they were explaining it, but now your going to make me really dig in. I wish I had your skills, thank you, God bless.
@@rico-ns5vr an IUL is the best retirement vehicle. A Roth IRA is the closest thing that comes to it, but even then an IUL outperforms it in every way. I recommend you look into an IUL if you're serious about your retirement. If you need resources to help you out , then I'll be more than glad pass them forward.
@@Theactualcurrentsea an IUL is the best retirement vehicle. A Roth IRA is the closest thing that comes to it, but even then an IUL outperforms it in every way. I recommend you look into an IUL if you're serious about your retirement. If you need resources to help you out , then I'll be more than glad pass them forward.
@@TheTacticalHouse If you keep your money out of the markets, you will certainly not be able to retire. It is simply not possible to save enough during a 40-year career for you to live on during 25-30 years of retirement without putting your money to work for you while you're working. The problem is you MUST shift your money out of riskier, high-growth investments as you approach retirement age. Seems like many 401k plans have now added target date retirement funds as the default investment choice. Those would have prevented people near retirement from suffering these kinds of losses. Those should have existed BEFORE 2008 happened.
I graduated high school in 2003. Knew nothing about life! Started working and in 2006 it started to go down. I was laid off as a drafter for a surveying company. I was lucky to spend only 2 months on un-employment. Worked hard, got a decent drafting job and started a family in 2011. Got laid off shortly after. Was lucky to land temp jobs drafting to keep food on the table and roof over our head. Since I started paying attention to politics in 2012, Trump by far is the best thing to ever happen to our economy. My 401k has been at 11.07% return since Trump entered the white house. My dad lost almost everything under Obama. I will never again vote democrat... Ever.
Pay your car(s) off, Pay off all credit cards and destroy them. Buy a house and pay it off. Be 100% debt free. If you can't pay cash - don't buy it. Build your savings (you have no rent or mortgage) - self fund your retirement. Diversify with other tangible items of value. Remember you can also reverse mortgage your home and pull out money every month until death if needed. Let the bank have the house back when your done with it or if theres equity give it to your kids. Have a life insurance policy that will take care of your spouse and kids when you go. Use your home as a financial vehicle while its a home and shelter. Work less. Live more. Less stress.
401k is a risky game of chance , if you happen to retire at the time of the market, you're fine............but if you happen to retire during an economic downturn or crisis...........you're screwed
Not true, as you get older you should be shifting your investments from equities to something safer to weather the storm. These mouth breathers losing 30-40% in the crash on 2009 only happen cause of greed. Nothing else.
Wrong and I’ll tell you why and I’ve ran this model. If you retired with $1,000,000 (or any amount of money) in the year 2000 and withdrew 4 percent a year every year for 20 years in 2020 you would have $1,100,000. This was with the actual market fluctuations for every year. It works if you know how to use it.
If there are "dogs" in your 401k, blame your employer. All plans should have index funds for low costs, and you are guaranteed whatever the market returns that given year, minus the fees. Employers can always change or modify their plans to make them better. Talk to your employers to make changes. If the fees are too high or are lousy performers when the market goes up, and there is no matching money on the employers part, don't participate and go with a Roth IRA. Anyone close to retirement should have 50% or less in stocks, with more money in bonds and cash. Educate yourself with books and maybe take a investment class at your local community college. I have been doing this for over 20 years and have a nice six figure nest egg, and I'm considered lower middle class. If I can do it, anybody can, really.
Choose the Roth 401k. Pay the taxes up-front. Unless your income puts you in a high tax bracket, then you might be better off paying the taxes later in retirement. As far as fees, choose the low-cost index funds if you have any the choose from.
These people would've been fine if they just held onto their holdings during the recession. Market goes through cycles and the last 10 years have been nothing but growth
I don't think you paid attention to the video and I don't think you have a clue how difficult 2008 was for the average American (guessing you're a young kid). All lost their jobs and couldn't find work for some time, some had their mortgage go underwater, and all were already close to retirement age. The 401Ks they had that lost half their value was all the money they had left to live on. They had to pull their 401Ks to survive.
Michael Carter True. But at the end of the day a recession is a natural part of our economic cycle. That is what happens when people live ABOVE their means. Buying houses they shouldn't be buying. The horrible thing is I think the average American is worse off now than they were in 2008. The difference is mountains of student debt, and no savings to lose in the market
@@zs5002 You would be right if this were any other recession, but this wasn't a typical recession. This was the worst since the great depression 80 years earlier. This was an economic crash not seen in America for generations. And yes, you're right. The average American is worse off. 2008 crippled the middle class and pretty soon there won't be one at all if things don't change.
@@zs5002 how old are you? Just pray you never feel the pain of that recession a day in your life. There was no money flowing through the economy. Even if you didn't overspend. Gas prices were ridiculous. Everything was out of whack.
11:00 - 11:45 This little 40 second exchange basically explains the problem of uneducated investors and their interactions with their 401k plans. The lobbiest clearly supports the position of not adding disclaimers or educating investors of the 401k accounts because it will hurt his pockets, rather helping ours. I do think the exchange between the reporter and lobbiest was edited though, and the actual conversation might have happened differently Very cool perspective seeing this 10 years later. Hope the next financial crisis won't be so bad. . .
Oh, sweet summer child. Haven't heard about COVID back then, have you?😁 On the serious not, I admire the interviewer who could maintain his polite tone to the 401K lobbyist. I could see the fury in his eyes and rightfully so. If I were him, I might slap the lobbyist on the spot😠
BlackWorldTraveler, if people did not sell when the downturn hit in 2008-09, the market has more than TRIPLED since then. Some of these people who lost a lot of money and were pushing 60, should not have had more than 50% in stocks to begin with. As you near retirement, cut back on stocks and more in cash and short term bonds. It's all about educating yourself with books and maybe a investment class. That's what I did, now have a nice six figure nest egg with about 6 years to go. And I'm considered lower middle class.
Henry Hill Actually that is not a great thought. It's actually stupid since most people with 401k doubled or tripled since this video was made. I'm assuming the people that thumbed up this panicked and sold out.
If you left it in there and didnt touch it. I bet you you its worth triple now. Show the people who invested more because they didn't live beyond there means. That woman worked 30 years. Stop buying cars,mini mansion's, charging trips, boats, and trying to keep up with other people that are broke. When you have savings you don't worry about retirement money. Think about if you worked 30 years and have nothing. How long would it take you to burn thru your 401k. That means you didn't plan for the later years of life. Working 30 years you should have had 2-5 years of liquid cash. The markets rebounded with all time highs. I live on 40% of my bring home. People always want to blame someone look in the mirror. You should have savings,IRAs,Cds,cash. I bet if you looked at there spending the past 30 years you would see where there money went.FOH
Might want to cash out soon, still close to the peak of the market, and increasing interest rates will slow down the economy, they will keep going up until inflation stops and it might crash 401k's unless you're in stable assets.
And now their 401k's have doubled from that point. If you were like 60-62 yeah it sucked and probably delayed retirement but people in their 50s made it back and then some.
Never does it talk about what these people invested in. They made choices along the way to be in equities or in cash. They chose equities and they lost, and now they are blaming others. The problem isn't the 401k - it is the financial illiteracy that is so prevalent in our society. Take investing 101, folks and don't repeat this scenario again. -Fern Alix LaRocca CFP 401kmaximum
This is hilariuos watching this 14 years later and thinking now that people STILL have no idea how their 401k really works, and they're STILL dependent on it for retirement.
You're right. Interest rates do destroy the middle class. I am talking about the interest rate on a GIUL, which is 2.5%, which is not high. Two of the biggest killers for the middle class is procrastination and lack of discipline. Which then ties into financing things they don't need to buy at high interest rates. But when someone does need to buy something, wouldn't it be better to take out a 2.5% loan from yourself and then pay yourself back rather than take out a loan from a bank?
I don't often comment on youtube but it just seems like there's so much misinformation here and I hope I can offer a different perspective than what many of the commenters are providing. Reading some of the comments here makes me feel worried about the state of folks' financial understanding about how the market and these investment vehicles are intended to work. I believe the American equity market and economic engine is one of, if not the best, opportunities to generate and build wealth. Especially considering when one invests and takes part in that economic engine over longer periods of time. First and foremost, the crash in 2008 - 2009 was not a problem to do with 401k's. Everyone lost money. If you owned a home, your equity position halved. If you owned equity's, your position halved. It affected everyone. I suppose one could argue semantics about what caused the recession, but that might be for a different conversation. To say that having a 401k was correlated or the reason folks lost money, or as some commenters have said, "scammed", is patently false. My point in saying this is that an economic engine is an appropriate metaphor for this situation. If you think of your investments as a car, as most folks know, vehicles need maintenance. The difference with the 401k is you have the choice and ultimate control over what happens to your investments, much like you do in determining how often you change the oil in your car or rotate your tires. Sadly, I believe most people put money into something without understanding anything about it, so, when the metaphorical tire goes flat, or if you never change, much less look at the oil, catastrophe can happen. This is to say, that as time goes on you need to take some time to check on your investments and determine if your allocations are safe while promoting growth. A lot of the folks in this video, should have started rebalancing their portfolios into more diversified conservative bonds or target date retirement funds as they got closer to retirement. When you're younger, your time horizon is much longer and your investments have time to recover from the proverbial flat tires. When you're older, you need to rebalance and start thinking about preserving your principle and focus less on growth. Otherwise you end up like these poor folks and what might have just been a flat fire, ended up being a engine fire and near total loss. Lastly, I strongly disagree with the sentiments expressed advocating that we should only primarily rely on pensions and/or social security. I think those are patently bad, and unsustainable ideas and here's why. The average American individual will contribute $312,000 to social security over their lifetime. Just a few years back, ours will be the first generation to get less out of SS than we will put into it. Consider that the retirement age is at 67, that's a hard pill to swallow. Now, as a math exercise please consider the following. When a child is born, assume for the first 20 years of that child's life, the parents of said child contribute $100/month to a broad market index fund brokerage account for that child. Once the child turns 20, they can take over the $100 monthly contribution for the next 40 years. For those that are still following, this is $1200 a year. Assuming the market average return is 7%, that individual will have just over $1,000,000 by the time they turn 60. The total amount in principal that was invested for that individual, was $72,000. Compare that to Social Security for example, and it's stunning to see the difference compound interest and properly harnessing the power of the American Economic engine. For 3x less principle, you will end up with 3x more in retirement funds. And this is assuming only $100 and not including if folks go on to start careers with companies with 401k's that match contributions. Pensions are dependent on a large company continuing to stay in business, and social security is dependent on fewer and fewer workers supporting more and more retirees. It's mathematically unsustainable. For folks that think $1200 is too much, please consider that the average tax refund for the average American is around $2700. I feel like I have a lot more to say, but this is already rambling on far longer than I had intended. Likely this comment will go unread, but if you made it this far, I'd love to hear your thoughts.
I was 40 when the 2008 market crash occurred at which I increased my 401k contribution from 10% to 15% knowing this is just a blip in the overall ascent of the stock market. For those who panicked and pulled their money out of the market - my condolences. For those who embraced the horror and held on tight here is your reward - as of 10/25/19 the S&P 500 has surged for more than a decade. Since the recession low of March 9, 2009, the S&P has rocketed from 666.79 to 3,022.55 today. That’s a gain of 353% in 10 years. Talk about building wealth $$$
But now, with fidelity or Vanguard, even in a 401K plan, you can do index funds, Total Market or S&P 500 index funds. One can avoid all those monstrous fees in index funds. I dont think all firms have index funds with law fees though, unfortunately
Why do 401K holders invest in funds and pay fees , the muppets running your fund still make money when you are losing , why do they not simply buy stocks that they can evaluate and understand ? They could then avoid tech stocks when they are overpriced , or move into Treasuries if they become fearful. To have lost 40% during the past year , they must have chosen to invest in tech heavy funds. Like everything else in life , the more you pay attention , the better you are likely to become at managing your pension pot.
I see adults who are in a state fear. I am a 22 year old who just immigranted to America, New York to be exact, and I'm looking for an entry-level job. I've been on the search for a job for a month now. I just want a simple job in retail. I see these old videos during the Financial Crisis of the late 00's, and I think to myself in disbelief that adults who are in the height of their careers have fallen face flat on the ground. Because for me, as someone who's still young, I thought of grown ups as people who know everything and can solve everything, while children like I was, were just vulnerable without parents. I just hope in the inevitable next financial crisis that the government doesn't bailout the banks and let the free-market heal by itself at the same time, that would teach the banks a lesson. The U.S. Treasury did bailout AIG and made a profit out of it, because found out that if AIG would completely fall, since the company was everywhere, it would be much worst. I actually wish that the profits from the bailout of AIG was used as assistant funds for those who got laid off from their jobs like what Iceland did.
Amanda, would you be interested in providing full disclosure? Do you act as a fiduciary to your clients? How are you compensated? What percentage of your clients do you NOT recommend a whole/universal life policy or annuity?
@Ryan BI don't think you understand what a tax shelter is. A tax shelter is a financial arrangement used to minimize or avoid taxes. Since you don't pay taxes on 401k or retirement accounts for years and the money invested in them are allowed to grow tax free 401ks fit that definition. It reduces your tax obligation for that year and many more years to come hence it's a shelter.
Never trust any 401k promoters. They are the 20th century and 21st century promoters of purchasing SPECULATIVE INVESTMENT STOCKS ON MARGINS KNOWN AS BORROWED MONEY which caused a lot of poverty duing the Great Depression. And now they are doing it again, this time using the good ecoomic years and decades to hide the negative evil side of all 401k retirement investment programs.
@Ryan B So because you can only put 18k...actually it's 19k makes it less of a shelter? Jesus the "logic" some of you guys use is astounding. You do know that you cobble up multiple different tax shelters to minimize your tax liability don't you? Also the overall yearly contribution limit is $56,000....that total would be your contribution plus your company's contributions. If you're a business owner you can funnel 19k as an employee of your business and 37k as a company contribution. There also tons of other strategies used to shelter even more money yearly in a 401k when you combine it wit a SEP IRA like Mitt Romney did and was able to build a $102 million balance. Oh and one more thing. The 401k was originally a tax shelter loophole an accountant discovered when trying to minimize the tax liability of his high salaried clients. Look up the history of the 401k. It's not a problem to be ignorant about a subject. Lord knows there are plenty of things I'm ignorant about. It's when you're arrogantly ignorant that the problems come because you stunt your knowledge growth.
54 yr old, career woman that said she worked her entire life, no kids, and has only $80k..... Umm lady.... you do deserve what you are getting... Hope you enjoyed driving that fancy car...
She might have to pay student loan, mortgage, medical bills (herself or her parents'), or other life necessity. You and I don't know her, but based on my experience (on myself and people that I know of), women who choose single life usually come from broken families and have really rough childhoods. Women who wanted an easy life usually got married early, when they were still young and pretty, to the richest men they could get. They know as they were older, the chance to get wealthy husbands would be diminished.
So nearly half of savings is down. Then he said his down 140k. Fk thats low if he only has around 240k. 2nd woman 54yrs old has 88k that went down to 50k plus 4k that was showed up. Save your dollars and go to Costa Rica or Mexico to retire.
6:26 exactly. good growth mutual funds are a safer option. growth - aggressive growth- growth and income- and international growth. diversification is key.
Retro Nostradamus speaks: And now, from the future, 9 years later, the stock market has tripled. Economy is in overdrive. Unemployment is at historic lows. Thanks to that I retired last year at age 61. When things go bad everyone thinks it will never get better. But it always has. Of course, when things are going good everyone thinks it'll last forever. Which it hasn't.
EXACTLY!!! My dad was ready to cash out in 2009 and I told him to not touch his 401k account and to increase his contributions if he can afford it. Since 2009, his account has increased over half a million and he’s VERY happy. The younger generations don’t trust Wall St. to make them money but trust in a scam like Bitcoin, it’s hilarious
Remember, losing jobs is one thing. That's a loss of income. But when you retire, you don't have to liquidate your 401k holdings immediately. If these people could have held on for a few years, they could have gotten back to where they were at previously.
Why borrow from yourself? It keeps the account tax advantaged. Do you pay taxes on loans? No. Why do they charge interest? Depending on the product, the collateral held by the financial institution in a collateral account is gaining the same amount of interest being charged and then put back in your account gaining more interest. So, if it doesn't level itself out, you're still gaining more interest than paying interest. Don't say the interest rates are high, because they are not.
a 401k is only an account type...volatility with people's account balances were due to the investments (mutual funds) held within the accounts. people were ignorant of 1) what they actually owned, 2) risk of owning any specific fund mix. Investing fees is a separate issue.
Cause you’re investing. Nobody can tell where the market will be. You choosing your investments is on you. The problem is the expense ratios eating away at your returns. People just need more education on the subject.
But who is going to give these folks this perfect 20/20 hindsight advice? The Banking/Finance/Investment sure as heck will not. They are fighting constantly against any efforts to give consumers extra knowledge on how to better manage their 401ks.
Annuities tend to be a waste of money with lower returns than you could get on your own. Traditional IRA's are pointless to anyone making over $69K a year because you can't deduct your contributions. There are many options out there but those 2 are not too useful for a saver/investor making above average income.
diversify your investments. Im dont like 401k as much but since my companie matches it I dont mind the extra money they are giving me, but will never only rely on 401K as my only investment account
superplan89 What could happen again? My 401k more than doubled since this video was made. And you have access to you 401k at 59 1/2. Many of you are truly ignorant about the 401k.
A 401k is not an investment. It is a vehicle for investments. The stocks and bonds are what crashed, and if you had a brokerage account it would be no different.
And for you to say it "might not be there" doesn't make sense. Are all businesses going to close shop? Are people going to stop buying things altogether? If not, then stocks will likely exist just the same as they do now.
I’m 49 and I have about ($190k) liquid in savings which I plan to put towards becoming a homeowner, but based on the current high prices on real estate, do you suggest I hold from buying and look at stocks instead?
Yes of course, housing crash is coming. If you're thinking about investments to earn huge income while maintaining the ability to access your money and safety, so you don't get caught in a market decline, a financial planner can come in handy
True, aI always tell people not to dismiss the importance of advisors, until being burnt by their own emotions, no offense intended. Amid covid-19 pandemic crash, I needed a good strategy to grow my portfolio, thus I consulted the service of a true market strategist that helped to rejuvenate my $700k portfolio, boosting its return over 240% as of today.
This is why I've entrusted a CFA with my investmnt decisions. Many underestimate advisors until emotions lead to losses. My advisor crafted a tailored strategy aligning with my long-term goals, guiding entry and exit points for the equities I focus on. This has grown my portfolio to over $850k.
Sonya lee Mitchell is theconsultant I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Sonya lee Mitchell is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Most of these people took high-risk funds at the time of the big crash in 2008 and we're in their 50s by the time you reach 55 you should have considered moving the funds in your portfolio to take less risk because you're too close to retirement and cannot gain it back... being greedy it's a quick way to lose your money slow and steady wins the race.
I always thought a "Where are they now" episodes of years past would be awesome. Hopefully everyone in the video were able to turn their lives around and theyre doing great now.
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I wish 60 minutes did a 10 years later interview with these people
My exact thoughts
Arie Fraiser
They won’t because people will see what the 401k would’ve done if you did not cash out and contributed.
Many either cashed out and/or stop contributing and will never get it back.
All the people I work with that only had their money in the credit union savings account and money market of the 401k have more than $500k after 30 years. Wasn’t affected at all by stock market.
I was 70% in stocks and affected by the stock market and down as low as $260k but my contributions wasn’t touched.
I kept maxing out my 401k,dividends/interest continue to reinvest and compounding through it all, broke even by 2012 tripling to 1.5 million since.
And you got to be really stupid risking your money like that over 50 years old especially with no pension and savings.
I’m retiring next year. After the rollover I now have about $600k in Pretax IRA and $1.7 millions mega Roth IRA. Have 40% in gas/oil ,REITs,and Dividend Achievers making $43k/yr dividends with 60% credit union and money market making $19k/yr. interest..
When I retire next year I have a $2400/mo. pension,$3k/mo. social security at FRA.and other savings to pay over 20 years of my current living expenses.
But also have the option of $500-$1500/mo. taxable and $2k-$6k/mo.tax free from my pretax and Roth IRA. Thanks to my 401k.
Did you notice that when that guy said there were other options to put your money into not connected to the stock market the guy ignored what he said? They really should have discussed that part.
And as far as fees go I just did a Fidelity BrokerageLink rollover with my 401k and the fees weren’t bad at all (0.33%) because I’m proactive and did not buy mutual funds(fees) or use the fee services like most do.
@@blackworldtraveler3711 Agree with most of what you said. Everyone in the video blamed 401ks like they were supposed to carry zero risk.
The market drop in 2008 was around 35%. If you had your money in an index funds you should have lost around that much. However if you had your money in company stocks you very well risked losing everything. And as you touched on if they were that close to retirement they should have had a 70% stock/30% bonds and/or CDs split at the most. If they invested in index funds and that split then the 35% market drop would have resulted in about a 23% portfolio drop. As risked adverse as some of them seemes they should have gone with a 60/40 split.
In any case the main point is with the 401k and IRA increasingly being the only retirement option for people it is your responsibility and duty to ensure you understand it as much as possible and know what the risks are and ways to minimize the risk. Too many people don't even take time to review their 401k at least once or twice a year.
Arie Fraiser
The value of investment was less but nobody lost anything unless they cashed out or sold..
And even though my stock value was down I was still averaging $2500-$5k a month in reinvested dividends including interest,stock/company splits,compounding,etc..
Half of the companies were increasing dividends each year regardless.
If these people didn’t sell and kept contributing they would be very happy now.
Another thing is I would like to know what these people were doing with their money for 30 years.
That diva lady showed that statement with only around $8k.and another $80k she says that.dropped to $50k......after 30 years Wall St. executive assistant and no kids? And what bothers me about her is what she said about her age and younger prettier women which should not matter if she’s good at her job.
The first guy and the couple would have at least $500k to million now if he didn’t cash out and kept contributing.
I know this because for the past 8 years I’ve been going to the two retirement seminars/workshops at the company I work and heard it all.
Ive known these people for 30 years hearing a lot of rationalizing and excuses to throw money at things, no saving,and borrowing from 401k,etc
And all the living beyond means and keeping up with the Joneses has caught up to them big time.
Also found out I’m one of about 75 out of 9k employees that are 401k millionaires out of over 9k in my group but probably more in the system there are over 100k employees.
This video and others like it do no good for anyone except cause panic and confusion without all the fact,details,or follow up.
Also you don’t have to put money in a 401k.
I don't understand why they keep saying you lost money. You don't loose anything until you sell. If you hold it your only down
The woman at 3 minute mark seems like an absolute star employee, I hope she found something great.
agreed! she's main character!
A ten year update to this video is needed. Where are these people now?
Solowolf dead
Solowolf
Either working until they die if they sold and/or cashed out their 401k or retiring comfortably or even early like me if they left it alone and kept contributing.
David Watson and how much of that went towards fees on a 401k?
Many likely cashed out around this time. This was filmed during the teeth of the recession (March of ‘09 was the bottom by most stats) and these folks are unemployed and seeking work in their late 50’s most had no other option than to liquidate regardless of the potential for the market to bounce back. Some may have kept their accounts though. Here’s hoping they weren’t invested in any securities/funds which never recovered...
This was so heartbreaking to watch.
I also agree with the comments here that state that there should be a 10 years later follow-up story to this... maybe even a "where are they now"?
"I'm a Microsoft office diva!"
As if that skill holds any weight.
🤣🤣
I laughed at that too.
And there comes top models who can type faster
@@sevensolaris remember this was 2008
for old people, it was devastating. For young people it was a huge opportunity
These older investors should have known better. They should have had some cash on the side and tapered off into bonds/lower volatility securities as they neared retirement. Sure ‘09 put these folks in a tough spot but they saw some of the greatest 20 years the American economy ever had prior.
I can personally attest to that lol
For a millennial like me, it was a huge wake up call. Made me become far more critical any advice that a financial guru insists that everyone should hurry up and throw money at. Also, taught me job are never a sure fire thing.
It's now 2021 and this still holds true to this day, although an update would be nice one can see the issue here.
For those that were still far off form retirement and didn’t need to access the funds, if they left it alone they would have made out phenomenally going out nearly each and ever year after this video was made.
We lost a lot from our 401k during the financial crisis. We sat tight, and did not sell anything. We continued to contribute to our 401k at the same level as before the crisis. It was scary as hell. But eventually we got it all back, and made good money on what we added during the meltdown. People who sold their stocks after the crash will never recover. I knew an older couple at church that was deep in retirement, and heavily invested in their 401k. When the crash hit, they were smart enough to sit tight. They only took out what they needed to live on. Their finances recovered.
Jj looks like you need to go back and study your economic history. There always has been and always will be crashes. But what happens after EVERY crash.....? It comes back. Not only does it come back, but it continues to go up.
You got the nominal amount of dollars back that hold far less value today.
Why you gotta wait. Theres better strategies out there
Tell that to the Japanese. Their stock market today is basically the same as what it was 30 years ago!
@andrewheffel....I read your post. You folks did a lotta good things correct by sitting tight, but. Yep there's that "but" we still don't know if YOU or the rest of us could have tripled our investment. Did you miss it somehow?? All the hidden UN-Disclosed fees (of which no invester knows their amount) created to rob us all. There's more than a dozen. I'll list a few. 1 Legal fees 2.Trustee fees. 3. Transaction fees. 4. Stewardship fees. 5. BookKeeping fees. 6. Finders fees and the list goes on. You may have quad- rupled your investment for all you know (which is nothing) had those wall street goons NOT robbed you blind. No pun intended, but it is what it is: literally robbing you blind and you don't even realize it. If you don't know the cost of those fees or that they even exist, you are blind.
This is why you don’t rely solely on a 401k or any kind of investing for your nest egg. I make mine own savings interest rate by being debt free and living below my means.
Beast from the East the issue is ‘what options allow my capital to grow the fastest’. 401k lets your capital compound tax free. The risk you place on that capital is up to you through investment choices/knowledge.
Trust someone else with your money? Times have changed. Can't trust anyone with your cash ...
Meta MGTOW you got it.!
No, no! It is the professionals you have to watch out for! Don't confuse experienced elders with professionals that make a living at risking your money!
It kind of sounds like the people interviewed didn't have a big amount in the market anyway. A 200k pre-crash value is quite low if you plan to live off of returns.
Thomas Reedy yeah, it’s low in the grand scheme of what’s needed to retire, but it’s high relative to what the average person has in their 401k/403b, etc.
Exactly. If all you had is $200K-$300K for your retirement you weren’t anywhere close to retiring in the first place.
Keep in mind this is from 2009. Would be interesting to see an updated video on this topic
It's pretty pathetic when you hear people talking in tears about how much they lost, only to find out they had $10 grand in the first place. I knew a couple people at work who said their retirement was ruined after divorce took around that much from their 401k.
This post and replies - - thumbs up. If you didn't sacrifice by not buying/leasing new cars, not taking vacations every year, etc. ) then you don't have the several hundred thousand saved and can't retire.
Oh yeah - - AND screw Wall Street and their frickin' "fees."
It’s 2019 and this still shakes me....
It’s the middle of June 2022.
4:43 "Its tough, but Im proud of him" How bout that.
I lost my job in the financial sector a few weeks before this clip was posted. It was real tough trying to find a job as there were thousands of people in the same situation as I, my Roth IRA dropped 50% in value and it wasn't until 2013 that it was back to normal. I also had a 401K which I was forced to sell and roll the funds into an IRA because the company was being sold and the new owner was dropping the plan.
Does everyone here not realize that the people who lost money in their 401ks basically quadrupled their money ( assuming they did not cash it out) by the end of 2017?
That's just what I was thinking. You don't lose your money until you sell or the companies you invested in go under. Assuming their 401k follows the S&P, they should be up right now.
Jonathon Haug im sure most of them sold... they likely didn’t have enough savings outside of the 401k to keep them afloat which as you said is terrible because they could have 3-4 X’d their money.
Really? You want a 60 year old to hang on and pray? Japan had a 30 year recession. A recovery is never guaranteed. This is just sad.
@@luisvalencia9180 The US stock market rising overtime is as close to a guarantee as you can get. That being said, I believe there is a lesson here for those of us who are still young. If you rely solely on your 401k for retirement, you will not have the luxury of choosing when to use it. You must wait for a rise in the market / gain in your portfolio. Expect a recession every 10 years or so.
JB Bonilla: There have been 10 year periods where the USA stock markets go nowhere “Lost Decades”. The 54 and 60 year olds don’t have that time to wait and see
How taxes and fees work in your 401k.
Basic assumptions. $1,000 contribution a month for 30 years at an average rate of return 7% (industry average).
Fees are charged annually and come before taxes (taxes are deferred in qualified plans)
$1,000 x 12m x 30yrs at 7% = $1,227,087 Gross (before taxes and fees are factored)
According to morning-star and dalbar the average 401k fees are anywhere between .5% - 1.5%. I teach personal finance and have found most plans total expense ratio to be closer to 1.5%. This includes all fees, mutual fund fees, 401k administrator fees, custodial fees, transfer fees, etc.
If you put away $1,000 for 30 years with an average return of 7% with 1.5% in fees your total = $917,799. That is over a $300,000 dollar difference. At a low expense ratio of .5% (best i have seen) total fees are still over $100,000.
Most plans seem to have employer matches now days. I have found that the employer match is drained by the employer fee. As an example. I had a client a couple months ago that worked at BOA. His company has an investment division and manages and administers employees 401k plans. He was offered a 100% match from his employer (rare). He maxed out his 401k every year. He put away 18,000 and employer matched 18,000 (above average). His total expenses totaled 2% (above average). If he funded this plan for 30 years, BOA and himself would have both contributed $540,000 over those 30 years. That is essentially a free $540,000 from his employer, right? With 2% in fees and a 7% return, BOA will make north of a $1,000,000 in total on this account. Not a bad investment on one employee right. Front 540 thousand in "free money" to generate a million in revenue $500,000 net.
Taxes work very similarly in these plans. Same basic assumption, $1,000 a month x 30yrs at an average return of 7%. Lets also assume .5% in fees. We will call this a low feed strong performing 401k plan.
Total contributions over 30 years = $360,000
Total earnings net of fees = $752,169
Total account balance = $ 1,112,169
Tax deduction or incentive (whatever you want to call it) is calculated on your deposits ($360,000). Lets assume you are in a 1/3 tax bracket. Total tax savings equals $120,000. In other words you didn't have to pay taxes on $120,000 over a 30 year time frame. Pre-taxed contribution plans are taxed when you start taking withdrawals. Instead of a capital gains tax, your taxed as ordinary income. If you are in the same 1/3 tax bracket, you will be paying north of $365,000 in taxes.
Isnt that how credit cards work? You are borrowing money today, to only pay taxes on all your money tomorrow, contributions (principal) and interest earnings. In other words, you are deferring taxes on your seed so you can be taxed on your harvest.
"Do you really want to invest in a system where you put up 100% of the capital and as the mutual fund shareholder you take 100% of the risk, and you get 30% of the return?" ~ John Bogle
Hope this helps.
So what do you suggest I do??? 37 yr old dad with 2 kids (7 & 4 yr old) only making $15 HR... Please help me with suggestions on how/or best way to save
rico211 wow your in a tough situation
I would try to get a trade job
Plumber or electrician
My girlfriends sons are union plumbers making over a 100 thousand a year working in San Francisco
My nephew is an electrician making 32 dollars an hour as a apprentice electrician
In three years he’ll be making over 50 dollars an hour
The only other thing is try saving 10% of your income every paycheck
Bryce Roenicke - My employee just changed their fees structure on our 401k and you are auto enrolled with auto contribution increase each eligible year. Something felt off when they were explaining it, but now your going to make me really dig in. I wish I had your skills, thank you, God bless.
@@rico-ns5vr an IUL is the best retirement vehicle. A Roth IRA is the closest thing that comes to it, but even then an IUL outperforms it in every way. I recommend you look into an IUL if you're serious about your retirement. If you need resources to help you out , then I'll be more than glad pass them forward.
@@Theactualcurrentsea an IUL is the best retirement vehicle. A Roth IRA is the closest thing that comes to it, but even then an IUL outperforms it in every way. I recommend you look into an IUL if you're serious about your retirement. If you need resources to help you out , then I'll be more than glad pass them forward.
Remember pensions? THATS the gold standard.
Yeah let's bankrupt all the great American corporations so they all go overseas! Great idea!
We need more 60 minutes series like this one
This is an eye opener
Yep. Keep your money out of the markets
@@TheTacticalHouse If you keep your money out of the markets, you will certainly not be able to retire. It is simply not possible to save enough during a 40-year career for you to live on during 25-30 years of retirement without putting your money to work for you while you're working. The problem is you MUST shift your money out of riskier, high-growth investments as you approach retirement age.
Seems like many 401k plans have now added target date retirement funds as the default investment choice. Those would have prevented people near retirement from suffering these kinds of losses. Those should have existed BEFORE 2008 happened.
I graduated high school in 2003. Knew nothing about life! Started working and in 2006 it started to go down. I was laid off as a drafter for a surveying company. I was lucky to spend only 2 months on un-employment. Worked hard, got a decent drafting job and started a family in 2011. Got laid off shortly after. Was lucky to land temp jobs drafting to keep food on the table and roof over our head. Since I started paying attention to politics in 2012, Trump by far is the best thing to ever happen to our economy. My 401k has been at 11.07% return since Trump entered the white house. My dad lost almost everything under Obama. I will never again vote democrat... Ever.
Pay your car(s) off, Pay off all credit cards and destroy them. Buy a house and pay it off. Be 100% debt free. If you can't pay cash - don't buy it. Build your savings (you have no rent or mortgage) - self fund your retirement. Diversify with other tangible items of value. Remember you can also reverse mortgage your home and pull out money every month until death if needed. Let the bank have the house back when your done with it or if theres equity give it to your kids. Have a life insurance policy that will take care of your spouse and kids when you go. Use your home as a financial vehicle while its a home and shelter. Work less. Live more. Less stress.
easier said then done for most people.
Thank you for posting. Great video.
401k is a risky game of chance , if you happen to retire at the time of the market, you're fine............but if you happen to retire during an economic downturn or crisis...........you're screwed
Not true, as you get older you should be shifting your investments from equities to something safer to weather the storm.
These mouth breathers losing 30-40% in the crash on 2009 only happen cause of greed. Nothing else.
Wrong and I’ll tell you why and I’ve ran this model. If you retired with $1,000,000 (or any amount of money) in the year 2000 and withdrew 4 percent a year every year for 20 years in 2020 you would have $1,100,000. This was with the actual market fluctuations for every year. It works if you know how to use it.
If there are "dogs" in your 401k, blame your employer. All plans should have index funds for low costs, and you are guaranteed whatever the market returns that given year, minus the fees. Employers can always change or modify their plans to make them better. Talk to your employers to make changes. If the fees are too high or are lousy performers when the market goes up, and there is no matching money on the employers part, don't participate and go with a Roth IRA. Anyone close to retirement should have 50% or less in stocks, with more money in bonds and cash. Educate yourself with books and maybe take a investment class at your local community college. I have been doing this for over 20 years and have a nice six figure nest egg, and I'm considered lower middle class. If I can do it, anybody can, really.
Gdobie1 West
You're making too much sense.
Stop it!
👍 me too, i did all that and i am fine.
Its important that They've not have unrealistic expectations. Cold blooded
Turns out that mar 9 2009 was the bottom. Great example of by the time the news media does a story on something it's over.
And when you decide to Cash out, Federal takes 30% & State takes 10%.. Also you give this crooks your money so they can invest on shit you wouldn’t!
Choose the Roth 401k. Pay the taxes up-front.
Unless your income puts you in a high tax bracket, then you might be better off paying the taxes later in retirement.
As far as fees, choose the low-cost index funds if you have any the choose from.
People need to rise up and get rid of these horrible 401k plans that are garbage and get back to defined benefit package.
These people would've been fine if they just held onto their holdings during the recession. Market goes through cycles and the last 10 years have been nothing but growth
I don't think you paid attention to the video and I don't think you have a clue how difficult 2008 was for the average American (guessing you're a young kid). All lost their jobs and couldn't find work for some time, some had their mortgage go underwater, and all were already close to retirement age. The 401Ks they had that lost half their value was all the money they had left to live on. They had to pull their 401Ks to survive.
Michael Carter True. But at the end of the day a recession is a natural part of our economic cycle. That is what happens when people live ABOVE their means. Buying houses they shouldn't be buying. The horrible thing is I think the average American is worse off now than they were in 2008. The difference is mountains of student debt, and no savings to lose in the market
@@zs5002 You would be right if this were any other recession, but this wasn't a typical recession. This was the worst since the great depression 80 years earlier. This was an economic crash not seen in America for generations.
And yes, you're right. The average American is worse off. 2008 crippled the middle class and pretty soon there won't be one at all if things don't change.
easy to say when it takes years for it to recover and you plan on retiring in 3 years
@@zs5002 how old are you? Just pray you never feel the pain of that recession a day in your life. There was no money flowing through the economy. Even if you didn't overspend. Gas prices were ridiculous. Everything was out of whack.
I couldn't watch the first five minutes with those people desperate to find a job at the job fair while showing how much they lost in their 401ks.
It’s such a catch 22. Their 401k collapsed. Lost there job and now their locking in their losses by desperately withdrawing from it.
11:00 - 11:45
This little 40 second exchange basically explains the problem of uneducated investors and their interactions with their 401k plans. The lobbiest clearly supports the position of not adding disclaimers or educating investors of the 401k accounts because it will hurt his pockets, rather helping ours.
I do think the exchange between the reporter and lobbiest was edited though, and the actual conversation might have happened differently
Very cool perspective seeing this 10 years later. Hope the next financial crisis won't be so bad. . .
Oh, sweet summer child. Haven't heard about COVID back then, have you?😁
On the serious not, I admire the interviewer who could maintain his polite tone to the 401K lobbyist. I could see the fury in his eyes and rightfully so. If I were him, I might slap the lobbyist on the spot😠
Curious as to what kind of Lifestyle these people maintained after they lost their job
They should rename the 401K retirement plan the 201K retirement plan !
Joseph Reid Great thought !!!
Joseph Reid
I have a feeling the people in this video who held on to their 401k and didn't touch it are very happy right now.
BlackWorldTraveler, if people did not sell when the downturn hit in 2008-09, the market has more than TRIPLED since then. Some of these people who lost a lot of money and were pushing 60, should not have had more than 50% in stocks to begin with. As you near retirement, cut back on stocks and more in cash and short term bonds. It's all about educating yourself with books and maybe a investment class. That's what I did, now have a nice six figure nest egg with about 6 years to go. And I'm considered lower middle class.
Henry Hill
Actually that is not a great thought.
It's actually stupid since most people with 401k doubled or tripled since this video was made.
I'm assuming the people that thumbed up this panicked and sold out.
How about the 101K plan lol
Having a 401K plan or not, you would like to see this report.
If you left it in there and didnt touch it. I bet you you its worth triple now. Show the people who invested more because they didn't live beyond there means. That woman worked 30 years. Stop buying cars,mini mansion's, charging trips, boats, and trying to keep up with other people that are broke. When you have savings you don't worry about retirement money. Think about if you worked 30 years and have nothing. How long would it take you to burn thru your 401k. That means you didn't plan for the later years of life. Working 30 years you should have had 2-5 years of liquid cash. The markets rebounded with all time highs. I live on 40% of my bring home. People always want to blame someone look in the mirror. You should have savings,IRAs,Cds,cash. I bet if you looked at there spending the past 30 years you would see where there money went.FOH
@Pazuzu Le PazNext time don't live beyond your means. I guess this one hits home for you.
Larry R then came corona!!!
If regular people can't save, how will they know how to invest?😂🤓🤔
I'm 67 my 401k is doing good I've never lost half of it's worth the last five years mine was in low-risk my Roth IRA has done well
Might want to cash out soon, still close to the peak of the market, and increasing interest rates will slow down the economy, they will keep going up until inflation stops and it might crash 401k's unless you're in stable assets.
And now their 401k's have doubled from that point. If you were like 60-62 yeah it sucked and probably delayed retirement but people in their 50s made it back and then some.
Never does it talk about what these people invested in. They made choices along the way to be in equities or in cash. They chose equities and they lost, and now they are blaming others. The problem isn't the 401k - it is the financial illiteracy that is so prevalent in our society. Take investing 101, folks and don't repeat this scenario again. -Fern Alix LaRocca CFP 401kmaximum
Fern LaRocca exactly.
As always, Thank you for an extremely informative story.
This is hilariuos watching this 14 years later and thinking now that people STILL have no idea how their 401k really works, and they're STILL dependent on it for retirement.
A guy with teeth like that, I would never Trust!!!!!! He has some nerve.
You're right. Interest rates do destroy the middle class. I am talking about the interest rate on a GIUL, which is 2.5%, which is not high. Two of the biggest killers for the middle class is procrastination and lack of discipline. Which then ties into financing things they don't need to buy at high interest rates. But when someone does need to buy something, wouldn't it be better to take out a 2.5% loan from yourself and then pay yourself back rather than take out a loan from a bank?
I don't often comment on youtube but it just seems like there's so much misinformation here and I hope I can offer a different perspective than what many of the commenters are providing.
Reading some of the comments here makes me feel worried about the state of folks' financial understanding about how the market and these investment vehicles are intended to work. I believe the American equity market and economic engine is one of, if not the best, opportunities to generate and build wealth. Especially considering when one invests and takes part in that economic engine over longer periods of time.
First and foremost, the crash in 2008 - 2009 was not a problem to do with 401k's. Everyone lost money. If you owned a home, your equity position halved. If you owned equity's, your position halved. It affected everyone. I suppose one could argue semantics about what caused the recession, but that might be for a different conversation. To say that having a 401k was correlated or the reason folks lost money, or as some commenters have said, "scammed", is patently false.
My point in saying this is that an economic engine is an appropriate metaphor for this situation. If you think of your investments as a car, as most folks know, vehicles need maintenance. The difference with the 401k is you have the choice and ultimate control over what happens to your investments, much like you do in determining how often you change the oil in your car or rotate your tires. Sadly, I believe most people put money into something without understanding anything about it, so, when the metaphorical tire goes flat, or if you never change, much less look at the oil, catastrophe can happen.
This is to say, that as time goes on you need to take some time to check on your investments and determine if your allocations are safe while promoting growth. A lot of the folks in this video, should have started rebalancing their portfolios into more diversified conservative bonds or target date retirement funds as they got closer to retirement. When you're younger, your time horizon is much longer and your investments have time to recover from the proverbial flat tires. When you're older, you need to rebalance and start thinking about preserving your principle and focus less on growth. Otherwise you end up like these poor folks and what might have just been a flat fire, ended up being a engine fire and near total loss.
Lastly, I strongly disagree with the sentiments expressed advocating that we should only primarily rely on pensions and/or social security. I think those are patently bad, and unsustainable ideas and here's why. The average American individual will contribute $312,000 to social security over their lifetime. Just a few years back, ours will be the first generation to get less out of SS than we will put into it. Consider that the retirement age is at 67, that's a hard pill to swallow.
Now, as a math exercise please consider the following. When a child is born, assume for the first 20 years of that child's life, the parents of said child contribute $100/month to a broad market index fund brokerage account for that child. Once the child turns 20, they can take over the $100 monthly contribution for the next 40 years. For those that are still following, this is $1200 a year. Assuming the market average return is 7%, that individual will have just over $1,000,000 by the time they turn 60. The total amount in principal that was invested for that individual, was $72,000. Compare that to Social Security for example, and it's stunning to see the difference compound interest and properly harnessing the power of the American Economic engine. For 3x less principle, you will end up with 3x more in retirement funds. And this is assuming only $100 and not including if folks go on to start careers with companies with 401k's that match contributions.
Pensions are dependent on a large company continuing to stay in business, and social security is dependent on fewer and fewer workers supporting more and more retirees. It's mathematically unsustainable.
For folks that think $1200 is too much, please consider that the average tax refund for the average American is around $2700. I feel like I have a lot more to say, but this is already rambling on far longer than I had intended. Likely this comment will go unread, but if you made it this far, I'd love to hear your thoughts.
Many good points. Sad to see this story is scaring so many people away from investing properly.
I was 40 when the 2008 market crash occurred at which I increased my 401k contribution from 10% to 15% knowing this is just a blip in the overall ascent of the stock market. For those who panicked and pulled their money out of the market - my condolences. For those who embraced the horror and held on tight here is your reward - as of 10/25/19 the S&P 500 has surged for more than a decade. Since the recession low of March 9, 2009, the S&P has rocketed from 666.79 to 3,022.55 today. That’s a gain of 353% in 10 years. Talk about building wealth $$$
50% crashes are not an issue if they're followed by 300% booms. Volatility is not risk.
It came back!
Do you know how index stocks work ?
But now, with fidelity or Vanguard, even in a 401K plan, you can do index funds, Total Market or S&P 500 index funds. One can avoid all those monstrous fees in index funds. I dont think all firms have index funds with law fees though, unfortunately
I have index funds in my 401k with fees of 0.02% (still robbery if you ask me!)
@CBS - Another vote for a 10 year follow up from the same people in this story
2009 was a brutal. Hopefully we don’t see a repeat version any time soon.
Tim Watterson No,it's not going to repeat, it's going to be a lot worse.
The Amurikan empire is falling apart!
Wake up!!!!!
Well on the bright side, for the people young enough to hang on. Their 401ks look good these days
Invest in bonds as you get closer to retirement!
Equities to make money, bonds to keep money.
ready for the next one? Its almost here....
People dont see it
IT HAPPENED DIDNT IT? I'd guess you were right!
Why do 401K holders invest in funds and pay fees , the muppets running your fund still make money when you are losing , why do they not simply buy stocks that they can evaluate and understand ? They could then avoid tech stocks when they are overpriced , or move into Treasuries if they become fearful. To have lost 40% during the past year , they must have chosen to invest in tech heavy funds. Like everything else in life , the more you pay attention , the better you are likely to become at managing your pension pot.
Thank GOD I live in the UK where our government takes care of us! Hope you all get a job soon over there.
@David Watson UK= Communist country
401k's are a joke!!! I don't know anyone that has retired comfortably putting money in there.
Watching this video today 10 yrs later and it makes me laugh.
I see adults who are in a state fear.
I am a 22 year old who just immigranted to America, New York to be exact, and I'm looking for an entry-level job. I've been on the search for a job for a month now. I just want a simple job in retail.
I see these old videos during the Financial Crisis of the late 00's, and I think to myself in disbelief that adults who are in the height of their careers have fallen face flat on the ground. Because for me, as someone who's still young, I thought of grown ups as people who know everything and can solve everything, while children like I was, were just vulnerable without parents.
I just hope in the inevitable next financial crisis that the government doesn't bailout the banks and let the free-market heal by itself at the same time, that would teach the banks a lesson. The U.S. Treasury did bailout AIG and made a profit out of it, because found out that if AIG would completely fall, since the company was everywhere, it would be much worst.
I actually wish that the profits from the bailout of AIG was used as assistant funds for those who got laid off from their jobs like what Iceland did.
Amanda, would you be interested in providing full disclosure? Do you act as a fiduciary to your clients? How are you compensated? What percentage of your clients do you NOT recommend a whole/universal life policy or annuity?
this still echoes today as much as it did back then
This is so fucked up, that's why i don't put my money in 401k anymore, it's all a joke
agreed! now i put all of my money in NFTs, cryto, and kickstarters.
Best retirement vehicle LOL
The 401k lobbyists likely don't have 401ks of their own.
They don’t. They use what the banks, congress, wealthy use.
@@SuperDeezy15 False. 401ks are a tax shelter. Can almost gaurantee they have a ton of money in them.
@Ryan BI don't think you understand what a tax shelter is. A tax shelter is a financial arrangement used to minimize or avoid taxes. Since you don't pay taxes on 401k or retirement accounts for years and the money invested in them are allowed to grow tax free 401ks fit that definition. It reduces your tax obligation for that year and many more years to come hence it's a shelter.
Never trust any 401k promoters. They are the 20th century and 21st century promoters of purchasing SPECULATIVE INVESTMENT STOCKS ON MARGINS KNOWN AS BORROWED MONEY which caused a lot of poverty duing the Great Depression. And now they are doing it again, this time using the good ecoomic years and decades to hide the negative evil side of all 401k retirement investment programs.
@Ryan B So because you can only put 18k...actually it's 19k makes it less of a shelter? Jesus the "logic" some of you guys use is astounding. You do know that you cobble up multiple different tax shelters to minimize your tax liability don't you?
Also the overall yearly contribution limit is $56,000....that total would be your contribution plus your company's contributions. If you're a business owner you can funnel 19k as an employee of your business and 37k as a company contribution. There also tons of other strategies used to shelter even more money yearly in a 401k when you combine it wit a SEP IRA like Mitt Romney did and was able to build a $102 million balance.
Oh and one more thing. The 401k was originally a tax shelter loophole an accountant discovered when trying to minimize the tax liability of his high salaried clients. Look up the history of the 401k.
It's not a problem to be ignorant about a subject. Lord knows there are plenty of things I'm ignorant about. It's when you're arrogantly ignorant that the problems come because you stunt your knowledge growth.
54 yr old, career woman that said she worked her entire life, no kids, and has only $80k..... Umm lady.... you do deserve what you are getting... Hope you enjoyed driving that fancy car...
She might have to pay student loan, mortgage, medical bills (herself or her parents'), or other life necessity. You and I don't know her, but based on my experience (on myself and people that I know of), women who choose single life usually come from broken families and have really rough childhoods. Women who wanted an easy life usually got married early, when they were still young and pretty, to the richest men they could get. They know as they were older, the chance to get wealthy husbands would be diminished.
All the people that stayed the course doubled their money twice now. Anyone that just stayed in until 2010 got all their money back.
That guy who was trying to sell 401k’s seems to be very ignorant.
So nearly half of savings is down. Then he said his down 140k. Fk thats low if he only has around 240k.
2nd woman 54yrs old has 88k that went down to 50k plus 4k that was showed up.
Save your dollars and go to Costa Rica or Mexico to retire.
6:26 exactly. good growth mutual funds are a safer option. growth - aggressive growth- growth and income- and international growth. diversification is key.
That's why all ways have a budget
Just like the guy said, it’s an economic cycle. Had they waited it would go back to where it was
Easy to say this in hindsight
This is incredibly hard to watch. I entered the workforce around 2010 so I didn’t live through this.
David Watson right, and that’s fantastic but I’m sure a lot of people weren’t as lucky.
So where did all the money go?
Retro Nostradamus speaks: And now, from the future, 9 years later, the stock market has tripled. Economy is in overdrive. Unemployment is at historic lows. Thanks to that I retired last year at age 61. When things go bad everyone thinks it will never get better. But it always has. Of course, when things are going good everyone thinks it'll last forever. Which it hasn't.
EXACTLY!!! My dad was ready to cash out in 2009 and I told him to not touch his 401k account and to increase his contributions if he can afford it. Since 2009, his account has increased over half a million and he’s VERY happy.
The younger generations don’t trust Wall St. to make them money but trust in a scam like Bitcoin, it’s hilarious
Remember, losing jobs is one thing. That's a loss of income. But when you retire, you don't have to liquidate your 401k holdings immediately. If these people could have held on for a few years, they could have gotten back to where they were at previously.
If your 50 or almost 60years old and you lost more than half of your 401k. Thats fucked up
Wait it actually did come back not only that it would have grown 400% more
yup bit what to do for those 5 years until the recovery?
Whose here because of Interactive Traders Course 🙌🏻😃
The people behind this shit are still at it today, nothing will change
I wish they did a 10 minute update.
What happened to them 10 mins. after?
Adam Johnson wha‽
idiot
I don't see pain in these people's face. I see greed.
You need an eye doctor then.
I sympathize with them. But if you are 60 and lose 50% of your 401k in a market crash, there is something seriously wrong with your asset allocation.
And yet many today people are advocating 90%+ equities because bonds are so low performing.
It’s even more disappointing is the US government does nothing
people want reward without the risk
Antonio Renteria exactly lol
For 30 years of employment. They want a pension, not a gamble...
Why borrow from yourself? It keeps the account tax advantaged. Do you pay taxes on loans? No. Why do they charge interest? Depending on the product, the collateral held by the financial institution in a collateral account is gaining the same amount of interest being charged and then put back in your account gaining more interest. So, if it doesn't level itself out, you're still gaining more interest than paying interest. Don't say the interest rates are high, because they are not.
this happened in 2019? Man, this is tough. 30 years in stock market job and she had 4,000 in her retirement account. What is missing here.
2009, at the depth of the Great Recession.
a 401k is only an account type...volatility with people's account balances were due to the investments (mutual funds) held within the accounts. people were ignorant of 1) what they actually owned, 2) risk of owning any specific fund mix. Investing fees is a separate issue.
This film is so important, we included a link from our website, My Self Sufficient Plan, to help this video get more exposure.
Why would you blame the people if YOU GUYS are the ones in control of the account?!
Cause you’re investing. Nobody can tell where the market will be. You choosing your investments is on you. The problem is the expense ratios eating away at your returns. People just need more education on the subject.
I would be curious to know how many of these older investors are in equities. If you're nearing your retirement
But who is going to give these folks this perfect 20/20 hindsight advice?
The Banking/Finance/Investment sure as heck will not.
They are fighting constantly against any efforts to give consumers extra knowledge on how to better manage their 401ks.
I rolled my 401k in to an annuity; "Man makes plans and Murphy laughs" -- God help me to make some sort of right decision in this life time...
Annuities tend to be a waste of money with lower returns than you could get on your own. Traditional IRA's are pointless to anyone making over $69K a year because you can't deduct your contributions. There are many options out there but those 2 are not too useful for a saver/investor making above average income.
How are these people so highly invested in equities at their age 60+...
I forget the 401k is young, in its 30s right?
So it could happen again
I’m 39...it might not be there when I’m 65
diversify your investments. Im dont like 401k as much but since my companie matches it I dont mind the extra money they are giving me, but will never only rely on 401K as my only investment account
Ed XO love your answer buddy
Some people I know are 100% dependent
superplan89
What could happen again?
My 401k more than doubled since this video was made.
And you have access to you 401k at 59 1/2.
Many of you are truly ignorant about the 401k.
A 401k is not an investment. It is a vehicle for investments. The stocks and bonds are what crashed, and if you had a brokerage account it would be no different.
And for you to say it "might not be there" doesn't make sense. Are all businesses going to close shop? Are people going to stop buying things altogether? If not, then stocks will likely exist just the same as they do now.
Maybe if they work 10 more years??
YEA RIGHT!
This feels prescient. 2024, let's see how many souls are crushed in the next 6 yrs...
But Congress was okay
lol i tried to withdraw my 401k today and there are a bunch of hoops to hop through. I thought this was Merica??!!!
I’m 49 and I have about ($190k) liquid in savings which I plan to put towards becoming a homeowner, but based on the current high prices on real estate, do you suggest I hold from buying and look at stocks instead?
Yes of course, housing crash is coming. If you're thinking about investments to earn huge income while maintaining the ability to access your money and safety, so you don't get caught in a market decline, a financial planner can come in handy
True, aI always tell people not to dismiss the importance of advisors, until being burnt by their own emotions, no offense intended. Amid covid-19 pandemic crash, I needed a good strategy to grow my portfolio, thus I consulted the service of a true market strategist that helped to rejuvenate my $700k portfolio, boosting its return over 240% as of today.
This is why I've entrusted a CFA with my investmnt decisions. Many underestimate advisors until emotions lead to losses. My advisor crafted a tailored strategy aligning with my long-term goals, guiding entry and exit points for the equities I focus on. This has grown my portfolio to over $850k.
Sonya lee Mitchell is theconsultant I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Sonya lee Mitchell is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Most of these people took high-risk funds at the time of the big crash in 2008 and we're in their 50s by the time you reach 55 you should have considered moving the funds in your portfolio to take less risk because you're too close to retirement and cannot gain it back... being greedy it's a quick way to lose your money slow and steady wins the race.
I always thought a "Where are they now" episodes of years past would be awesome. Hopefully everyone in the video were able to turn their lives around and theyre doing great now.