pkcrafter wrote:avalpert wrote:pkcrafter wrote: Having said all this, I really wonder if these investors are removing money because of downturns or just because they needed some money and didn't have any other funds--nothing for short term goals, nothing for emergencies.
Or because they assumed it was part of severing ties with their previous employer and aren't aware of the possibility or benefits of rolling it into an IRA.
Yes, that too. It's really surprising how little help some companies provide employees on 401k rules and procedures.
Paul
I was asked to serve on my company's 401k committee by virtue of being the only employee who has ever requested the plan documents. My reward was to be told essentially never to tell a fellow employee anything about the plan -- I need to send employees with questions to HR, who sends them to Fidelity, and of course by that point the person has lost interest in the simple piece of information that he or she wanted.
That said, this article reminds me, yet again, of one possible counterargument to the "low returns going forward" argument, and that is that there just aren't that many people interested in being long-term investors, so in theory, those who are interested should continue to be able to demand risk premiums on that invested money. A period of flat returns will further discourage the vast majority of people from investing -- why not pay down the mortgage, or simply spend the money?
I work with fairly sophisticated people. Yet from the broad overview I get of our company's plan, I know that many of my co-workers don't invest in the 401k, many have never left the default money market fund, and I myself own a notable percentage of the total amount invested in bonds across the entire plan. I have told a few co-workers about the Backdoor Roth IRA, and they have then had to educate their CPAs and tax preparers about the procedure before they can implement it. It's a sad state of affairs.
Like one poster above, I'm happy to have been able to help out my younger brother, who is socking away money in his 401k and Roth at age 22 -- he's going to be in great shape when he's my age.
NightOwl
"Volatility provokes the constant dread that some investors know more than we do, making us fearful of ignoring such powerful price movements." |
Peter Bernstein, "The 60/40 Solution."