Monday, February 21, 2011
Don't Know Much About 401K's
Jezebel: "Living in a capitalist economy means that one's life path is largely dictated by getting money, spending money, and saving money. Most people are plenty good at spending money, and some people are pretty great at getting money, but few excel at saving money, mostly because saving money is boring, not fun, and not simple, but oh so necessary.
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10 comments:
This is an amazingly useful article. For once I understand and am not afraid of all of the financial jargon. Hopefully we will get to discuss this further in PTM Business Practices when Jay Mahoney comes to talk to us. As most of us will be freelancers or with companies small enough not to have a 401k, it would be wise of us to start an IRA now. Now how do the investment options work? Do those exist with an IRA? I know there is a more complicated side to all of this...
I agree with Cody. That was surprisingly simple english. I am concerned with what that means for freelancers and self-employed's. And if we need to classify ourselves as one or the other. If there are conditions that determine which we fall under? The article makes it sound like we should set up some IRA's asap. I look forward to listening to Mr. Mahoney already having a vague idea of what he'll be talking about.
I think my problem with money is that I don't want to pay attention. I know that I need to and one day I will be very affected by how little I know, but right now I have trouble understanding what it all means. I hate talking about money also because I feel like I always come off sounding spoiled which is not what I mean at all. I guess since I've grown up in a household where my mom's response was "you're not paying for it, you don't need to know how much it costs." I think now that attitude as hurt me because I have no concept of money and how much spending is too much. I think this article definitely helped me understand more about what terms mean and I think also just being in college now and starting to learn how to budget is extremely valuable in my life.
I too enjoyed the simple language in this article and appreciate the applicability of IRAs to freelancers. I'd be interested to know about what happens if somebody with an IRA begins working for a company with a 401k plan, although it seems like he/she would be able to keep the IRA.
With regards to investing and managing money, the CFO at my high school stressed the importance of beginning an IRA or the like at a young age, e.g., just out of college. If you decide to contribute a set amount to retirement each year, if you begin in your 20s, by the time you're in your 30s the annual interest on your total investment will statistically already be greater than your annual contribution.
I'm sure there's a plethora of information about this out there; I hope that I take the time to look for it some day.
I'm glad to have come across this article, I always thought I knew what a 401k was, but now i definitely understand. My parents have included me on the surface of their financial decisions. I have a good sense of a dollar and how to save wisely. My mom made me read an article called "The Millionaire Next Door" and it talked about how the family with the expensive car, big house, and new clothes can't necessarily afford the vacations or expenses that the family with the average house and used car. Families who live under their means and save first end up worth more in the long run. My parents both began saving for retirement out of college. I'm grateful to parents for teaching me the value of saving while growing up.
Every single time someone brings up 401ks or retirement plans I hide under my bed. It is difficult for people my age to think about savings. I know that it is exteremly important and that it will be a big savior when I get older, but it is difficult (as the article says) for people my age to save money when they are living from paycheck to paycheck. I would really appreciate an article about that to go along with this.
I worked at a 401k company over the summer and the amount of people who don't know what a 401k is or how it works is actually staggering. Even CFO's and accountants for major corporations have little or no clue how the 401k market works. Everyone's fear and confusion about retirement plans is more than justified, as the industry has in the last several years been used by big banks to make more money than they should on plans. Things like timely fee reduction and plan reviews are required, but often times a Wells Fargo plan is reviewed by one of their representatives, allowing them to scoot around giving companies a reduction in fees. Stuff like this happens to a vast number of companies in America. Surprisingly, most people would rather just pay the extra 20% in fees than pursue a more lucrative plan.
This article was welcomely approachable. the language often surrounding discussions about 401k plans often contain language which i have trouble processing with out some thought. I think that this may be largely the affect of my age, and the fact that even older members of my immediate family do not spend much time discussing 401k plans. My family however does taker care to consider purchases, and is frugal when necessary, without being stingy in situations which warrant expenditures. I consider myself to be fairly good with money, but this article has made me want to examine my financial future with a bit more scrutiny.
This article was great in it's simplicity. I never really understood the difference between the various retirement plans. This article just laid it out plain. I would like to know what kind of employer would have a 401k in theater though. Since most of us are most likely going to be working freelance it seems we would be looking at an IRA. Others said they felt like hiding when these kinds of savings plans are mentioned, and truth be told after college I'm more worried about paying off my student loans than saving for retirement. However as a member of a family that went through some dire financial straights, I understand the value of saving because you never know what might happen. When you might suddenly need that money. So I am a fan of these plans and at the very least a savings account.
For once, someone from the financial world wants us non-business types to understand how to make the most of our money; cheers to the author for making it so simple and clean.
Having been into college for two years, I know how easy it is for your money to quickly disappear once its in your hands. I'm working on creating a solution to this for myself, and this 401K/Roth IRA sounds like a good plan. Especially since odds are social security wont exist by the time I reach retirement, I need to find a way to fend for myself. I honestly don't plan on working until the grave.
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