Fact and Fiction Blur in 401(k) Fund Story

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Over the past 10 years, many mutual funds have not even kept pace with inflation. So, the way I look at it, is mutual fund companies use our money/investments to peddle influence and keep control. By example, Since 1999, a basket of domestic U.S. stocks did not even return negative 0.5%. That is even worse than the 1930's.
I would highly recommend that 401(k) investors always have their first dollars invested in cash/stable value funds and then participants can doversify at times when the markets tank.
We have to be contrarian investors at all times. Otherwise, institutional investors will leave us without a shirt.

DNM of TX 2:00PM January 12, 2010

Service providers are necessary because the rules for plans are so complicated that no employer can comply with them without specialized help. I've been working with qualified plans for over 20 years. It's a constant struggle to keep up with all of the rule changes.
Yes, some service providers charge excessive amounts for the services they provide. Unfortunately, most employers don't understand enough about the plans they sponsor to know what services they need. Some service firms have perfected the art of hiding the level of their fees so that most plan sponsors don't have a clue how much the plan really costs to operate. Other plan sponsors don't care what it costs, as long as they don't have to write a check for it. The DOL's proposed fee disclosure regulations would have helped, but they got caught up in the politics as the new administration stopped regulations in progress and decided to put it on the back burner while they focus on the investment advice regulations instead.

pensiongeek of TX 11:46AM January 12, 2010

Well, will the consequences reap less than 2%? Put the govt. in charge and you won't get a 2% return. If future retirees get social security they will never get the amount they put into it or the amount they could have had if they had placed the same amount into a savings account. In fact the govt. has spent every penny in the Social Security Fund and they will spend every dime of your 401k. Once 401k's are handed over to the govt. you will never see it again. They are crooks,legalized mafia,pure and simple.

riffenberg of GA 2:23PM January 11, 2010

"Stevens and a lot of people make very good livings off of 401(k)s and similar employee-based retirement programs. Through fees, investment management charges and administrative expenses, the investment industry generates billions and billions of dollars each year from employee retirement funds."
Why EXACTLY is this either necessary or desirable social policy? Isn't it merely a situation where money saved by workers is being systematically transferred to corporations on a very large scale?
As for how well 401(k)s "work" for funding retirement, how do we know? Not that many people have yet worked a career under these plans (first invented in 1978 and slowly ramped up in the eighties) AND lived through retirement on their 401(k) without running out of money before death. Twenty or thirty years from now you may "know" how they work---with a large body of actuarial data from real-life experience. As of yet, no one knows.

Muser of NM 2:17PM January 11, 2010