7 Reasons Job Hoppers Are Worse Off in Retirement

Magazines like Kiplinger's and Money, and financial advisors used to have retirement charts and calculators that assumed 12% returns. Then they assumed 10% returns and now they assume 8% returns. (Yeah, right!)

Real inflation is 7% to 8% per year, according to Shadowstats.com, which provides real information about inflation, rather than the cooked Federal government CPI inflation numbers that substitute hamburger meat for steak when the price of steak goes up, and deliberately reduce the impact of rising costs like of health care (3 times the rate of gov't inflation) and college education (3 times also the rate of gov't inflation) and fuel and food prices (also high).

At the same time, the government has rapidly increased what it calls "Quantitative Easing", which is another way to say, printing money out of thin air to spend, to make everyone else's money worth less.

Also at the same time, the Baby Boomers will be withdrawing their retirement funds from the stock market to cover their retirement expenses. So who's gonna buy those stocks? There aren't enough people below them to pick up the slack.

So where does that put the average saver and investor? At zero.

Paul of CA 9:21AM April 05, 2010

6% is supposed to be a conservative rate of return for a retirement fund. Baloney: a diversified portfolio might get you 3-4% for a good long while - and that includes dividends. All these retirement calculators are suspect.

Hindenburg of CA 12:33AM April 05, 2010

Their used to be an expression in the pension industy: "what starts with F and ends with K and means screw your employees? 401K".

You don't hear that as traditional pensions have gone the way of the dinosaur, but it's still true. Limited and lousy investment choices proliferate as employers try to get free or low cost administrative services. In addition, their restrictions on your money, a lack of protected payout options, etc. Worse, the income is taxed as ordinary income upon withdrawal, unless you take it early and get hit with a special penalty. 401k loans are legalized robbery by servcicew providers (and the government that counts interest you essentially pay yourself as income)

There's no guarantee tax rates will be lower in the future and a good chance they'll go up.

As a CPA, I tell my advisees; put in only enough to get a match, otherwise, open a Roth. The itty bitty tax deduction isn't worth all the conditions employers and the IRS put on these plans.

Greeneyeshade of PA 12:57PM February 16, 2010

I know what it is like to be a job hopper, many times not thru my fault. I was a tool and die maker and many times I was hired when there was more work then the company could handle. When the job was over I was layed off. Luckly I was able to find a stable job and thru a 401K plan I invested heavily and was able to pull off a decent retirement. To those who enjoy job hopping, you'll just have to suffer the consequences.

Neal of GA 10:33AM February 10, 2010