Dear FRONTLINE,
I am a 54-year old female, who worked all my life in human services. Our pension was transferred to 401K some years ago. I still have NO idea how I'm invested! I do not understand finance, except that I know I will not be able to retire EVER; I will have to die on the job. Considering that my energy, health, and drive are depleting even now, I can't imagine working until 66 - a pipedream of Social Security, not reality for me.
I raised a child alone after being married only a few years. I cannot claim my ex's soc. sec. (which would be much more) so I will be living on peanuts. My near and distant future looks bleak,lonely, poverty-stricken, and one of sickness without insurance. All I feel in regard to aging now is terror.
Allentown, PA
Dear FRONTLINE,
Your program was great! I hope there is a repeat of it.
I worked for Pan American Airways and what happen to the United Airlines people happen to us. Most of the people lost their jobs. Some were picked up by Delta Airlines.
I am 65 years old and looking for employment. Its a joke when they interview me for employment in a office.
My pension is small due to the fact that Pan American Airways borrowed from the pension fund and the government allowed them to do so and the airline never put the money back.
I had to take my social security to live on as well.
My advice is save your money and I hope Congress does something for the people in the future.
I do hope more companies hired seniors. We are good workers and still look pretty good.
New York, New York
Dear FRONTLINE,
It is unfortunate that the older Boomers are caught in a web that is not their fault. No one predicted the demise of pensions. They were truly screwed by the new system. If you are younger than 45, it's easy to say that they should have saved more. But no one saw this coming.
One of the most important experiences I had as a young person was to witness an older couple come into my store in 1973 and tell me they couldn't afford a 10 cent newspaper. They explained that they were retired and 10 cents extra was not in their budget. They did not have a car any more and were not able to visit their grandchildren very often. I swore that I would never have to live like that.
I started saving the next day. And learned about how money works. I like investing and it has made all the difference. I retired at 51 and have started 3 very small business so I don't have to touch my savings.
It is the way the future will be. I expect I will have to continue with my little businesses until I am 70. Maybe then I will have enough to really retire!
Marilyn Sweet
Boulder, Colorado
Dear FRONTLINE,
I hope that corporate 401k employee contributionlimits are raised to match the allowable self employed limits of $ 44,000 plus. It is shocking that so many people are saving so little and do not study their financial options in a more serious fashion.
I am a financial professional and am not expecting to retire / I am 63 / I think stockbrokers, financial planners shuld be on educational tv explaining our various products to the public. People are too taken with do-it-yourself projects with inadequate training.
nancy lynn
boca raton, florida
Dear FRONTLINE,
I stumbled upon Frontline last night while doing my usual channel surfing. And as usual, I could not change the channel. I then went to this website to read more.
There are a few things that amaze me about what I heard on the show (and some of the comments I read on the board).
First, I don't know what I am (born in 1966 -- am I a baby buster or a gen xer - who really cares) but I have always known that I would be responsible for finding work, making money, saving money, etc. All of my grandparents who lived beyond 65 worked into their 80s. They didn't want to do anything else. They worked not because they had to but because they wanted to.
In a way, I think that the concept of retirement is simply some perpetuated icon, a symbol of what we'd like to experience but when faced with it, we don't want to experience. Every relative of mine who has retired in the recent past has complained incessantly about being bored and inevitably, they have gone back to work. So all this talk about there will be no retirement as we know it -- who but the very few very rich have ever known true "retirement?"
Second, I find it amazing that there are people on this discussion board who actually think that the show was a "hatchet job" and that PBS maintains its liberal bent. I found every part of the show totally unbiased. In fact, if anything, it was a fair and balanced approach toward the problem. Mr. Hamilton is far from a liberal; the same can be said for Mr. Bogle. Yet both these very rich, very conservative men point out failings that need to be discussed.
The "failings" of the 401K system permeate everything and everyone -- from a government who created the system as a supplement to traditional pensions to individuals who don't choose to educate themselves or participate to companies who disband or freeze traditional benefits programs to the economic system which has enabled people to change jobs, sometimes not so much at their choosing but at their necessity. There are no answers to this dilemma, except, sadly, as Mr. Bogle stated, that American taxpayers will once again have to bail out fellow Americans from another financial crisis.
I took a lot away from the show and the information on this site. Perhaps the most useful information was something not said: if retirement changes and people continue to work well into their 70s or 80s, their formulation of assets on which to live must change for 401K/traditional IRA distributions are predicated on tax deferral and there is an assumption that my tax bracket at 60 will be lower than it was when I was 40. If I continue to work, my tax bracket will be higher; therefore, my distributions will be taxed higher and I will have less disposable income. Food for thought: Roth IRAs offer tax free distributions and annuities allow for parsing contributions and investment monies to reduce tax implications.
There are solutions, but one has to spend a little bit of time learning. Thanks to PBS for inspiring me to reeducate myself about my retirement.
Frank Stoffers
Boonton, NJ
Dear FRONTLINE,
There once was a King who wanted to know all the wisdom of the world. So he sent out his brightest scholars and scribes to search the earth for the wisdom of the world and bring it back to him in written form. After a time had passed, they came back to him with volumes upon volumes of wisdom. The King said this wasn't good enough; he wanted the information condensed. So, they went back and were able to cram the information into one book. They came back to the King, but still he said this wasn't good enough. They needed to simplify the information. Thinking they had finally completed their task, the scholars proudly presented the King with a chapter summarizing all the wisdom they had gathered. "Too long!" roared the King. "Make it shorter!" Exasperated, they took some more time and finally presented the King with one sentence that summarized all they had learned. When the King read the sentence, he nodded with approval...
"There is no such thing as a free lunch."
Feed a man a fish dinner and you fed hime a meal. Teach a man to fish and you fed him for life.
Financial Education about how ones assets grow, what rights they have with those assets to create more wealth without encumbering tax burdens is an education worth learning.
It is an education worth paying for and practicing. You will not find it promoted in the media. That is where the change needs to occur.
John Beidle
Webster Groves, MO
Dear FRONTLINE,
your story did not expose the full ramifications of this problem in that you did not investigate the status of workers (government employees, teachers, fire & police personnel) insured by state pension plans. Many states have opted not to contribute their share, leaving these plans underfunded to meet the actuarial projections. Also, because of current federal law, a significant portion have become ineligible to receive full social security payments - even if they would have otherwise. Lastly, there is no agency available to bail out these workers as there is in the private sector.
DES PLAINES, IL
Dear FRONTLINE,
I appreciate the effort it took to produce this program, but with all due respect, I think you missed the mark. Is the abuse of pension plans by corporations unfair to workers? Of course it is. But that and a dollar will get you a cup of coffee. It is vitally important that workers provide for themselves in their old age. Depending on others for something this important is incredibly foolish. That is the most important point regarding 401(k) type plans; you own it.
With regard to problems associated with 401(k)s, rather than provide a real service by educating people you play up the hard-luck cases for the drama it provides. You pass off investing as an opaque endeavor which the masses can't hope to penetrate. How is "maintain a diversified portfolio" (e.g. 60% stock index funds, 40% bond funds) rocket science? It's not. You do people a disservice with your hype. People who have such a portfolio did not lose 60% of their investments in the 2000-2002 downturn. They lost 10 - 20%, which they have since made back and then some.
One of your experts claimed, I believe, that the range in investment performance in his 401(k) database was from 4% to over 30%. I'm assuming he meant annualized (i.e. 4%/year when averaged over, say, two decades). The people who made 4%/year put all their money into a money market fund; a no-no. You should have explained this. And 30%/year? Averaged over 10 or 20 years? a) I don't believe it, b) even if it is true, that has to be so few people that using that statistic is misleading.
Absolutlely most important of all; save as much as you can and start as early as you can. This is complicated? Yes, some people can save more than others and some endure real hardship. But for the vast majority of middle class Americans, anybody who doesn't make saving their number one priority has only themselves to blame when they don't have the money they need in retirement. And, as always, the frugal ones are going to have to bail them out (higher taxes, means-tested Social Security, etc.) A bigger injustice than that perpetrated by the Uniteds of the world, IMHO.
Yes, it appears that a crisis is coming. One that could have been (and still can be for younger people) avoided with common sense. You had an opportunity to provide a real service by providing some remedial education and you blew it.
Michael VanLysel
Madison, WI
Dear FRONTLINE,
An incredible claim regarding 401k rates of return was made in the middle of the program: The 401k's of the top 20% of salary earners average 30% return.
This is an absolutely astounding rate of return over a multi-year period, yet it went completely unchallenged and not examined in any depth. Professional money managers do not achieve that rate of return consistently, and I find it difficult to believe that the 401k's of those in the top 20% of salary are achieving anywhere near that return on a consistent basis. Just $2000 per year invested at 30% accumulates to $1.6 million in 20 years.
How about adding a little credence to the story by explaining the statistics and perhaps telling what is different about how these accounts managed to achieve such fantastic returns.
john ebert
st. louis, mo
Dear FRONTLINE,
I am an Enrolled Actuary and have worked with retirement plans for over 20 years. A significnat point made in your program is that a great majority of individuals do not have the expertise to husband their investmants and reap the yield necessary to accumulate sufficient funds for their retirement. Though I am mathematician specialized in financial projections, I am not investment savy by profession or by avocation so am myself lacking in this respect. I was delighted by the lady you interviewed and said "I've made all the classic mistakes with respect to my own 401(k) situation."
Until recently, I had never personally appreciated the advantages of the monthly income provided by a defined beneft plan, even though I have been working with these plan and certified their funding almost my entire professional career. Now, close to "retirement age", I have only a small defined benefit due to continued mergers and acquisitions of the companies that have employed me. What might have been a meaningful monthly benefit has been slashed each step of the way by the corporate buy-and-sell activity. All of the "cutbacks" are totally legal.
I now sit with a worksheet and use my own professional skills to model my financial future, based on the usual assumptions as to amount of savings, investment returns, life expectancy, and so forth. The future is filled with uncertainty. I have been forced to assume the risk of outliving my own savings. Without the risk pooling such as one finds in a defined benefit plan or under Social Security, it is each man for himself, sink or swim. And some of us will sink. The law of large numbers will require it.
Randy Friend
Dallas, Texas
Dear FRONTLINE,
I have worked on wallstreet with the big investment banks and law firms in the past and the one thing I know for certain is that they are are all (with only a few exceptions) a bunch of crooks. If most Americans had seen the kind of manipulations these guys cook up and how hard they work to defraud the average joe - they would agree with me that the country would be better off if we put every one of them behind bars.
Union guys - if your company files for Chapter 11 - STRIKE!!! and never come back to work. The only one getting ripped off is you (and your buddies that just retired). The management, banks and lawyers are going to clean up.
Mr and Mrs America - financial advisors only have one goal - getting rich off of you. So please, the next time one of these snake oil salesman come around offering to sell you a fund or stock, remember that the only patsy in the room is you. Yes, you might be lucky and make some money - but that is the rare exception. You could also get rich going to Vegas too.
The best advice I can give you is to take your money and buy bonds yourself (no middlemen) from the government. (And yes - save alot - you'll need to put away about 20% per year for retirement) If average Americans just did that, they would be far better off than they are now. Sure, you don't make huge returns - but you won't be making someone else rich instead either.
David Barker
Redmond, WA
Dear FRONTLINE,
The Frontline program from last evening was good, but what left out was the roll that the unions have had in the failure of the current system.
As a retired United employee, I to lost a third of my pension. I fault the IAM, the union representing the mechanics, which gave its members a failed ESOP and allowing the company to under fund the pension plan with nary a wimper until to late.
Workers and the unions that represent them need to be more aware of the changes that are happening in the global work place and adapt, or there will be more Uniteds, just look at the problems at Ford and GM. My advice. Pay yourself first. I did, and I'm OK.
Nels Nelson
Fremont, CA
Dear FRONTLINE,
Great Program. This program sent an extemely powerful message. I hope and pray that your message reaches the younger workforce.
Allen Williams
Germantown, Maryland
Dear FRONTLINE,
I found last night's Frontline very informative, very disturbing. If one looks beyond the foreboding music and corporate malfeasance that are trademarks of Frontline, there is still the very real fact that most American workers are on their own to plan retirement and few have good tools.
I'm a partner in a small business with 30 employees and I'm concerned with how few take full advantage of the 401k program. Even among those who do, it's shocking how few have made investments - most leave the funds in cash earning less than inflation!
I will post the links to your excellent web site and urge them to use the tools there. Thanks for this timely report and the many links.
Peter Saucerman
Sacramento, California
Dear FRONTLINE,
Dear Frontline,While I share your concern about the "retirement crisis", all hope is not lost for the 401k. The problem is not with the 401k concept, but with the execution.The traditional 401k has the following problems for the average plan participant: Too many choices; High (often hidden) fees; No advice; and, Poor diversification.All of these lead to the problems you addressed of lack of participation and poor performance for those who do participate.But there are new options for plan sponsors and participants. Some 401k providers now offer a different approach: Limited choices dependent on a participant's risk tolerance; Low-cost institutional funds, with full transparency; and Advisor-designed portfolios that are fully diversified.These new plans offer participants a much better chance of avoiding the fate of many of the people you profiled. The 401k is not "fatally flawed", it just needs to be improved. Thankfully, there are now better options available.
Scott Pritchard
Asheville, NC
