nefertiti-egypt-co-uk

© MJ/TR (´･ω･)

Four in five American workers say that their 401(k) retirement funds and savings accounts haven't reduced in value, according to a CareerBuilder survey. 401(k) savings of American adults aren't being dipped into as much as compared to recent years and more workers are putting their paychecks into savings, the survey reveals.

On the other hand, a study of 401(k) plans has revealed that black and Hispanic workers save significantly less for retirement and tap into their accounts more frequently than white and Asian employees. The study of 3 million 401(k) plans concludes that unless some changes are made some minority groups run the risk of retiring into poverty. 66 percent of black employees and 65 percent of Hispanic workers participate in their company's 401(k) plan while 77 percent of white workers and 76 percent of Asians enroll.

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© o5com

If a recently introduced bill sees the light of the day, then it would drastically limit the number of loans an employee can withdraw from his/her 401 (k) retirement plans. The two senators responsible for introducing the bill are Senator Herb Kohl, a Wisconsin Democrat & Mike Enzi, a Wyoming Republican. The bill is called The Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011 -or the SEAL Act in short.
76 year old Kohl is the chairperson of the Senate Special Committee on Aging. According to him the 401 (k) bill is aimed at discouraging the employees from eating away in to their retirement assets.
The highlights of the bill are: That it would reduce the number of loans that employees can withdraw at a given time, extend the rollover repayment period post leaving a job, allow 401(k) participants to continue to make elective contributions during the six months after a hardship withdrawal and ban products that promote "leakage," such as the 401(k) debit card.

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© Mr. T in DC

401(k) plans have become the dominant retirement savings plans for US workers over the past 25 years. While they have been improved over this time, there are still additional issues that need to be addressed with these plans. There are structural flaws associated with investment contributions, specifically dollar-cost-averaging. It works well if the market is trending up over time but not so when the market in oscillating in a flat range for years, or if the market is trending down.

Because 401(k) plans have been touted as long-term retirement savings plans, most people were led to believe that they should develop a long-term strategic asset allocation with a time-horizon exceeding ten years. However, the portfolio managers who are managing your 401(k) are unlikely to have that long of a time horizon, so that index funds are actually a much better fit with a long-term focus then a 401(k) portfolio.

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