The TEXPERS Blog

The 401(k) generation is beginning to retire, and it isn’t a pretty sight…. Generally, people facing problems today got too little advice or bad advice. They didn’t recognize that a 6% annual contribution, with a 3% company match, is probably not enough. Some began saving too suspended or past due efforts when they or their spouses lost careers.

Others borrowed against 401(k) accounts for medical emergencies or ran up bills too close to their planned pension dates. Initially envisioned as a way for management-level people to put aside extra pension money, the 401(k) was embraced by big companies in the 1980s as a replacement for costly pension money.

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Suddenly, they were in a position to transfer the burden of funding employees’ retirement to the employees themselves. Employees got control over their cost savings, and had the ability carry these to new jobs. THE BRAND NEW York Times on March 3 ran a tale “Making the Most Out of Less” in their Retirement section.

78,000, very little to live on in addition to Social Security if you stop working at 65 and live 20 more years. 2.8 trillion in value, tumbling by more than 40 percent – though Wall Street’s recent rise has allowed these to recoup more than half that reduction. Alicia H. Munnell, director of the guts on Retirement Research at Boston College, said 401(k) plans were definately not ideal for pension, not least because they’re so complicated and many Americans have little investment experience.

“Every step on the way, a significant small fraction of individuals make serious mistakes,” she said. In many corners, there is such knee-jerk antipathy toward public sector employees that the counsel of several third-party observers, to be very careful about mid-game changes to successful defined advantage programs mostly, are going unheeded.

In 2012, the FI part of my profile provided better comes back than stocks or investment trusts. The income or coupon on most FI is paid gross so I try to ensure these are held in my ISA otherwise the income would become taxable. In contrast, there is no more taxes to pay on dividends from shares held outside of an ISA (for basic rate taxpayers). This concludes the three part mini series looking at income. If anyone has other ways they generate income to defeat cash debris, leave a comment below.

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