Comments on: Retirement Planning: Do you still rely on your Pension plan?

by: Chris

Sat, 22 Jul 2006 16:12:41 +0000

In most cases, you don’t want to leave money in your 401(k). The choices available to investors who are seeking larger returns are very limiting. After leaving a job, it may be better to close up the 401k and roll it over to a Traditional IRA where most of the market will be available to you.

That being said, even if you were to leave your money in a 401k, the company that administers your 401k, in my case T. Rowe Price, doesn’t own the shares in your account. They do hold the certificates, but as proxy for you. If they were to go under, I don’t believe they have any rights to your assets, period.

Even though we risk the market swings, the pension is just as vulnerable as much of their assets are in stocks and bonds. They also buy insurance annuities and mortgage-backed securities, which is also relatively easy for small investors to gain access to.

I would always rather be in control of my own portfolio and view the pension as a bonus, just like the rest of you. At least I’ll have no one to blame but myself if my portfolio is underfunded.

by: Dan

Fri, 21 Jul 2006 00:42:20 +0000

I present a somewhat contrarian view in my article The End of Retirement which is based in part on an excellent series on PBS.
It turns out that the very concept of retirement may be obsolete - hence my suggestion that preparation for old age should go beyond mere financial planning.

by: Jason

Thu, 20 Jul 2006 16:00:15 +0000

In a discussion once with my Dad, I warned him about relying on his pension plan for retirement. He in turn warned me about my 401k plan, asking “How do you know they will give you that money when you retire?”

Now my father doesn’t have much knowledge of investing or 401ks, but his point is a decent one to follow up on anyway. What are the risks with 401ks, IRAs, and other investment vehicles that are replacing pensions these days?

What if your broker goes under? What kind of insurance do you have for getting paid? Will Uncle Sam back us up? Will they do a better job of backing us up than they are doing with pensions?

I really don’t know the answers to the above and would appreciate anyone who has any insight into this.

by: Nick

Thu, 20 Jul 2006 15:20:13 +0000

My company has a pension plan, and I have no reason to doubt that it will still be there when I retire. But I’m not counting a single penny of that pension plan toward my total retirement savings. If it’s there when I retire, great! If not, I won’t be the least bit disappointed or unprepared.