401k

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Yesterday’s big financial news was about how the DJIA increased it’s previous high mark — set back on October 9, 2007.

Now I’ve always had a pretty large percentage of my “wealth” (it feels silly to use that word) invested so let’s see where I was then and where I am now…

Before even looking into it, I’ll all but positive that I’m not, you know, just now getting myself back to where I was 5+ years ago like the “news” would indicate. I’m light years past it.

Yep, just what I thought…

My 401k balance alone was $65,153 at the end of .

This morning the balance is $148,656.

Enough with the doom and gloom attitude…

It only took an entire year but, finally, this afternoon, I submitted the paperwork to stop contributing to my 401k.

No, no, it’s not due to the recent ups-and-downs on the market and any sort of economic uncertainly.

And I know that I’m not following my own advice by making this move.

But you know what?

I’ve got more credit card debt than I’m comfortable with and I’ve been dancing around that fact for too long.

Fourteen months ago it was a zero balance. Since then, I’d been tap dancing around $25k — and now the finance charges are starting to kick in.

My first manoeuvre was to sell the I-Bonds.

Hitting the pause button on the 401k is the second.

My debts will most certainly fall now.

They’d better.

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Bruce SpringsteenIt’s been a busy week and I wish I’d had the time to do individual posts about these but, well, you know how it goes.

First off, on Tuesday, my 401k balance finally hit the six figure mark.

While this doesn’t really mean anything, it’s exciting sorta like when your odometer hits a nice round number. I didn’t write down what song was playing on the radio at the time, but you know what I mean…

When my old VW Jetta hit the 100k mile mark, Bruce Springsteen’s “I’m on Fire” was playing on the radio. I’m not really a fan of the song or even Bruce.

And the very next time I started the car after surpassing 100k miles, well, it didn’t start. Spent three days stranded in Pigeon Forge, Tennessee.

I blame Bruce Springsteen.

The next thing is that we received the final invoice from the contractor working on the house. The original quote back in May was $33487.70.

Total damage now that they’re within hours of completion (just some paint touch-ups left) is $39212.72.

At first I was floored. But then, after taking a closer look at the breakdown, well, I really can’t complain. Sure, it’s cost us nearly $40k for this renovation but I don’t feel ripped off.

I do, however, feel broke.

Even with a six-figure retirement balance.

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So on Friday a memo was delivered to my desk containing my employer’s annual report summary for the 401k plan they administer and that I participate in.

Amongst the legal jargon and gobbledygook, the memo clearly mentions that plan participants are supposed to receive this annual report, well, annually.

Funny, I don’t recall *ever* receiving it and it’s exactly the type of thing that I’d remember… Doesn’t really matter though…

So what I found most interesting are the actual numbers. It lists out the plan expenses, the number of participants, and the plan assets at the start of 2009 and at the end of 2009.

Why it takes over 9 months to report numbers that would have been easy to calculate on January 2 will always be a mystery to me. Again, I digress…

Some of the numbers were higher than I expected. Some were lower. Actually, it was all pretty eye opening. Nothing seemed, well, what I would have guessed.

So I went back and checked out my own personal numbers on January 1, 2009 and on December 31, 2009. The entire company’s net assets increased at roughly the same rate that mine did.

I did a little better. Just a bit, though.

What really blew me away, though, is that my assets alone make up well over ten percent of the total value of the plan’s assets.

While this certainly strokes my own ego some — as it all but verifies my long-standing belief that I’m the biggest contributor in the company — it also causes me a bit of concern because I have zero say in how the plan is administered.

I dunno — with each passing month it (the 401k) seems like a more and more foolish thing to do with my money.

Now, I know that typical employees never have control over their 401k administration unless they’re the CFO or whatever — I totally get that — but I don’t think that most have as large a percentage “in the game” as I do unless they work for a very small company.

According to the memo, there are nearly 700 hundred participants in the plan — it’s not a small operation.

So, with the employer match a thing of the distant past, the inconvenient account administration on the website, and my newly realized frustration over not having any say in what options are offered in our plan (cause, I’m sorry — some of the options we’re offered totally blow and some of the fees are ludicrous too), well, I’m once again considering dropping out all together and doing it my own way…

Not sure if that’s a smarter move or not but I really don’t like having so little, actually, no control over the options of how my money is managed when I (possibly naively) feel like I’ve got enough on the table to, well, be heard.

PIAC Post Extension:
What really shocks me is how little my fellow co-workers must be contributing — if they participate at all — for the numbers to be so out of whack.

While I’m pretty proud of it, I personally don’t think my 401k balance is very high in the grand scheme of things — especially when compared to some other personal finance bloggers out there sharing their numbers.

The fact that my percentage is so high while my balance is so middle-of-the-road, though, I think speaks volumes, you know, when it comes to the generation X and Y workforces’ thoughts on retirement.

We’re not gettin’ social security ever and we’re not saving either…

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Moo!Yesterday marked the 11th consecutive day that the balance of my 401k went up.

I’ve been keeping track on a daily basis since July 21, 2005 and that’s *never* happened.

The dollar amounts have been higher, yes, but it’s never progressed consistantly for this length of time.

I haven’t had a “down” day since February 25th.

Of course, now that I’ve mentioned it, the bears will come out on Monday…

Beware the Ides of March

Still, though, I’m hoping that this personal bull market will bail me out (on paper, anyway) of my extraordinary expenses this month.

Money for nothing...and the checks for free...As we stumble into another election season here in the US, the fact that the senior citizens are generally the largest voting block (and dictate who actually wins) is really starting to scare the crap out of me.

Whether it’s my parents, my friend’s parents, or even the interactions I’ve had with the dinosaurs that attend our imaginary government meetings (the meetings aren’t imaginary, the government is — it’s complicated), I can’t help but notice how differently they see things and how, well, out of touch they are with how things work these days — simply because they don’t need to stay in touch with how things work.

The first thing I think they’ve lost touch with is this whole healthcare issue that has been in the news for the past few months. Yeah, yeah, I know they’re all over the whole medicare side of things (for their own reasons) but they can’t understand why the “younger” set is by-and-large upset with the wacky costs associated with health insurance.

In my own situation, I’d consider myself pretty well off. My wife and I both have full time jobs and both offer health insurance. It sounds like a pretty cushy situation but we’re still paying around $15000 per year for insurance — and this isn’t for some special elite plan. I don’t think the average senior realizes that it’s that high of a number — it wasn’t during their working days.

Yep — using an average household income of $50,233 (2007 numbers), healthcare is costing us nearly 30% of our PRE-TAX income. You can’t deny the percentages — the average American household wasn’t blowing 30% of their pre-tax income in the 1970’s and 1980’s unless, of course, they were a really unhealthy family.

The crazy part in my own personal situation is that I haven’t been to a doctor in over a decade. Do the math… Yep, I should have an extra 6-figures in my pocket. It’s highway robbery. It really is.

Now I’m not saying that a government plan is the best option (even though I am Canadian and do, in theory, support such an idea) or even a solution, I just think that there’s a HUGE segment of the voting population that are completely unaware of what the younger folks are paying, not for services, but for just-in-case insurance. It’s not right.

The next thing is the whole concept of a 401k plan. I’ve heard two or three people over the past couple of months someone say along the lines of, “Yeah, well you don’t need pensions because people your age have 401ks…”

I don’t know about you but there are an awful lot of companies out there that don’t even offer 401k plans — I’m pretty sure that most of my friends have nothing of the sort. And even if they do, good luck finding a company that *still* offers a match — sometimes I even have to laugh that employers call it a “benefit”.

Using my own 401k as a real life example : I’ve been contributing to it pretty heavily for a dozen years to receive the largest possible employer match (from when they were *still* offering a match). You know, basically making the most of it that I possibly could.

My total balance right now is right around $79000. Fourteen thousand of that is from my employer — or a little over $1000 per year over my 12 years of contributing.

You can throw phrases like “compound interest” or “tax deferred” in there all you like, there is NO WAY that anyone can claim that $1000 per year over a 25-30 year career (if you’re lucky) is going to be enough to “retire” on.

AsparagusThe fact is — employers aren’t going to take care of their “former” workforce like they used to and calling a 401k plan a “retirement” plan similar to a pension is, well, like comparing apples to asparagus. One tastes like crap.

That’s right Mom, I still don’t like asparagus. I think, at this point, it’s safe to say that I never will.

So, from my employer’s contributions to my 401k, I might end up with a $200 check each month for a few years once I retire… And don’t forget — I’m at that unfortunate age where I won’t be getting any social security checks on top of it all either… Ouch.

And on the subject of fixed incomes and social security checks, what is up with the seniors getting all upset about not getting a “raise” in 2010

Are they as out of touch as Wall Street?

Maybe my job sucks but I’m pretty sure that I’m not alone — I haven’t gotten a raise since 2003. It might even be as far back as 2001 but plain and simple, right now, I’m certainly not expecting a token raise anytime soon, you know, just because…

Really, everyone’s cost-of-living has gone up (I personally haven’t noticed) but those still lucky enough to be part of the workforce aren’t seeing the “adjustments” that the seniors have come to expect. It’s messed up — the seniors need to get in touch with reality on this one.

Again, like the 401k/pension thing, that isn’t how things work anymore — people don’t get token raises just because…

But in the end, it’s really funny to me as I can’t deny that I’ve jumped the bandwagon before and said stuff like, “Yeah, the bratty Gen Y’s out there just expect everything to be handed to them…” but now I’m seeing first hand that AARP members are just as expectant of handouts.

Weird how perspectives change… or fail to change… Seems that every generation can fall into that often mocked me-me-me category indicating that one thing is for certain — we’re not all in this together.

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hop-chop...Well, I suppose it was only a matter of time…

At the end of the month, my employer will no longer be offering a match on our 401k plan.

The hammer fell in the form of a limited release memo that made it seem as if something new and exciting were being offered but, hidden deep within paragraph two, the dire news was delivered.

You’re on your own now.

So I’m at a bit of a crossroads here…

Should I stay the course?

Should I lower my contribution to focus more on paying down the mortgage?

Or should I just elect not to contribute and invest on my own where there are a lot fewer limitations…

I think I’ve made up my mind on staying the course… I’m not going to.

While my 401k has been a real money maker for me in the grand scheme, regardless of what I’ve said in the past, I can honestly say that the employer match was what fueled me the most to stick with it.

Sure, there’s that tax break in there too, sheltered income or whatever, but let’s be honest… that’s like saying the mortgage interest tax break is a big deal.

Yeah, I fell for that hoax. Oh, buy a house and you’ll get so much back on your tax return… Nearly 7 years in now and I’m still waiting to see that nice return…

Unless you’re right on the ege of moving up or down a tax bracket — it doesn’t make that much of a difference.

I’m not anywhere near falling into a different bracket.

Perhaps lowering my contribution, therefore increasing my bi-weekly paycheck, would be the wisest option?

That way I’d have more coming in to manage my own way — whether it be to pay down the mortgage even faster, save up for that much needed home improvement project, or finally get around to setting up and funding a Roth IRA. Maybe a combination of all three?

Or is that spreading myself too thin? Little sums all over the place never seem to add up for me. Hmmmm…

Maybe I should go all in and say “to hell with it all” and stop contributing entirely?

Based on the success of my weekly transfers, I’m confident in my ability to continue to invest on a regular basis and this way, if needed, I’d have access to the money in the instance that I needed it. That’s not an option under the current strategy.

Another strike against the 401k plan that I have is that my investment options are very limited. I’m pretty certain that I could do better picking out mutual funds on my own rather than being stuck picking from a handful of investment options that I’ve never even heard of. That’s not a knock against my employer — it’s just another gripe I have towards for John Hancock.

The other upside is that my paycheck would go up considerably and my cash inflow would be far in excess of anything I’ve ever experienced. Kinda like giving myself a 15% raise!

Sure, there’d be that tax issue that I mentioned, but let’s be real — I’m not raking in millions so the realized number would be insignificant over the span of an entire year.

That, and now that I’ve got a sizeable amount in savings, if my regular paycheck deductions don’t cover the difference on their own, I’m sure that I could swing it.

Besides, I just had a kid last month. Doesn’t that line me up for a sweet tax break or something? (Based on the mortgage interest lie, I’m not holding my breath on this either…)

In the end, the last two options are obviously the most attractive to me right now.

Based on a gut feeling, right this minute, I’m thinking that I’ll lower my 401k contribution to around 5% just to keep my foot in the door and pocket the rest to do with what I please. (Yep, accelerate the mortgage!)

Later tonight, I’ll play with that nifty paycheck calculator to see how things might fall…you know, a gut check of sorts…

Thoughts?

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While I don’t really have any complaints about John Hancock in general, I do have a problem with their website.

See, the website is supposed to benefit the customers and account holders — that’s its sole purpose!

So instead of waiting three months for an already outdated statement to arrive via snail mail, I can just log in and see what’s going on right NOW.

Round-the-clock service…

Really, that’s why most businesses have set up websites. On the web, they can serve their customers even when they’re not open! It’s pretty simple.

This is where the problem lies with John Hancock.

Their website is not open round-the-clock. Their website works, well, sorta like an online version of the often envied bankers’ hours.

That, my friends, is not convenient.

Can You Dig It?

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