General Discussion
In reply to the discussion: The Great American Do-It-Yourself Retirement Fraud, Brought to You By Big Finance & Co. [View all]JDPriestly
(57,936 posts)401(K)s have been a huge scam. It never hurts to save, but with the 401(K)s, the risks fall on the person with the least knowledge, experience and connections to know how to invest money -- the working people.
You focus on a sales job or a career as a doctor or a lawyer or you work as a scientist or a maintenance man or a waitress or whatever. No matter how much money you make or how much education you have, you do not have the information to make decisions about how to invest your money. You may think you do, but you really don't have that inside edge.
And then those who have the inside edge, who run the banks and the huge corporations, wag their fingers at you and say, "Nanni, nanni, free markets. Winners and losers. You may have given your productive life to the effort of saving lives or repairing cars, but now you are ours. We dictate how much money you get to make on your life savings." And that is what they do. Right now, seniors are making pitifully little on savings accounts.
Here is the news we got from a certain very well known, large bank maybe a week or two ago. You must maintain a minimum daily balance (usually about $2,500 per day or month) on most kinds of savings accounts or pay a fee of from $5.00 to $12.00 per month. And your interest rate? Far less than 1% per year, closer to .01% which is .0001 dollar per year.
A child does not have to pay the $12.00 a month fee for maintaining a savings account of less than $2,500 (but his or her grandparents would). If a child gets an interest rate of .01% per year, he or she gets only 10 cents for keeping that $1,000 in the bank for a year. If that child has $10,000 dollars in the bank, he or she will get $1.00. If the child has $100,000, he or she will get $10.00. If the child has $1,000,000 in the bank, at an interest rate of .01% per year, the child will be lucky enough to get $100 in interest. That is the ordinary savings rate for that well known, 2008 bailed-out bank. Good luck saving for college, kids.
The banks neither need nor want our money. They get their do-re-mi from Uncle Sam. The same Uncle Sam who says he doesn't have enough to pay promised Social Security benefits. Boo-hoo for Uncle Sam and Boooooo! for the banks and Wall Street. They have mismanaged the economy that was entrusted to them, and now they want to starve grandma.
Want to know who is on the real death panels? The bankers. That's who. The hedge fund managers. That's who. The 401(K) managers. That's who.
The hedge fund managers and account managers for the companies that handle the 401(K) accounts are cashing in just as baby boomers are about to retire and think they have saved enough for a cruise. Think again.
The anti-Social-Security crowd crow about how the Social Security trust fund will eventually be in the red. Well, guess what, when the baby boomers start taking their money out of their 401(K)s to supplement their pensions and Social Security, several things will happen. First, the stocks in which they are invested will lose value -- supply and demand. Remember that, if a lot of people decide to sell stocks, the supply will exceed the demand, and market prices for stocks will fall. Second, demand for products and services will decline. Baby boomers won't have the money to eat out as often, but they will have the time to cook at home. Older people tend to drive less than young people. (They have less money for gas and travel on the average.) Older people don't buy the new clothes or new cars or new pots and pans, even new towels and sheets that younger people do. We tend to use what we have because we want to simplify and get rid of things.
Our economy is going to change drastically. Social Security will be the bedrock that keeps it going. Don't be persuaded to the contrary. Many seniors have spent their savings by the time they reach their mid- to late 70s, much less 80s.
Wall Street does not want to hear what I have to say on this, much less admit it themselves.