CBS 60 Minutes on the 401(k) Fallout

If 60 Minutes said it on CBS during Prime Time television, it must be true. Right?

In his very eye-opening and intriguing report, Ira Rosen talks to 401(k) and Wall Street insiders, whom I call “behind the sceners.” Although “sceners” is not a word, you get the picture, and you know what I mean.

When Ira poses the question, “What type of a retirement plan allows millions of people to loose 30 – 50 percent of their life savings, just as they near retirement?” – The answers from the “behind the sceners” and “insiders” are frightening. As hidden fees, and and the 401(k) broker mindset is exposed, “insiders” refer to the typical 401(k) investors as “a financial novice, who doesn’t know the difference between a stock and a bond.”

Also, the irony in the statements made by a 401(k) lobbyist, who claims the let down of the 401(k) is not a 401(k) problem, but “an entire investment system problem,” is even more frightening.

I am aware that Trillions of dollars have evaporated from 401(k) accounts and IRAs, and tens of millions of people, at this point, cannot afford to retire. Even worse, in this unstable employment market, they cannot even find a job.

Up until yesterday, this type of information has been only distant news to me. On yesterday, a very dear and close friend was laid off from Sprint where he’s worked since 1996.

In the middle of this mixed up mess, I can assure you this – THERE IS LIGHT AT THE END OF THE TUNNEL! However, you must have the right map, and you must be willing to dig your own way out.

Why have so many real estate investors chosen real estate as their retirement and investment vehicle? Take a look with your own eyes, and have a listen with your own ears, to this jaw-dropping CBS report…then you be the judge.

Comments

  1. This video made me feel sad. I’m relatively young (30), but I know a lot of people who will be working the rest of their lives because of this crash.

    Hopefully the stock market crash will be a blessing in disguise for some people and they’ll decide that they need to change what their doing because obviously it’s not working.

  2. John Doe,

    Be careful. Those are not capitalists, they are thieves.

    The idea for capitalism is you only make money by helping and serving others. These guys stepped outside that model.

    As far as control, you have as much control as you want as long as you don’t hurt other people.

    However, if you follow blindly what our educational system is teaching from grade school on, you will have no control as you describe.

    John, don’t get discouraged. Read the books on the reading list (see free listener kit upper left) including “The Richest Man in Babylon.” You will see how to take control back by changing the way you think and act.

  3. The point of the CBS investigation was that no matter how much you researched, you couldn’t have known about the hidden fees and sub-par funds being offered; worse yet, the real risk was downplayed in the name of sales.

  4. This is capitalism, and you are in control of your life, you decided what you want to be or to do, or at least reject what you don’t want to.

    Its sad, but people close to their retirement should be more prudent and wiser with their investments (specially if they relay on them for their retirement).

    John.

  5. Hi Steve,

    My point is you have to protect yourself (via more education, reading, etc, knowing what you are getting into, know what type of investments your are doing).

    If you are commiting a lot of money for 401k investments be prepare for that, the same for real estate, or any business you want to pursue. You have to control at certain degree what you are getting into, if not dont even try it, because you probably will claim later you were a victim of thefts, system, bad luck, etc. Ignorance is not a bliss.

    Close to retirement you have to be more conservative with your future income, regarless of the current market conditions (good or bad), and this is not a new concept.

    Thanks,
    John

  6. You can protect your 401k or IRA using the following techniques:

    1.- If you hold common shares as part of your retirement, you can protect them using stock options (collar, protective put, covered call).

    2.- If you hold mutual funds you can beta weight them and apply stragedies like mentioned before.

    3.- Ultimately you can stay cash in the mayority of your portfolio.

    Here is an extract of the Fidelity’s website:

    “For a retirement goal, if you are already eight years or more
    into retirement, Portfolio Review will default to the Conservative”

    I think is a matter of personal responsability here, keep in mind those hidden fees are about 1-2% (those wont drop your portfolio 30-40% down).

    Im wondering why presenter didnt ask them how conservative or aggressive was their portfolio before the big debacle? If they allocate some of their money in other stuff like bonds, annuities, etc. And if they had a stragedy for managing their 401k, if they actively monitored it, not just opening the envelop every quarter. If did they have am exit stragedy when the things start to point south.

    Marin

  7. Great Marin,

    However, you have spent a lot of time on that strategy. A lot of intelligence. What if you had spend that same time and intelligence on a vehicle with higher potential?

    Have you been doing for a really long period of time? 5 years or more? If so you should have enough income from your investments that it meets and exceeds your bills. If not, your system is ineffective.

    I will discuss this on my show today at 2 on 700 KSEV, Houston. You can stream it or podcast it or visit this website later in the day.

    I would love for you to call in and share your ideas with the listeners if possible. 1.281.558.5738

    Thanks,
    Steve

  8. Hi Steve,

    Basically took me one year to find something that works (keep in mind took me 5 years to find you guys) and then another year to learned via self-studying some of these principles, like anything w/o a map its really hard to get theer, once you have it (the map) everything start moving more efectively.

    Since now you wanted to turn the discussion about my stragedies, and not about CBS’s documentary and the people on it (either side);
    I havent reached that goal of paying bills, yet, I treat this like a insurance’s business you have to start with small capital and Im trying to generate a monthly income with good risk manemenent. prove yourself first and then if you can be suscesfully during at least 6 months increase your investment capital. In here you need; knowledge, tools and some money to start. And Im not talking about day-trading or anything can cause you not to sleep well, this is not directional trading going up or going down type of deal.

    I would love to share some of this ideas with you, I will call tomorrow Thursday.

    And now since I found you guys, my learning process start :-)

    Marin.

  9. Alfonso says

    One point not to be lost on us should be the fact that the lobbyist on the 60 minutes piece, although he may sound insensitive, is absolutely correct when he said that the problem is a problem with the markets overall. The stock market was not designed to be a way to retire 100 million America workers. There is not enough money generated by the stock market to retire the working American public. It was designed to raise capital for businesses. That’s all!
    Also, there is too much going on behind the scenes that make it unlikely that the average investor will profit significantly from the stock market. If you have $100 Million dollars to toy around with, like the institutional investors, then it’s a game you can win. Otherwise, you have no control over the market direction. The institutional investors win whether your stock picks go up or go down. They’re in business to make money, not to make YOU money.

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