to
Main StoragePatrick Wolf
July 9, 2001
(This is a critique based upon an article about retirement investing)
One of the more popular retirement savings plans in the past 20 years is the 401K program. Most companies utilize this plan as part of an employee benefit package and is generally very good. Employees who took part in the 401K have looked at the plan as an ever-expanding account, one in which they simply have a pre-tax portion of their paychecks put into a wide variety of investments. In the long term, chances are that the account will grow larger and not smaller. In the short term, there are numerous fluctuations that can make the employees possibly second-guess themselves. There is no guarantee that you continuously make money, just as there is no guarantee that you lose money. With this in mind, more and more financial planners are urging workers to take more control over their retirement funds. The Bush administration is exploring ways to carry this out by allowing people to invest a portion of their Social Security in the stock market, while many states are creating retirement plans similar to the 401K. Another option available to employees is buying stock in the company they work at. This not only will give the employee more incentive to work better at their job, which helps the company, which in turn makes their stock go up. Again, the downside is that if the company goes under, so does their job along with their investment.
Financial planners advise those who are close to retiring, that they should still continue to invest in a plan of their choice, but make less risky investments. At the same time, they urge those starting out in the work force that since they have 30 to 40 years until considering retiring, they can make more risky investment that will yield a higher return. Regardless of which category people fall into, as more people start to retire, some checks aren’t going to be there.
Opinion
Because of that last statement, I have been planning for my retirement for a number of years. When I turn 65, I’m not going to be depending on a Social Security check to tide me over until the next month. I want to live a full life when I retire, therefore I am taking the initiative to plan for myself. It has been said that Social Security is the “third rail” of politics, and that nobody should even touch it. I applaud the Bush administration for bringing up the issue of letting people invest a portion of their Social Security in the market, and yielding a higher rate of return than what the system is currently offering. The average checking account earns more than Social Security, so I’m not so sure why people are so caught up in the hysteria of interest groups accusing certain political parties of wanting to gut Social Security. I believe that there are too many people willing to settle for less, because they think Social Security is a God-given right, therefore don’t mess with it. There are also going to be lots of disappointed people when they get their checks and see it’s so measly. If only they would’ve taken advantage of a 401K, IRA, or some other retirement fund they could be living quite differently. I know plenty of people who would like to invest part of their Social Security in the stock market, after all, it is their money to begin with. I know the risks of investing part of my paycheck in the market, but I’m willing to take that risk for my betterment of my retirement. Just because the stock market may be slumping now, doesn’t mean that people should be afraid of investing. Chances are that it will go back up, and if you’re on that wave, you’ll be quite satisfied. Although workers who invested when the economy was good may be a bit dissatisfied.
If you plan for your own retirement, when you do retire and receive your government check, you can consider that to be the icing on the cake.
to
Main Storage