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Dear FRONTLINE,
Throughout the Frontline presentation on 401Ks I sensed an underlying assumption that "someone" owed it to aging people to provide for them "in retirement." Why should anyone be responsible for my economic welfare, at any time (except childhood!), other than me myself? There was not a strong enough message in your presentation that "boomers" themselves have squandered their opportunity to provide for a secure retirement by their uncontrolled appetites for consumption, for big houses, new cars, electronics, etc. THAT is why they have not prepared for retirement, because this self-indulgent generation is incapable of present self-denial for the sake of future planning. I would still say that an adult person is responsible to provide for themselves even if there were no 401K plans or IRAs - nothing. Why should anyone else have to act as an adult's parent? In this light, you do not emphasize sufficiently the benefits of 401Ks - they are tax-advantaged and include free money as employer contributions. The theme of your presentation seemed to me "bemoaning the end of retirement paternalism." Maybe a boomer retirement crisis where ill prepared people have to work until they die will teach a next generation to be forehanded and self-responsible.
Roger Scott
Fredericksburg, Virginia
Dear FRONTLINE,
Dear Frontline:
I found this article because The News Hour is broadcast by SBS channel in Australia. I want to thank Prof. Elizabeth Warren for her excellent interview and Frontline for making it accessible to everybody.
Citizens of capitalist democracies must hold their congressmen accountable and manage their own assets, and it seems that the average American is dodging his responsibilities at his own peril. Americans can concentrate on their individual affairs leaving public ones like law making unattended, but it will cost them dearly. Money can not only be stolen with a gun, it can also be stolen with a pen.
We do not have this problem in Australia, the law guarantees choice of investment for retirement funds. Company sponsored ones can not invest more than 10% in company shares and are managed by independent trustees with employee representatives. However, not having a problem now does not guarantee our future, corporations can buy politicians in Australia the same way they bought them in USA if the average citizen takes his eyes off the ball. Details of the Australian system can be found in http://www.ato.gov.au/ under "superannuation" and http://www.apra.gov.au/ Globalization should include global fight against crooks.
Oscar Perez
Bunbury, Australia
Dear FRONTLINE,
While we all want someone to take care of us, ultimately it is up to the individual to look after him/herself. In order to save and be frugal, you have to learn to ignore our entire and overwhelming consumer culture; that requires thoughtful discipline.
Donald Empson
Stillwater, Minnesota
Dear FRONTLINE,
I am retained as a co-fiduciary to retirement plans and have been providing services to retirement Plan sponsors since the mid-70s. A few conclusions I've reached (I'm sure I'll have others in the future):
1. The majority of plan participants, when asked, admit they do not know how to invest their account values appropriately (no surprise then that, apparently, the vast majority of Americans polled did not want responsibility for "managing" any of their Social Security account); further,
2. They truly want investment guidance/ advice they can trust -- they are afraid of making decisions that reduce their retirement prospects (there is voiced concern that providers of guidance/ advice are "conflicted" by their means of compensation and lack co-fiduciary status).
3. Many participants admit:-- they do not understand the investment alternatives their Plan offers;-- they do not know how their accounts are invested or how their contributions are being invested; -- or, if they do know, they do not know why their accounts are invested as they are.
4. Too many participants that have Web access to their accounts have never/ infrequently accessed their accounts to investigate status (service vendors tout their Web-based capabilities but many participants are apparently not listening).
5. Participants in Plans that offer "allocated, multi-manager portfolios" as discreet investment options (presuming these options are well-communicated to participants) have noted:-- increased utilization of these options;-- high satisfaction with these options;-- they spend less time "trying to figure out what to do";-- reduced concern about losses in down markets (because of their experiences in 2000-2002);-- they are less reactive to market swings (up or down) and more patient.
6. Proposing that a Plan that only offer "allocated, multi-manager portfolios" as the only investment options may initially meet with resistance. BUT in those cases I'm familiar with where a sponsor converted from the typical program of offering individual options (from which the participants select to build their own "portfolios"), the vast majority of participant comments were in favor of the change.
Thanks to shows like Frontline and articles in the popular press, the public's awareness of fiscal and retirement issues is rising (albeit slowly). I believe that increasing our citizens' awareness will create action. And what better place to begin that process than with the curriculum offered through our public schools?
J DeBruler
Seattle, WA
Dear FRONTLINE,
On one hand I feel sorry for the airline, enron, etc. Employees who lost most of thier retirement savings due to the failing of the corporations they were emplyed by. On the other hand, why do so many people put something as valuable as retirment funding into the hands of someone who has no real responsibilty to them?You gave examples of people who were doing well in retirement and those who weren't that were employed by the same corproation. Income and position during employment was implied as the reason for such huge discrepencies in retirement. it seemed to me the bigger difference was those who played a hands on role and made adjustments along the way compared to those who just "handed the keys" to their employer thinking all would be taken care of for them.I'm self employed and there is one big reason I have to fear for my retirement. You pointed out as well as recent other news stories that the goverment will have to step up to fund a growing number of underfunded pension plans. Ultimately we, the tax payers, will foot the bill. This means that besides funding 100% of my own retirement, I will also be expected to kick in a little extra for those poor unfortunate people who really believed retirement would be served up on a platter by someone else.
Gregory Allen
Mt Carmel, Illinois
Dear FRONTLINE,
I watched your program with much dismay.I am concerned with what I perceive to be "financial illiteracy" in our society.We need to start the education process in our schools .....basic finance.We are asking our workforce to make very important, long term decisions regarding their financial futures without the "tools" or resources to be able to make those decisions.The implications are enormous...we as a nation must make a commitment to our workforce to assure a decent life in retirement.
John O'Neill
seattle, wa.
Dear FRONTLINE,
I suggest that if you are asking "how much do I need to save?" you can obtain a good answer from Quicken's Retirement Planner tool. The retirement planners on the internet are practically useless, and coming up with a simplistic formula (e.g.: 80% of current salary) is just silly since your requirements will vary over time. I've tried other planners including professional versions, and they give pretty much the same results.
jonathan singer
Storrs Mansfield, ct
Dear FRONTLINE,
Thanks for your program and website; I referred my colleagues to it.
As an aging boomer that never had a pension option, I have worried about retirement savings for a long time. I have taken comfort only in the understanding that we save more than others our age. One link you did not make was to the growing rates of personal bankruptcy and personal debt. It stands to reason that those with credit card debt, for example, are not saving for retirement. The real estate boom has meant that many families have taken on excessive mortgage debt.
Boomers (or their parents) helped to create a live-for-the-moment culture. Both individuals and our institutions seem less and less capable of thinking long term. Perhaps this financial crisis and the immutable environmental issues facing the planet will alter this culture in later generations.
John Gregg
Bethesda, Maryland
Dear FRONTLINE,
I found chapter 2 with the United Airlines bankruptcy case absolutely outrageous. Our bankruptcy laws are flawed and chapter 11 has become a strategic move by corporation to eliminate their pension obligations. Current laws are protective of superiorities suchas banks. It is disgraceful that they took back all the money plus interest and hefty fees while the employees had to carry the burden of bankruptcy.
Education is the real key in this area. America's workforce has to be aware of what it really takes to retire and how to go about putting together the assets necessary for a pleasant retirement. It is truly scary and alarming to see that some retirement crisis are about to unfold within the next decade or so.
Farzad Novin
stony brook, ny
Dear FRONTLINE,
I am 61 years old and "portfolio management" by a pair of Smith Barney vice presidents has wiped out just under 60% of my retirement savings. The local newspaper published an article on this pair's activities (a year too late to warn me) and was subsequently sued into silence by Smith Barney, alleging that the article was harmful to their business. Two dozen NASD complaints (not including me) against this pair, totaling losses of about $5.8 million, have vanished and their record is now spotless. I can think of no better example of self-regulation as an oxymoron than the NASD.
In addition, I have been periodically contacted by class-action attorneys about my Smith Barney-recommended Global Crossing wallpaper. Based on the estimated recovery of $0.002/share (after attorney fees, of course) a payment of $8 for my $40,000 loss would be laughable, if it were not so painful.
Frontline has already commented on some of this, but I would really like to see more detailed coverage, including:
1) How much monetary damage has been done to individual retiremnt savings by brokerage firms claiming expertise in "portfolio management".
2) A complete evaluation of the effectiveness of the NASD.
3) An assessment of how the tort lawyers have taken advantage of the situation.
G.S. Zimmer
Tucson, AZ
Dear FRONTLINE,
I work for one of the legacy airlines. I have seen concessions forced on the back of the employees while management has taken millions in bonuses and stock options. I have personally heard the CEO tell employees "he would not work for free." Apparently he expects his employees to so he doesn't have to. I have seen my pension plan frozen at a level 85% below what it was projected to be at my mandatory retirement age of 60. A 401k option at one of the major brokerage houses with the highest fees and most restrictions was forced on us. All of this was done under the threat of bankruptcy if we did not accept concessions.
It appears that in my experience your report was right on target. The airlines did not ask for or create 9/11, but they have capitalized on the "silver lining" and utilized it as a labor smackdown. Their crown jewel achievement was the jettisoning of pension plans. When is a deal not a deal? Apparently when management sees an opportunity to reduce costs to increase bonuses.
Saint Augustine, Florida
Dear FRONTLINE,
I work for a county government agency and I have a traditional pension but in addition I also have a 401(k) style plan.
The 401(k) is a wonderful thing but should only be used as a supplement and not as the only source of retirement income.
By the way, I am only 28 years old and am already planning for my retirement. My parents are baby boomers and they did not start saving for their retirement until they were in their 40s, and I don't think they will have enough saved for their retirement. I am determined to make sure I don't make that same mistake.
I think that is something we can teach our own children. Once they start working they should start to think about retirement. That is the one thing I have learned is that it is never too early to start planning for retirement.
Brian Kaufman
Long Beach, CA
Dear FRONTLINE,
Dear Frontline, I would really enjoy a second topic about retirement for younger people. I'm 37 and have never worked for a company that offered 401K as a benefit. Most small businesses cannot offer these things. Plus, the cost of housing in Florida is growing higher than anywhere else in the USA (the price of my house has went up 400% since I bought it). There is no affordable living down here, no one can afford to to buy a new house, let alone save for retirement.
I think there will be a bigger crisis when Generation X & Y retire. Many women my age are waiting later in life to have kids. We went to college and established a career first. I feel like I have to make choice between having children (which cost $$) or saving that money for retirement instead. There is no way that I could afford to save for retirement and start a family at the same time and save for their college education too.
Could you do another segment profiling the next generation? I'm sure it will be a real eye-opener! Thanks!
Boca, FL
Dear FRONTLINE,
I believe a solution is to let older workers to retire but rehire themas part timers (with the same salary rate). My employer providespost-retirement health care and a pension; and combined with part time employment (which means no benefits) both parties win.Retirees remain active and able to live a comfortable life,work at job which they are best suited for with less workload.Instead of working 5 days and 2 off, they work 2 days and 5 offbut do not suffer income losses. In fact, they actually earn more for less time.
My employer having health and pension already paid for, retainsa senior employee at a part time cost. It also allows the retiree's successor acquire to hard won (and expensive) knowledge and expertise that may be available anywhere.When it's my time to retire, I plan to do the same thing. If thatdoes not pan out I know I need a backup plan as well and mustact according now. I think the say hope for the best but planfor the worst is the best what we can do today.
Los Angeles, CA
Dear FRONTLINE,
I am an attorney, and have made my living 17 years as a financial planner. I am an independent, fee-paid Certified Financial Planner (CFP). I see every day that Americans are not preparing well at all for their future, and am thankful that they need and want help, as these opportunities are now my livelihood. I was shocked that your program did not mention ANY example of individuals who were utilizing their 401k plans and other resources successfully to prepare. The viewer came away from your program hopelessly disturbed, with no direction whatsoever on what they should be doing. At the root of this systemic problem is the fact that understanding and respecting money and finance is not part of our American culture--ironic, considering our spending habits. As a nation, our people need education, at all ages, to form appropriate expectations of what is required to achieve financial independence, and to learn the steps that must be taken over our careers to fulfill realistic goals. Most Americans--middle and upper class alike--have no clear sense of what they will need, not to mention how to get there. As a result, they are vulnerable, and destined for financial disappointment. I would like to be interviewed if you have a program like this in the future. Ember L. Flack, JD, CFP, CLU, ChFC, CLTC
Ember Flack
Dallas, TX
