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How is Your 401k Doing?



November 02, 2010 – Comments (6)

Is it meeting its stated goals? Do you feel like your retirement plans are going well? Or are you deciding you have to work a few more years than you planned to?

 Some members of the media, academics, and policymakers recently have questioned whether public pension fund investment return assumptions are unrealistically high. If this were true, it could encourage these funds to take too much risk in investing pension fund assets, or it could understate the cost of pension liabilities, reducing their current

cost at the expense of future taxpayers. Alternatively, an investment return assumption that is set too low would result in overstating liabilities, which would overcharge current taxpayers.

 Public retirement systems employ a process for setting and reviewingtheir actuarial assumptions, including the expected rate of investmentreturn. Most systems review these assumptions regularly, pursuant tostatute or system policy. The process for establishing and reviewing theinvestment return assumption involves consideration of various factors,including financial, economic, and market data. This process also is based

on a very long‐term view, typically 30 to 50 years.

 Although public pension funds, along with most other investors, haveexperienced sub‐par returns over the past decade, median public pensionfund returns over longer periods exceed the assumed rates used by mostplans. As shown in Figure 1, median investment returns for the 20‐ and25‐year periods ended 12/31/09 exceed the most‐used investment returnassumption of 8.0 percent. For example, for the 25‐year period ended12/31/09, the median investment return was 9.25 percent.


6 Comments – Post Your Own

#1) On November 02, 2010 at 8:06 AM, dbjella (< 20) wrote:

Good video.  This makes me sad :(

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#2) On November 02, 2010 at 6:37 PM, MegaEurope (< 20) wrote:

My 401(k) is doing awesome...

Up 7.2% annualized over the last 4 years, 16.8% over the last year.  Mostly outperforming the market as a result of dollar cost averaging, also decent asset allocation.

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#3) On November 02, 2010 at 10:06 PM, ChrisGraley (28.58) wrote:

The video was about a 403B plan and not a 401K. The news about the unions getting kickbacks is not new. Same with the corporations getting kickbacks.

Absolute power still corrupts absolutely. 

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#4) On November 03, 2010 at 6:34 AM, devoish (82.57) wrote:


It was on Bloomberg News. Watch the "up next" video if you want more. It was unlikely for them to guide you away from the 401k plans, without which they would pocket much less change.

More often it is your employer that has the absolute power of collecting a kickback for selecting the few fund choices available to you in your 401k.


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#5) On November 03, 2010 at 8:27 AM, ChrisGraley (28.58) wrote:

In the specific case in the video, it was a 403B plan and the union getting a kickback.

I don't disagree with you that some 401K's have the same problem, but you could at least have posted an example of that.

I also hope you aren't posting this to advocate the taxpayer supported ponzi schemes that are called government pension plans. Those plans are even more corrupt and are going to bankrupt most states. In those cases the kickbacks are coming out of the taxpayer pockets.

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#6) On November 06, 2010 at 1:47 AM, devoish (82.57) wrote:

Some - most.

Hey! You read your contracts. Perhaps you can run some posts showing us all the type of language that hides the fees from the rest of us.

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