401k's Not All They're Cracked Up To Be

Depending if and how much your employer contributes your mileage may vary from my own situation. These figures go back to shortly after I retired when neither me nor my employer continued putting money into it. Instead of rolling over my money to an federally insured IRA savings account or CD I decided to take a chance and let it ride Here are the results.

Over the last seven years the fund only averaged a 1.8% growth per year.

Currently the balance on my 401k is now down by a negative -1.6% since January 2014. In other words I've been bleeding.

In 2014 instead of earning the average 1.8% the balance was down a negative -1.6% instead.

My Analysis
When I was working both my contributions and my employer's matches were kicking in and most likely I never would have never noticed this sham. Indeed the balance would continue to grow, but not because of the underperforming Wall Street investments. So if your working and your employer's matching you'd be wise to stay in a 401k, but after you retire and your employer's no longer adding to the pot.. roll it over to an IRA & get out!

I'll give you another very good reason why. Keep in mind I only earned an average of 1.8% a year with all the risks the stock market brings. Right now some banks are paying up to 2.3% APR on a 10 year federally insured IRA CD. Here's another valuable piece of information most people don't know. If you're over 65 some banks (mine) allows partial withdrawals from these CD's before they mature without incurring fees or penalties.

In summary: I've lost -1.6% since January when I could have made up to 2.3% without any of the risks. That's almost a difference of 4% . This amounts to almost a $4,000 difference per $100,00 balance!

One Last Piece Of Wisdom
When I retired we were allowed to take a lump sum payment in lieu of our monthly pension checks. I decided to take mine and put it in an IRA CD. Others put theirs in the hands of so-called investment specialists. Most of those retirees didn't fare well. Many financial advisers speculated they could earn them more then it turns out actually being after taxes and up to the 5 fees they charge for their services.

I personally know a licensed investment councilor who makes north of $100,000 a year even though most of his clients are losing money with him.

The last boss I worked for before I retired got smart and found a way around this. He went to school in the evenings. Earned his broker's license. Then quit taking his lump sum with him. Thus avoiding all 5 of the fees.

He's now making 2-3x's more then he did no longer having the headaches of managing 30 some factory workers nor the crazy hours forced upon him.


I've heard of incidences where other companies pensions went South after a few years. Hence I feel it best to take a lump sum if it's offered and stash it into a savings or CD account. You know what they say... A bird in the hand is worth two in the bush.

Anyone else have similar stories?