There is no security on this earth, there is only opportunity."
--General Douglas MacArthur
A hugely significant event has occurred in our 401a plan. This event is absolutely the most important occurance I can imagine for many of the younger members. It is, however, without real significance to me and to many of the older members.
Here's what's goin' down; The default plan for our 401a has been the Balanced Pooled Fund. See all over this site....This is a gawdawful choice for many people. A brand new apprentice/journeyman contributing to the B/P Fund starts off his investing in a vehicle that is 60% bonds.
Kinda.
Actually I suspect he is investing in a 60% bonds/mortgages vehicle. Bummer. He has some security, maybe, which is always nice. But he barely (maybe) breaks even with inflation in bonds.
And, it's not that the jury is still out...we don't even know if there is going to be a jury when the CDO (collateralized debt obligation[subprime/subslime mortgages]) riff finally gets laid down so it stays there. I just don't have the time here to cover this here and now. But I will, elsewhere and later. Stay tooned."
So the young member doesn't make much in the B/P Fund. That's not good. You wouldn't keep your life savings in an interest free savings account... But look up the returns for the 401a bond funds over the last five years. Again, Bummer.
The older member, retired or ready to retire, who has his 401a invested in the B/P Fund, has his 401a savings and earnings in a vehicle that is 40% stocks. Stocks can make you rich and can beggar you...sometimes a coupla times each in the same year. That's called volatility. Why would anyone set up an older member's savings where 40% of the money was on cruise control in a risky investment? Yet that happens to be the case for older/near retirement or retired members, who have all his or her money in the B/P Fund.
So what is needed for Local 342 members is a no hassle/easy/low/maintenance/automatic/rational way to allocate his (or her) funds properly between stocks and bonds, as driven by the member's age and retirement target date. The answer is...
The American Funds Target Date Retirement Fund
At the special called State of the Pension Funds Meeting in November of last year, I suggested that we try to put something like this into place... and it has come to pass.
It's About Time!!!!
Of course, my son has had this kind of fund available to him for at least the last seven years at the last two places where he has worked/works..... But better way late than never.
This is a quantum leap or two better than the B/P Fund and all of the younger members need to check this out.
It is NOT the answer for everybody and it is not the answer for me. And it may not do much for the older members. But it is a DAMN FINE THING THAT THE BOARD OF TRUST HAS DONE. They just needed to be pointed in the right direction and motivated....
The problem (yeah, for all my enthusiasm for the target date funds, there still is a problem...) is that we hemmoraged away money in the 401a and defined benefit plan under the previous financial advisors and participating in the Target Date plan won't help that. But it will get the members who are very new or those who are close to retirement and have a nice nest egg into a more rational allocation plan.
And there are still risks... The Board of Trust added four new financial advisors in 2004 and within a year, two of them were on notice for crappy performance. Not that it was any different from what they had been doing previously and that the Board of Trust had blessed the previous year... But still... the Target Date Funds appear to answer a major need. So I'll be vigilant.
So, bottom line, I'm stoked!. But I've been down this road before... Lemme see about tracking this and getting back to you... Stay tooned...
Oh, yeah...Fixing the damage done to my pension savings is another matter. And one that I'm addressing presently with my 401a. The godawful performance of our prior 401a plan discouraged me from bumping my contribution to the plan. So I'm late taking advantage of the 401a. But now I've got something I can work with and I've got my head down and I'm doin' it. You should make sure you are doing the right thing for your personal circumstances too.....
THAT'S WHAT I'M TALKIN' 'ABOUT!!!!!
See ya at the hall.....
--General Douglas MacArthur
A hugely significant event has occurred in our 401a plan. This event is absolutely the most important occurance I can imagine for many of the younger members. It is, however, without real significance to me and to many of the older members.
Here's what's goin' down; The default plan for our 401a has been the Balanced Pooled Fund. See all over this site....This is a gawdawful choice for many people. A brand new apprentice/journeyman contributing to the B/P Fund starts off his investing in a vehicle that is 60% bonds.
Kinda.
Actually I suspect he is investing in a 60% bonds/mortgages vehicle. Bummer. He has some security, maybe, which is always nice. But he barely (maybe) breaks even with inflation in bonds.
And, it's not that the jury is still out...we don't even know if there is going to be a jury when the CDO (collateralized debt obligation[subprime/subslime mortgages]) riff finally gets laid down so it stays there. I just don't have the time here to cover this here and now. But I will, elsewhere and later. Stay tooned."
So the young member doesn't make much in the B/P Fund. That's not good. You wouldn't keep your life savings in an interest free savings account... But look up the returns for the 401a bond funds over the last five years. Again, Bummer.
The older member, retired or ready to retire, who has his 401a invested in the B/P Fund, has his 401a savings and earnings in a vehicle that is 40% stocks. Stocks can make you rich and can beggar you...sometimes a coupla times each in the same year. That's called volatility. Why would anyone set up an older member's savings where 40% of the money was on cruise control in a risky investment? Yet that happens to be the case for older/near retirement or retired members, who have all his or her money in the B/P Fund.
So what is needed for Local 342 members is a no hassle/easy/low/maintenance/automatic/rational way to allocate his (or her) funds properly between stocks and bonds, as driven by the member's age and retirement target date. The answer is...
The American Funds Target Date Retirement Fund
At the special called State of the Pension Funds Meeting in November of last year, I suggested that we try to put something like this into place... and it has come to pass.
It's About Time!!!!
Of course, my son has had this kind of fund available to him for at least the last seven years at the last two places where he has worked/works..... But better way late than never.
This is a quantum leap or two better than the B/P Fund and all of the younger members need to check this out.
It is NOT the answer for everybody and it is not the answer for me. And it may not do much for the older members. But it is a DAMN FINE THING THAT THE BOARD OF TRUST HAS DONE. They just needed to be pointed in the right direction and motivated....
The problem (yeah, for all my enthusiasm for the target date funds, there still is a problem...) is that we hemmoraged away money in the 401a and defined benefit plan under the previous financial advisors and participating in the Target Date plan won't help that. But it will get the members who are very new or those who are close to retirement and have a nice nest egg into a more rational allocation plan.
And there are still risks... The Board of Trust added four new financial advisors in 2004 and within a year, two of them were on notice for crappy performance. Not that it was any different from what they had been doing previously and that the Board of Trust had blessed the previous year... But still... the Target Date Funds appear to answer a major need. So I'll be vigilant.
So, bottom line, I'm stoked!. But I've been down this road before... Lemme see about tracking this and getting back to you... Stay tooned...
Oh, yeah...Fixing the damage done to my pension savings is another matter. And one that I'm addressing presently with my 401a. The godawful performance of our prior 401a plan discouraged me from bumping my contribution to the plan. So I'm late taking advantage of the 401a. But now I've got something I can work with and I've got my head down and I'm doin' it. You should make sure you are doing the right thing for your personal circumstances too.....
THAT'S WHAT I'M TALKIN' 'ABOUT!!!!!
See ya at the hall.....
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