This comment on Steve Utkus’ recent post about retirement struck a major chord with me:
“Our children’s incomes are not increasing, and they have their own children to support, let alone saving for their own retirement. No one is to blame or is being stingy; we simply must plan for and take charge of our own later years.”
The national debate on health reform has me thinking about a particular angle of the question: paying for health care in retirement. Let’s put aside for the moment long-term care costs (i.e., nursing homes) and focus on regular medical care—doctors’ bills, hospital fees, drugs, and so forth.
Each year in August we publish a compendium of statistics about 401(k) plans administered at Vanguard. As the report covers over 3 million American participants, it often generates a lot of interest from the media, policymakers, consultants, and employers. (You’re certainly welcome to read the entire book—please do!—but for the CliffsNotes version, just take a look at the executive summary.)
I recently participated in a live webcast attended by a number of Vanguard retirement plan participants. The topic was retirement investing, and questions came fast and furious. We answered as many as we could in our allotted 30 minutes.
One question we didn’t get to: What are the plusses and minuses of keeping money in a 401(k), as opposed to rolling over to an IRA? It’s unfortunate that we didn’t have time to discuss this, as it’s an important question, and the answer can vary depending on what’s going on in your life.
There’s been lots of talk since late last year about the plusses and minuses of financial engineering, including a debate (see blogs by Felix Salmon and Tyler Cowen) about the overall merits of various modern financial innovations. While it’s easy to pick on stuff like “NINJA” loans (No Income, No Job, No Assets) and various mortgage-backed securities as examples of financial innovations that we’d have been better off without, I think it would be foolish to let these mistakes convince us that we’d be better off going back to the barter system.
