ABF | 401(k)'s as a retirement vehicle

canaryinthemine

Retirement....The Job I Was Born To Have!
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Here we go , Gentlemen! The Metaphysical gauntlet has been thrown down!

Several Brothers on this site have expressed a preference for defined-contribution retirements,...commonly known as 401(k)'s.

I, myself, had called them "schemes"...........that only favor banks, Wall Street, and employers.......at the expense of employees.

I can clarify a bit by saying I was involved in ABF's 401(k),...and the involuntary switching from ABF's Fidelity fund to the Teamster's Prudential fund. I think that 401(k)'s have a place as far as savings go,.....but to rely on them as a SOLE retirement vehicle........as they are "sold" by many employers,.....is a huge financial error.

The fact that pretty much all of the "investors" in defined-contribution plans......have NO idea of how the "mechanics" of retirement on a 401(K)-style plan....(....ask your co-workers HOW they will get their "retirement" check from their 401(k) when they retire, and you'll see what I mean...).....
......is , in my eyes, evidence that there is a heavy sales pressure being applied.........
.......regardless of whether the employees in question...will be properly taken care of,...through retirement.

I realize,.....as the literature says in the 401(K) brochure,.......that the investments you are making are your personal decision,......and carry NO guarantee.
This would preclude anyone getting involved in a defined-contribution investment plan as a SOLE means of retirement,..to spend quite a bit of time researching all aspects of the various 401(K)'s, 501 plans, and the other types of investment schemes.
Yet,.....the fact that just about all of the people I've talked to,...have no clue how they're going to get...paid...in retirement,.......and are involved in the company's 401(K) STRICTLY on their faith that "good investments" will be made on their behalf.......

......shows me that the average employee is not being....educated.....on what will become the most important decision of their life....in their '60's.

I.....suspect......that lack of information,....is by design.

Brothers,.........what do you think?
 
ask your co-workers HOW they will get their "retirement" check from their 401(k) when they retire, and you'll see what I mean...).....
If I may answer that; there are several ways to get your money out of a 401k but I think the easiest way is to call them (after you are no longer employed with that company or you are over age 59 1/2) and ask them to send you a check. I would suggest having the check made out to your financial institution (your personal bank) and you, then you deposit it. It can be direct deposited or money transferred. It's not hard nor is complicated. Easy as depositing your payroll check except it may take a little time to clear your bank.
 
Also, CHECK first,.as if.you take the money out TOO.EARLY,and not put the funds into another type of.investment,You will get taxed to.the MAX.
And.I'm not talking about a savings account...
Check with some other type of fund. The key here is you have to.REINVEST them.until you reach a certain age...
 
If I may answer that; there are several ways to get your money out of a 401k but I think the easiest way is to call them (after you are no longer employed with that company or you are over age 59 1/2) and ask them to send you a check. I would suggest having the check made out to your financial institution (your personal bank) and you, then you deposit it. It can be direct deposited or money transferred. It's not hard nor is complicated. Easy as depositing your payroll check except it may take a little time to clear your bank.

Of course you can ask for a lump-sum distribution. They will automatically take out 10% withholding from the total amount. They will ask you if your state will tax your....."income".....and will also deduct an appropriate amount.
This reflects on your yearly taxes, and will throw you into a much higher tax bracket. That is why annuities are used. You set up a monthly payout, and only pay withholding on the monthly checks instead of the total amount.

Most participants of defined-contribution funds aren't aware of the tax pitfalls or whether their employer's 401(K) will set up an annuity for them...(..Most don't. ArcBest doesn't...).

Under your scenario,.......Say you had $800,000 in your 401(K)......Nice amount.....You take a lump-sum distribution after age 59 1/2,......to avoid the 15% early withdrawal penalty. The 401(K) administrator will automatically deduct 10% for federal withholding,.....that's $80,000,...leaving you $720,000.

How do you keep from....outliving....your $720,000? Annuities are now roughly 3.5%. $720,000 times 3.5% is $25,200 a year,.....or $2,100 a month,..........PROVIDED you NEVER touch the principal........

$2,100 a month divided by 4 weeks is $525 a week,.....(.Just for easy comparison..)...

Many guys don't plan for a distinct drop in income as they retire.........

By the way,.....Annuities USED to be 5% about 3 years ago. For some arcane reason,....in a rising economy,.....Wall Street companies and investment firms decided,...."individually"..(..Yeah, right...).....to lower annuities to roughly 3.5%....

A 5% annuity on your $720,000 is $36,000 a year,......a $10,800 loss of income due to the caprices of the Wall Street people........

No explanation,.......no reason,........no Government oversight,........just a lowering of a rate vitally important to the long-term servicing of retirement income....

Could this....lowering...of annuity rates be designed to force employees deferring their retirement longer to make up the loss of income,.......and thereby helping to alleviate a tight Labor market?
 
Brother Canary, you and Mike are correct and wrong at the same time.
Mike, rolling your money into a traditional IRA at your bank will eliminate taxes until you withdraw it.
Canary, your math is flawed brother.
First, most people are in a lower tax bracket when they retire; no employment income because no job ie retired.
Second, $800,000 without any interest or dividend will pay $80,000 a year for 10 years or $40,000 a year for 20 years. So start there and figure your life expectancy; if you are 70 years old, how long do you plan to live? If your 60 years old, how long do you plan to live?
Third, and I'll climb off my horse here, look at the dividend for SO(5.49%) or DUK (4.56%) just to name a couple utilities (southern companies and Duke energy) that are not going out of business. They are monopolies. And if you buy for the dividend who cares if the stock price rises or falls as long as you get the quarterly dividend amount......
and I am not giving investment advice. I'm having a financial discussion with friends. Talk to your bank. Talking to your banks financial advisor is normally free and enlightening.
 
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Brother Canary, you and Mike are correct and wrong at the same time.
Mike, rolling your money into a traditional IRA at your bank will eliminate taxes until you withdraw it.
Canary, your math is flawed brother.
First, most people are in a lower tax bracket when they retire; no employment income because no job ie retired.
Second, $800,000 without any interest or dividend will pay $80,000 a year for 10 years or $40,000 a year for 20 years. So start there and figure your life expectancy; if you are 70 years old, how long do you plan to live? If your 60 years old, how long do you plan to live?
Third, and I'll climb off my horse here, look at the dividend for SO(5.49%) or DUK (4.56%) just to name a couple utilities (southern companies and Duke energy) that are not going out of business. They are monopolies. And if you buy for the dividend who cares if the stock price rises or falls as long as you get the quarterly dividend amount......
and I am not giving investment advice. I'm having a financial discussion with friends. Talk to your bank. Talking to your banks financial advisor is normally free and enlightening.
Homesick, you make a poor Socialist.
 
Brother Canary, you and Mike are correct and wrong at the same time.
Mike, rolling your money into a traditional IRA at your bank will eliminate taxes until you withdraw it.
Canary, your math is flawed brother.
First, most people are in a lower tax bracket when they retire; no employment income because no job ie retired.
Second, $800,000 without any interest or dividend will pay $80,000 a year for 10 years or $40,000 a year for 20 years. So start there and figure your life expectancy; if you are 70 years old, how long do you plan to live? If your 60 years old, how long do you plan to live?
Third, and I'll climb off my horse here, look at the dividend for SO(5.49%) or DUK (4.56%) just to name a couple utilities (southern companies and Duke energy) that are not going out of business. They are monopolies. And if you buy for the dividend who cares if the stock price rises or falls as long as you get the quarterly dividend amount......
and I am not giving investment advice. I'm having a financial discussion with friends. Talk to your bank. Talking to your banks financial advisor is normally free and enlightening.


How can I be right and wrong at the same time? You're making my head hurt........

Just kidding,..........I see what you're saying about $800,000 in savings. If you take an $80,000 a year income and file that in taxes,......you'll pay the Federal tax on that amount. Your 401(k) money was....tax-deferred up until that point.

At age 70,.....and $80,000 a year,.....you are out of money at age 80. How the heck are you going to buy the grandkids the latest electronic toys? Your Social Security should be up around $2400 since you waited for the maximum amount,.....but that means your lifestyle will drop by $51,200 a year. I guess it should be liveable at age 80,.......unless you've been hitting the casinos and lottery machines heavy.......

But,....if you retire at 60,....you get $40,000 a year for 20 years. Taxed at a $40,000 a year level. At age 80, you only take a $22,400 hit in your lifestyle.

Plus,....when you retire,......do it on December 31.....because your tax level for the next year will be based on your last year worked.

Now,.....what about the news stories of guys returning to the workforce in their late '70's.....because tey ran out of money?
From what I understand,.........the average 401(K) has about $80,000 in it,..........nowhere near the savings to live on for more than a few years.....

It looks like $800,000 should be the bare minimum.......Does that seem the exception?....or the norm?
 
I had the Teamster 401K plan until I retired, then I rolled it into an existing IRA account I had at Fidelity. It was a simple process, there was no tax liability since the money went from one retirement vehicle to another. Getting into the Teamster 401K was the best retirement move I ever made. Prudential was great to work with, made the process very easy, same with Fidelity.
 
Here we go , Gentlemen! The Metaphysical gauntlet has been thrown down!

Several Brothers on this site have expressed a preference for defined-contribution retirements,...commonly known as 401(k)'s.

I, myself, had called them "schemes"...........that only favor banks, Wall Street, and employers.......at the expense of employees.

I can clarify a bit by saying I was involved in ABF's 401(k),...and the involuntary switching from ABF's Fidelity fund to the Teamster's Prudential fund. I think that 401(k)'s have a place as far as savings go,.....but to rely on them as a SOLE retirement vehicle........as they are "sold" by many employers,.....is a huge financial error.

The fact that pretty much all of the "investors" in defined-contribution plans......have NO idea of how the "mechanics" of retirement on a 401(K)-style plan....(....ask your co-workers HOW they will get their "retirement" check from their 401(k) when they retire, and you'll see what I mean...).....
......is , in my eyes, evidence that there is a heavy sales pressure being applied.........
.......regardless of whether the employees in question...will be properly taken care of,...through retirement.

I realize,.....as the literature says in the 401(K) brochure,.......that the investments you are making are your personal decision,......and carry NO guarantee.
This would preclude anyone getting involved in a defined-contribution investment plan as a SOLE means of retirement,..to spend quite a bit of time researching all aspects of the various 401(K)'s, 501 plans, and the other types of investment schemes.
Yet,.....the fact that just about all of the people I've talked to,...have no clue how they're going to get...paid...in retirement,.......and are involved in the company's 401(K) STRICTLY on their faith that "good investments" will be made on their behalf.......

......shows me that the average employee is not being....educated.....on what will become the most important decision of their life....in their '60's.

I.....suspect......that lack of information,....is by design.

Brothers,.........what do you think?


You would be correct IF teamster pensions were safe. Given the huge cuts in benefits and most teamster pensions heading toward insolvency a 401k is the only safe means to build a good retirement nest.
With the variety of choices from Traditional or Roth and countless investment vehicles a 401k is the safest way to prepare for retirement.
Plus if you die prior or shortly after retirement a teamster pension only guarantees 60 payments. But with a 401k your beneficiaries get all of your savings not a union....
 
They take 20% federal.
Trust me. I know.
I've taken some out.
Best to take it directly outta your check and put it in your mattress.
Now if your gonna wean a monthly check off a 401 that a good idea.
But to take large amounts out expect to have a large amount of taxes taken out and then again at the end of the year because they call that an income.
Good luck.
:17142:
 
401scam bring back pensions and company paid health insurance through retirement like my grandfather had when he retired from Illinois Bell in 1984!
 
Here we go , Gentlemen! The Metaphysical gauntlet has been thrown down!

Several Brothers on this site have expressed a preference for defined-contribution retirements,...commonly known as 401(k)'s.

I, myself, had called them "schemes"...........that only favor banks, Wall Street, and employers.......at the expense of employees.

I can clarify a bit by saying I was involved in ABF's 401(k),...and the involuntary switching from ABF's Fidelity fund to the Teamster's Prudential fund. I think that 401(k)'s have a place as far as savings go,.....but to rely on them as a SOLE retirement vehicle........as they are "sold" by many employers,.....is a huge financial error.

The fact that pretty much all of the "investors" in defined-contribution plans......have NO idea of how the "mechanics" of retirement on a 401(K)-style plan....(....ask your co-workers HOW they will get their "retirement" check from their 401(k) when they retire, and you'll see what I mean...).....
......is , in my eyes, evidence that there is a heavy sales pressure being applied.........
.......regardless of whether the employees in question...will be properly taken care of,...through retirement.

I realize,.....as the literature says in the 401(K) brochure,.......that the investments you are making are your personal decision,......and carry NO guarantee.
This would preclude anyone getting involved in a defined-contribution investment plan as a SOLE means of retirement,..to spend quite a bit of time researching all aspects of the various 401(K)'s, 501 plans, and the other types of investment schemes.
Yet,.....the fact that just about all of the people I've talked to,...have no clue how they're going to get...paid...in retirement,.......and are involved in the company's 401(K) STRICTLY on their faith that "good investments" will be made on their behalf.......

......shows me that the average employee is not being....educated.....on what will become the most important decision of their life....in their '60's.

I.....suspect......that lack of information,....is by design.

Brothers,.........what do you think?

First and foremost, brevity is my choice.
In the Teamster model, the 401k is misrepresented, because there is no 'matching' funds by the employer.
Money contributed by employees of ABF is completely voluntary.
In lieu of pension contributions by YRC employees in Western States, 25% of former dollars earmarked for pension contributions are now deposited into that fund. Any additional is purely voluntary, as with ABF.

#1 Any money one chooses to contribute to their 401k from their wages is purely voluntary, BUT IT IS TAX DEFERRED.
#2 The money contributed lowers one's gross income, THEREBY REDUCING TAX BURDEN.
#3 Investing is not an easy task and most are ignorant, not stupid, ignorant. Learning how to invest is a daunting, if not a formidable task. Some investment professionals will take advantage of ignorance. Understanding the many strategies of investing and the most beneficial ways to take advantage of investing for your future is a massive undertaking. It's your money, it is your responsibility to manage it in the best way you can. It is your responsibility to educate yourself.

I will do my best to address each and every issue on this thread.
 
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If I may answer that; there are several ways to get your money out of a 401k but I think the easiest way is to call them (after you are no longer employed with that company or you are over age 59 1/2) and ask them to send you a check. I would suggest having the check made out to your financial institution (your personal bank) and you, then you deposit it. It can be direct deposited or money transferred. It's not hard nor is complicated. Easy as depositing your payroll check except it may take a little time to clear your bank.

In almost all cases, it is better to wait until you are no longer employed, to take action on your retirement accounts.
It is better to use options within existing 401k plans to protect your investments until you retire.
As Supercourse has stated, the best way to control your money is to 'roll' it into an IRA account and reinvest from within that account.

Be conscientious of your income level before dipping into your 401k. The idea is to keep your income at a level that is below the the maximum at each breakpoint in taxable income. It is important to consult a tax professional to keep your tax burden at a minimum in retirement.

Once you have established your IRA, or transferred to an existing one, the amount you choose to have added to your annual income will be taxed appropriately. There are a variety of options available to you. Sometimes it is better to defer Social Security in lieu of taking IRA withdrawals.... Be aware of the many options available to you. Once you reach 70 1/2, you must take distributions based on the table referred to in this link.

https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf

(There are exceptions if your wife is sole beneficiary and more than 10 years younger.)
 
You would be correct IF teamster pensions were safe. Given the huge cuts in benefits and most teamster pensions heading toward insolvency a 401k is the only safe means to build a good retirement nest.
With the variety of choices from Traditional or Roth and countless investment vehicles a 401k is the safest way to prepare for retirement.
Plus if you die prior or shortly after retirement a teamster pension only guarantees 60 payments. But with a 401k your beneficiaries get all of your savings not a union....


But,....is a 401(K) safe? I distinctly remember a market downturn in 2001 that cost me 30% of my portfolio. And,....another one in 2008......And various small ..."fluctuations"......that cost 5% - 8%.
I can't remember any massive...jump ahead. All I ever saw was slow and steady growth,...until a precipitous and unexpected de-valuing of my account. Why no large jumps forward?

As near as I can figure,.......I could've done just as well putting my money in a bank with 1% - 2% interest over a 25 year period. No large drops in value, and the same steady growth.

A 401(K) with a company match is a good thing,....I guess. Having never have a company offer to match my 401(K) contribution,...I wouldn't know.

I don't know about your Teamster pension options,...but here in W.Pa. you can elect a "Survivor's Option",....where your wife gets your pension for as long as you live. There's a 50% survivor's, and a 100% survivor's option.

It's my understanding that....90% of your lifetime healthcare dollars,....are spent in the last 90 days of your life. In light of that,....I would think the doctors, hospitals, hospice care people,...and the funeral home directors....(...and all your creditors...)...
...would be in line in front of your spouse and family,....for any money remaining in your 401(K),...or any other savings and holdings.
 
First and foremost, brevity is my choice.
In the Teamster model, the 401k is misrepresented, because there is no 'matching' funds by the employer.
Money contributed by employees of ABF is completely voluntary.
In lieu of pension contributions by YRC employees in Western States, 25% of former dollars earmarked for pension contributions are now deposited into that fund. Any additional is purely voluntary, as with ABF.

#1 Any money one chooses to contribute to their 401k from their wages is purely voluntary, BUT IT IS TAX DEFERRED.
#2 The money contributed lowers one's gross income, THEREBY REDUCING TAX BURDEN.
#3 Investing is not an easy task and most are ignorant, not stupid, ignorant. Learning how to invest is a daunting, if not a formidable task. Some investment professionals will take advantage of ignorance. Understanding the many strategies of investing and the most beneficial ways to take advantage of investing for your future is a massive undertaking. It's your money, it is your responsibility to manage it in the best way you can. It is your responsibility to educate yourself.

I will do my best to address each and every issue on this thread.

Brevity is admirable,.........but clinically impossible in such a long-winded person such as myself......Must be good genetics regarding my lung capacity.........(...note that I said nothing about mental capacity as regards to ...typing long-windedly...)...

You make very good points here.....the main one being how daunting learning how to be a responsible, savvy,....and successful ..investor , can be. Where does the....Average Joe...go to find good advice that doesn't cost as much as one stands to make?...or require large amounts of Trust in the decisions of total Strangers, who say they have your best interests at heart?

The.....Average Joe,......and I am one,......is really at the mercy of whoever is running that particular investment scheme. There are no safeguards to protect the....Average Joe......from the vagaries of the market....which COULD be manipulated by the large players in the stock 'n' bond trade.....for their OWN benefit. Short sales, insider trading, day trading,........all this exists in the same sphere us....."uninitiated".....are operating in. I don't know about you,.....but it makes me very, very...leery.

CAN the.....Average Joe.....educate himself to the point where he feels safe? Or,..would the education amount be almost a full-time occupation in itself? There are guys on here who have degrees in business management and economics,......I would think they have at least the rudimentary skills neccessary.......But,....what about the rest of us? The bulk of the investors? Are we "sheep to be sheared" in the eyes of portfolio managers?
Not to .....accuse.....all investing managers of malfeasance,.......but ,....isn't it "convenient" to sometimes take advantage of ignorance?......especially if the "Ignorant" are unaware they've been ....taken advantage of? Would that be the explanation of the.........large drops in the value of 401(K) portfolios,....that seem to occur every three or four years, with regularity?....if not warning?

Once you sign up for a 401(K) investment scheme with your employer,......it becomes almost impossible to withdraw from it,...short of separation of employment. That's forced stock market investing,.....whether you want to or not.
Many might regard that as a good thing,......to have "professionals" steward your savings........

But,......you still have to eat those losses,...when the "professionals" say you do......
 
But,....is a 401(K) safe? I distinctly remember a market downturn in 2001 that cost me 30% of my portfolio. And,....another one in 2008......And various small ..."fluctuations"......that cost 5% - 8%.
I can't remember any massive...jump ahead. All I ever saw was slow and steady growth,...until a precipitous and unexpected de-valuing of my account. Why no large jumps forward?

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If you were in say an S&P 500 index fund over the past 22 years and didn't panic and sell, you would be doing just fine. That works
fine if you are young enough to ride out down turns. As you approach retirement age it's best to get out of equities and move into fixed income vehicles. The Teamster 401k offered an excellent one from Prudential, I think it was called Teamsters Stable Income or something like that. I retired about 9 years ago and haven't touched the money in my 401K yet and haven't worked a day since retirement. In a few years I'll be forced to start taking money out. I retired with no debt, no mortgage, no car payment, no credit card debt and live a frugal contented life.
 
If on retirement day you have $800,000 in a 401K you should be invested in CDs and or bonds to get a 5% return ($40,000 annually) and don't touch the principal until you have to (age 70 1/2). Then draw it down over 20 -25 years.


Not bad,..........provided you can accumulate the $800,000.

The latest data from Vanguard is that the average amount in a 401(K) across this country is....$103,866.
Not bad if you're a 29 year old.............terrifying if you're 58, and that 401(K) and Social Security have to last you until you're 85....

That amount may cause you to defer retirement until 67,..70...beyond?
That's fine if you're a desk jockey or a keyboard pounder........But what about those in physical labor jobs? The "coin" you're spending there .....is your age, dexterity, strength, ...and your ability to keep up with the....younger guys,....without getting a life-altering injury.

Having all of your employees in a 401(K) is an employer's dream.......Any market fluctuation..(..manufactured or not...).......causes existing employees to....defer retirement. In a tight Labor market,.........it behooves the "powers That Be.."....to CREATE market fluctuations..(..I.E.: losses..)......to retain employees. There is no responsibility for the employer,....and no oversight from the government,....to insure that an employee can....afford...to retire.

And,....once retired,....can afford to STAY retired........

Business Maxim #1: The more available the employees, the lower the wages.

If you can double the size of the available Labor pool, you can halve the wages,..........Like they did in the late '60's , when they convinced women to enter the Labor market in droves, and go in competition with their husbands for jobs......
Remember when it took only ONE paycheck to feed a family? Big Business laughed all the way to the bank,.....and our wives went on second shift.......
 
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If you were in say an S&P 500 index fund over the past 22 years and didn't panic and sell, you would be doing just fine. That works
fine if you are young enough to ride out down turns. As you approach retirement age it's best to get out of equities and move into fixed income vehicles. The Teamster 401k offered an excellent one from Prudential, I think it was called Teamsters Stable Income or something like that. I retired about 9 years ago and haven't touched the money in my 401K yet and haven't worked a day since retirement. In a few years I'll be forced to start taking money out. I retired with no debt, no mortgage, no car payment, no credit card debt and live a frugal contented life.




Good Man!

But,....I am just the opposite......I have the debt,...the mortgage,...the car payment,.......and put 4 children through college,...(..that remains a lasting legacy..).....

Now I've got an arm that regularly clicks and shoots pain,....and a hand with no feeling in my fingertips.

I've been retired for more than a year at 63. Options were to keep working and risk more "physical" damage,...or retire.

Which one of us would you say is the more ..."Typical"...of people our age,...... Financial-wise?

...(...My work history includes 9 carriers going bankrupt under me,...a 9 year stint as an O/O,.....and finally ABF..)...

Was I stupendously Unlucky?.......or Financially Stupid?........Or (Third Option) , Fairly typical of anyone in the trucking industry, post-deregulation?
 
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