response 44 of 96:

Feb 2 15:42 UTC 2006

re #41 unfortunately you cant even take that for granted anymore, because
numerous companies these days are filing chapter 11 bankruptcy these days for
the purpose of killing their employee pension plans.  

response 46 of 96:

Feb 2 16:32 UTC 2006

Good points. Luckily for my folks, their retirement health care is 
being paid by taxpayers due to a retirement from a public sector job. 

I imagine that since health care is so expensive for older people, 
there simply are no easy solutions. Personally, I can think of a lot of 
reasons why it might be better for everyone if employer based health 
care were switched to a more socialized form of health care. And oddly, 
I imagine that lots of big businesses are going to start to lobby for 
that kind of thing. 

I am very interested in this business of firms getting out of paying 
benefits for retirees. I need to look into it further but it seems to 
me that the auto industry in particular will have a hard time getting 
rid of such obligations because they were part of collective bargaining 
agreements. But then I dont know anything about bankruptcy law. 

response 48 of 96:

Feb 2 17:13 UTC 2006

Academic (and medical, and some other) institutions as a group got out of 
the "pension" business for their employees a long time ago. An investment 
corporation was formed, the Teachers Insurance and Annuity Association - 
College Retirement Equities Fund (TIAA-CREF) in which academic employees 
invested part of their income, usually along with a match from the 
employer, to form private retirement portfolios. These retirement funds 
are also transportable between employing institutions. This has worked 
very well for such employees. I don't know why the model hasn't been 
adapted more widely for other groups of employees in other industries. 
There is no governmental involvement (except regulation, and tax exemption 
for the invested funds until they are withdrawn).

response 50 of 96:

Feb 2 17:20 UTC 2006

Gee, Curl thinks that TIAACRF is the greatest thing since sliced bread, 
but when President Bush wants to allow employees to choose to do 
essentially the same thing with their social security contributions he 
goes ballistic.

response 52 of 96:

Feb 2 17:40 UTC 2006

marcvh!

did you know that the u.s. spends more on healthcare per capita than any other
industrialized nation, yet doesn't even offer free medical care to its
citizens?!

response 54 of 96:

Feb 2 17:47 UTC 2006

My employer matches contributions 1 for 1 to my 401(k) up to 3% of my 
income.  The U-M matches $2 for every dollar contributed to their 403
(b) by staff and faculty, with no limit as I understand it.  It used to 
frustrate the heck out of me, during my 1st marriage, that my ex didn't 
contribute much to her retirement fund.  I thought she should have put 
in her entire paycheck and we should have lived on my income.  Had we 
stayed together, we could have both retired when I was 50 and lived as 
millionaires.

response 56 of 96:

Feb 2 18:00 UTC 2006

The government imposes a limit on employee contributions to a 403(b) or
401(k) plan.  In 2006 it's $15k.  The employer may also impose their own
more stringent limits.  And jep, if you feel bad about your match,
remember that some employers (like mine) don't give out any match at
all.

I'm not sure that 401(k) plans have exactly been a rousing success.  The
employee is limited to what the employer chooses to offer, which are
often high-cost plans.  Because the plan is tied to the job, a large
fraction (something like half) of people end of cashing out of the plan
when they leave their job, which totally defeats its role as a
retirement savings vehicle.  Employees at companies facing financial
difficult sometimes find that their employer is making ends meet by
delaying the deposit of their contributions to the account.  And so on.

response 58 of 96:

Feb 2 18:23 UTC 2006

I cashed out of my 401(k) after leaving my last two jobs.  There just 
wasn't much money to roll over, and it made more sense to me to pay off 
bills.  Also, my ex was the one in charge of the money and she's not a 
long-term planner type of person.   When you're in your 20s or 30s, 
retirement is a lot more distant than the credit card balance.

I'm doing better at putting money away in my current job, since my 
divorce 4 years ago, anyway.  I need to get my contributions up some 
more, but I'm buying a house now, my wife has a house which is about 
half paid off and is getting significant renovation over the next year 
or two, and things look pretty good for us.  We'll increase our 
contributions when we see how the bills shake out after a few months.

Marc, T Rowe Price's WWW page says I can contribute 75% of my income to 
my 401(k) pre-tax, then 10% more after taxes.  That would be a bit more 
than $15,000 if I could actually do it.

response 60 of 96:

Feb 2 18:52 UTC 2006

 re #54:
 > The U-M matches $2 for every dollar contributed to their 403 (b)
 > by staff and faculty, with no limit as I understand it. 

 I haven't been employed by them for nearly 10 years now, but at the
 time I worked for the University of Michigan that wasn't the way it
 worked (and I consider it unlikely that they'd have changed to the
 plan you describe.)

 When I was there (as recently as 1997) it worked like this:  

    -  if you signed up for their retirement plan, the University
       would put in a contribution equal to 5% of your salary,
       even if you put in nothing.
    -  they would also match your contribution on a 1:1 basis, up
       to another 5% of your salary.

 This is probably where you get the idea that they were doing 2:1
 matching -- they were matching, yes, and if you contributed 5% 
 the university contribution would be 10%, but the ratio was 2:1
 only in that exact situation.  There was no unlimited matching,
 though I wish there were.  I used to contribute another 10% of
 my salary over and above the matched 5%, so I was contributing 15%
 and the university was contributing 10% (5% flat contribution +
 1:1 match on my first 5%.)  In the situation you described I'd've
 gotten an extra 20% (more, probably, because if the deal were
 really that sweet I'd've probably put away 50% of my salary..  Why not?)

 So whatever lingering pain and regrets you have from your first
 marriage, you can safely forget about "I could be a retired
 millionaire by now, if only we'd set up our retirement a little
 better.."

response 62 of 96:

Feb 2 19:03 UTC 2006

Re #58: T Rowe Price is a good low-cost provider; glad to hear you have
them instead of some gouging crooks like Smith Barney or Principal.  The
$15k limit still applies; if you contribute 75% of your income, the
deductions will stop once your contributions for the year hit that
amount (and that's the amount for both pre and post tax contributions
combined.)  Note that limit applies only to your contributions, not
matching money from your employer.  My plan allows me to put in 50% of
my income, but if I actually did that I would hit the 15k ceiling pretty
quickly.

There are currently two different kind of tax-advantaged savings plans
for medical expenses, FSAs and HSAs.  FSAs are the ones with the annual
use-it-or-lose-it provisions.  Fortunately, now that FSAs can be used
for things like OTC medication it's easier to use the whole thing.
Worst-case, you just empty the account by buying a bunch of aspirin on
December 31st, then take it all back for a refund on January 2nd. :)

Both plans are of limited practicality, and both are only needed because
of the fact that the medical expenses deduction on federal income tax
has so many restrictions that few people are able to get any benefit
from it.

response 64 of 96:

Feb 2 19:45 UTC 2006

re resp:62: Thanks for the overview!  It is unlikely I'll be able to 
contribute $15,000 in a single year any time soon.

Is that limit the pre-tax limit?  How does it work if you put in money 
after taxes?  Are you double taxed; once when you earn the money and 
then again when you take it out of your 401(k)?

response 66 of 96:

Feb 2 20:09 UTC 2006

We know where Neil went after S&L but where's Marvin Bush?