RandomGuy
07-03-2008, 09:49 AM
Ruined by 401[k] Predators (http://news.yahoo.com/s/bw/20080703/bs_bw/0828b4092000132397) (click title for full article)
Stan Morrill was confident his nestegg would provide for him and his wife for the rest of their lives. After all, the Eastman Kodak (NYSE:EK - News) veteran, a factory worker for 31 years, had attended the free financial seminar recommended to him by co-workers. Morrill says the host, Michael J. Kazacos, one of Morgan Stanley's (NYSE:MS - News) top brokers, dazzled him with a plan that would let him retire at 49. Morrill just had to roll over his pension and 401(k) into a tax-deferred account managed by Kazacos. After that, he could safely withdraw $36,000 a year -- plenty to cover his bills -- without ever touching the $320,745 principal. "I saw no reason why I should stay and work," says Morrill, who signed on in 1998.
But he says the strategy, which assumed unusually high investment returns of up to 14%, didn't pan out. Morrill's balance now stands at just $57,559, and with little other savings, he's scrambling. At 59, Morrill doesn't yet qualify for Social Security benefits, so he has taken a job as a janitor at a local school paying $9.50 an hour. In April 2007 he and his wife, Cathy, sold the five-bedroom Victorian house in a suburb of Rochester, N.Y., where they had raised their two kids, and unloaded some inherited land in Florida. Now they own a modest ranch house on the outskirts of town. "It's all gone," says Morrill. "I've had thoughts of suicide."
On June 24, MetLife (NYSE:MET - News) research arm Mature Market Institute released a study showing that 69% of pre-retirees overestimate the amount of money they can safely withdraw from their accounts each year during retirement -- many, dramatically so -- while 49% underestimate their expenses. Likewise, a May study by the research group National Institute on Retirement Security found that about one in three households approaching retirement is at risk of running out of money.
The problem is that to get at the fees involved in the managing of the TRILLIONS of dollars in saved assets held by soon to be retirees, a lot of advisors are overstating what they can earn you.
By overstating what you can take out, you take out money at a rate that is waaay too fast, and end up penniless at a time where you are too old to work.
Read the whole article at the link.
Stan Morrill was confident his nestegg would provide for him and his wife for the rest of their lives. After all, the Eastman Kodak (NYSE:EK - News) veteran, a factory worker for 31 years, had attended the free financial seminar recommended to him by co-workers. Morrill says the host, Michael J. Kazacos, one of Morgan Stanley's (NYSE:MS - News) top brokers, dazzled him with a plan that would let him retire at 49. Morrill just had to roll over his pension and 401(k) into a tax-deferred account managed by Kazacos. After that, he could safely withdraw $36,000 a year -- plenty to cover his bills -- without ever touching the $320,745 principal. "I saw no reason why I should stay and work," says Morrill, who signed on in 1998.
But he says the strategy, which assumed unusually high investment returns of up to 14%, didn't pan out. Morrill's balance now stands at just $57,559, and with little other savings, he's scrambling. At 59, Morrill doesn't yet qualify for Social Security benefits, so he has taken a job as a janitor at a local school paying $9.50 an hour. In April 2007 he and his wife, Cathy, sold the five-bedroom Victorian house in a suburb of Rochester, N.Y., where they had raised their two kids, and unloaded some inherited land in Florida. Now they own a modest ranch house on the outskirts of town. "It's all gone," says Morrill. "I've had thoughts of suicide."
On June 24, MetLife (NYSE:MET - News) research arm Mature Market Institute released a study showing that 69% of pre-retirees overestimate the amount of money they can safely withdraw from their accounts each year during retirement -- many, dramatically so -- while 49% underestimate their expenses. Likewise, a May study by the research group National Institute on Retirement Security found that about one in three households approaching retirement is at risk of running out of money.
The problem is that to get at the fees involved in the managing of the TRILLIONS of dollars in saved assets held by soon to be retirees, a lot of advisors are overstating what they can earn you.
By overstating what you can take out, you take out money at a rate that is waaay too fast, and end up penniless at a time where you are too old to work.
Read the whole article at the link.