Is the 401(k) dead?

Are 401K plans still a good investment vehicle and an adequate way to prepare for retirement? Money Magazine’s Ask the Expert sheds some light on the issue. Here are some of the concerns people have:

• participants aren't particularly adept at investing their contributions
• account balances can get whacked hard during market setbacks
• turning one's 401(k) stash into a lifetime income is a major challenge

However, Mr. Updegrave, who is also the author of “How to Retire Rich in a Totally Changed World: Why You’re Not in Kansas Anymore,” points out that no one has a better alternative. He explains that we might be better off if companies stuck with the check-a-month pension plans that have disappeared in recent decades. Or, maybe we would do better if the government stepped in and guaranteed a retirement check on top of our Social Security. What are your thoughts on these ideas?

No matter what you think, use whatever vehicle you have to save for retirement. If all you can do is contribute to your employer sponsored 401(k)—make a date for yourself in the future and advantage of investing pre-tax dollars and gaining free money in the form of an employer match.
Lastly, Updegrave makes an important recommendation for older adults: You will want to protect your money from downturns in the stock market as you get older by shifting some assets to the less volatile assets like bonds and cash. Take the time to do it.

Read the full article here. Let me know your thoughts on the 401 (k) on Facebook or Twitter.

8 Do's and Don'ts For Your 401k

From MSNMoney.com:

When it comes to saving for retirement and building a portfolio to last a lifetime, most Americans are way behind the eight ball -- and the nine ball and just about every other ball on the pool table.

More than 54% of Americans report that the total value of their household savings and investments, excluding the value of their primary homes and any defined-benefit plans, is less than $25,000, according to the Employee Benefit Research Institute's annual Retirement Confidence Survey. What's worse, 27% have less than $1,000 in assets. Just 11% have more than $250,000 set aside.

Yes, those figures include Americans young and old, those just heading into the working world as well as those about to check out of it. But in the main, Americans need to modify their savings and spending patterns to have any hope of enjoying a standard of living to which, rightly or wrongly, they've become accustomed.

It's not rocket science, at least not according to experts. Here are some nest egg do's and don'ts from Hewitt Associates and Merrill Lynch.

1. Participate in your plan

If you're lucky enough to have a 401k at work, contribute to it. That will greatly improve your financial well-being, according to Bank of America Merrill Lynch, which recently introduced a new tool designed to monitor and score the "financial wellness" of 401k plans in general and, by extension, the employees who participate in them.

The new tool looks at four plan-participant behaviors: saving, investing, setting and monitoring retirement goals, and nest-egg preservation. Not surprisingly, savings and investing behavior -- which represent 80% of the overall score -- are the primary drivers of financial wellness.