Guest Article
"Retiring Boomers Find 401k Plans Fall Short" - A False Premise
By David Kudla. David Kudla is CEO and Chief Investment Strategist of Mainstay Capital Management, LLC, a fee-only, independent, Registered Investment Advisor with $1 billion under management.
The Wall Street Journal article, "Retiring Baby Boomers Find 401k Plans Fall Short," published over the weekend, seems to blame the tool used to save for retirement rather than the user or provider of the tool itself.
401k plans have provided a vehicle for millions of Americans to save and invest for a secure retirement. It is the one source of retirement income among Social Security, traditional pensions, and workplace savings plans, where the individual has 100% control - how much to save, and how to invest the savings.
At Mainstay Capital Management, we have found time and time again, that employees who are provided with ample investment choices, education, and third-party independent advice can utilize a 401k plan quite well in saving for retirement. The key is awareness, education, planning, along with appropriate payroll contributions and investment decisions.
My firm, Mainstay Capital Management, provides fee-only independent advice for many 401k plan participants. At one major corporation where we have provided advice for hundreds of their 401k plan participants, the difference professional guidance makes is staggering.
A recent analysis we conducted showed that for our clients among the salaried work force, where Mainstay had managed their account for at least six years, the average account balance was nearly three times that of the average for all salaried employee participants in that 401k plan. Among the hourly workforce, where Mainstay had provided services to clients for at least six years, the average account balance was more than three times that of the average for all hourly employee participants of the plan.
The combination of awareness, education, planning, and professional investment guidance clearly makes the all important difference in the success of 401k plans in corporate America.
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