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Advice from my 401k provider

September 7, 2010

A while back, I got a letter in the mail giving me a “check-up” of my retirement savings, and an offer to sign up for (not free) account management services on my 401k (no thanks!).

Since I’m maxing out my 401k this year, I was feeling a little smug when I got to the part where they were going to tell me whether I’d have enough money to retire or not.  Until I read their conclusion:  “We recommend saving $16834/yr.”    What?!?  But I’m only saving $16,500!  That’s not enough?!

They have no knowledge of my maxed Roth IRA, so I think I’m still ok in their eyes.  Still, I always thought I was oversaving a bit for retirement, with the idea that maybe someday I wouldn’t be able to save quite so much (kids, etc.).  I don’t even bother with the online “what do you need for retirement” calculators because so many assumptions are built into them that I never trust the result.  I just save the maximum possible in tax-advantage accounts, and I’ll figure out the rest later.

Then again, it is in their best interest to not only sell me their “advising” service, but to also have me buy more of their funds, so they can collect more of my fees. Do you trust advice given to you by your 401k management company?

3 Comments leave one →
  1. tom permalink
    September 7, 2010 8:12 am

    Nope… I don’t trust it at all.

    I also don’t appreciate the fact that they are charging $0.50 a month for services I don’t use/need.

    They also took away the calculators. There used to be calculators that would graph potential changes to your 401(k) contributions and calculate the tax impact (with these, you could change the assumptions).

    I think the new management company is completely worthless and we need to switch to Vanguard.

    Sorry for the ranting, but it really bothers me.

    • September 7, 2010 11:21 am

      I miss the calculators too! I actually used them pretty frequently.

      They told me I was too aggressive, but on the sheet my current allocations were about 1/4 inch from their recommendation. Ummmm, don’t think that’s worth it.

      I didn’t realize that’s where the $0.50 was coming from. What do they even need it for? For maintaining the useless articles on the new website?

  2. September 8, 2010 4:09 am

    Not really. They tell me to save more, but my plans are to leave the country so I have to keep everything in cash so it’s easily transferred to my new banks..

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