Don't miss this new PBS documentary on retirement
Do yourself a favor. Block out an hour of your time, and make sure to watch "The Retirement Gamble," a damning documentary from Frontline.
It aired on PBS stations Tuesday night, but you can watch it online for free on the website: www.pbs.org/wgbh/pages/frontline/retirement-gamble.
In one hour, the show lays out exactly why do-it-yourself retirement planning has been, and will continue to be, a disaster and how 401(k) plans are proving to be a poor replacement for traditional pensions.
Most of us are poorly prepared to make the complex investment decisions that are required.
A recent study by the Securities and Exchange Commission found that we "lack basic financial literacy" and have a "weak grasp of elementary financial concepts and lack critical knowledge of ways to avoid investment fraud."
Frontline shows how that's playing out in the lives of real Americans as they struggle to save more, invest wisely and overcome costly hidden fees that sap their balances.
- The 31-year-old economist with $40,000 in student loan debt who plans to cross his fingers and pray that he'll be able to figure out how to save more money.
- A retired teacher and a working teacher and an unemployed middle-aged man who were sold expensive annuities through work without being told the real costs.
- The correspondent on the documentary, Martin Smith, who is 65, had tapped his 401(k) to pay education costs for his children and has been told by his financial adviser that he has to work full time until he's 70 and then part time until he's 75.
It was the economist of that group, Robert Hiltonsmith, who figured out how much money the average American family is losing to 401(k) fees. He was perplexed as to why he kept putting money into his account, but the account never seemed to gain much money. In 2012, he published a study that the number for a median-income, two-earner family is nearly $155,000.
The documentary ends on an even more depressing note (yes, really), with how the financial services lobby squelched everything but a token change that forced companies that peddle these products to make fees clearer.
Let's be clear.
Having something in your 401(k) plan is better than having nothing. Every dollar you save is a dollar closer you'll be to true financial security.
But we're just kidding ourselves if we think that dumping all of the responsibility and risk of retirement savings onto individual Americans is going to end well.