Fixing Your 401(k) – Part 7

Problem #6 – EducationOf all the issues we have been discussing that are plaguing 401(k) plans right now, the biggest is EDUCATION on how it works. Why? Very simple. If proper education was taking place, it would help to solve the other issues, and reduce the liability each employer and plan sponsor currently faces.


Jackson Life did a survey of several passers-by and asked them questions about 401(k)s. (Source Rollover Rx, Jackson National Life Insurance) If you have ever watched Jay Leno do his “Jaywalking” bit on the Tonight Show, you have a pretty good idea of how it went.

Here are a few actual responses when people were asked about education offered by their employers for their 401(k) plans.

“I wasn’t aware of any education.”
“Don’t participate in this. Its on a webinar.”
“Information meetings are inconvenient to attend. I’m too busy.”
“I think there is on line stuff, but I don’t think anyone uses it.”
“What can you tell me about it?”

I have personally talked to several clients who tell me that when there are “meetings”, the advisor simply hands out his card and runs thru a quick power point presentation, then asks if there are any questions. This is usually met with blank “deer in the headlights” looks.

Education must be done on an INDIVIDUAL BASIS. Everyone’s situation is different.
John, the 49 year old manager is in a different spot from Brandon, the 24 year old sales rep, who is new to 401(k) investing – although Brandon needs to know he is in a great place to get started now. Kim, the 35 year old customer service rep, may be thinking about borrowing against her plan, and Sue, the 42 year old customer service manager, is new to the company and wants to know how much she should invest, and what funds to pick.

How can you address individual situations in a “webinar” or “power point”?

A survey done by The Spectrum Group ( – Source Jackson Life, Rollover Rx) tells us that 85% of employees want professional advice, however only 37% of employers offer any real contact with an advisor. That is not good for the employees, or the employer/sponsors, who are exposing their companies to liability and potential lawsuits.

So what should you be doing?

Let’s review the Problems I’ve covered so far.

Participation –  We don’t participate & don’t contribute enough. Start participating in your plan and max it out.
Portability – Too many cash out when changing jobs.  Roll the old 401(k) to your new plan or to an IRA. 
Loans – Heavy tax consequences and penalties.  Set up a savings fund of 3-6 mos expenses. Don’t borrow on 401(k)!
Investments –  We try to ‘advise’ ourselves. Diversify. Get professional advice. Its your money, your future.
Education –  Not enough advice by employers.  Find an advisor you can work with.

Here are 3 key questions you & your advisor should be asking.

1. Do I have enough money to live through at least 25 years or more in retirement?
     How can I make my money last for the rest of my life?

2. Will my savings & income keep up with rapidly rising costs?

3. How can my savings be protected against declines in the stock market?

Let me end with this quote from one of my favorite songs.
“Working so hard to make it easy……got to turn….turn this thing around – Right Now!
Its your tomorrow. Right Now! Its everything.” (Van Halen – Right Now)

Bet you never thought you’d see a Van Halen reference in an article on retirement!

Get started on your plan – Right Now! Meet with your advisor today and get started on Improving Your Financial Health. For more information, please contact me at You can also follow me on Twitter –

7 Responses to Fixing Your 401(k) – Part 7

  1. Jack Home says:

    Thanks for writing,I really enjoyed your newest post.I think you should post more frequently,you obviously have talent for blogging!

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  3. James Bailey says:

    This article is FANTASTIC!! You nailed it! I will start putting more into the 401k!

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