No one likes unpleasant surprises, especially when it comes to retirement. Here are a few potential pitfalls that the Solo 401 k solution can help you avoid:
Companies are restructuring their retirement plans
These days, more and more companies are following the trend of pension plan restructuring. Whether it’s scheduling early buyouts, making structural changes, or tightening contribution rules, these changes affect your retirement. And usually the end result is that you have less money in your retirement fund.
In 2012, Verizon employees sued the company for transferring $7.5 billion in retirement plan obligations to Prudential. The claim was that Verizon was breaching its fiduciary duty by transferring to a single entity, Prudential, instead of diversifying the plan to minimize risk for its beneficiaries. Verizon won the case, and the employees were not given a say in the matter.
Even if a company’s pension remains the same, the fact is that the power to make changes is held by the company. And the company doesn’t always have its employees’ best interests at heart. The company’s main goal is to protect their bottom line.
Instead of leaving the structure of your pension to a company, the Solo 401 k solution enables you to structure your retirement. Only you can truly have your own best interests at heart. With the Solo 401 k solution, you have the power to decide, make changes, and invest.
Companies can’t pay their retirement plans
In this recession, many companies once considered to be indestructible are now facing closing, downsizing, and even bankruptcy.
Recently, Hostess brands, an American icon, closed after declaring bankruptcy. Included in its liquidation plan was a request to cut $1.1 million per month in retirement benefits, leaving its employees without the retirement payments that they were promised.
Even city and state governments are not immune. Once reputed to have generous benefit packages, public service jobs are often being asked to wait or go without payment to their retirement. With all the troubles plaguing the governments, paying retirements may be one of the last things on their minds. It’s tantamount to saying, “Sorry, we can’t help you; we’ve got troubles of our own.”
The city of San Bernardino is one example. After filing for bankruptcy in August 2012, the city stopped making payments to CALPERS. The city now owes its employees $6.9 million in retirement funds.
Leaving the growth of your retirement fund to another (who may or may not live up to their promises) is a risk. The Solo 401 k solution gives the control to you- you can invest, diversify and maximize your funds as you see fit.
Get rid of hidden retirement fees with the Solo 401 k solution
There are many fees associated with the management of retirement funds. And the disclosure of these fees seems almost purposely obscure. As a result, most people are not aware of what these fees are for, when they’re taken, and how much is being charged. Not even the employers are aware of these fees, and they’re the ones who are required by law to ensure that their plan’s fees are reasonable.
Fees may be taken “off the top,” taken from the investment’s returns or added to the fund’s losses. Fees can also be taken for managing the investment options and for the costs associated with administration, sales commissions, advertising, trading, and insurance, just to name a few. A study by the Government Accountability Office found that these investment management fees make up the bulk of total 401k expenses.
The bottom line is simple: as fees increase, your retirement fund decreases.
With the Solo 401 k solution, you are the trustee. There is no need for a custodian, and the fees associated with one are eliminated.
Personal debt looms over retirement
It’s no secret that many in the US have personal debt, whether in the form of credit card debt, loans, or mortgages. With the ubiquity of debt, it is not unusual for many retirees to enter into retirement with debt.
The Solo 401 k solution can help with debt. It has the option of borrowing from the fund in the form of a loan, which can be used to pay down debt.