Raiding retirement just to survive

It appears especially the middle aged, you know those ones who desperately need a job and are denied, are raiding their 401ks. From Fidelity Investments Q2 2010 statistics on 401k, retirement accounts:

the percentage of participants either initiating a loan or a hardship withdrawal increased. Loans initiated over the past 12 months grew to 11% of total active participants from about 9% one year prior. The portion of participants with loans outstanding also increased two full percentage points in the second quarter to 22%. The average initial loan amount as of the end of the second quarter was $8,650 with an average loan duration of three and half years.

Frankly I thought this number would be much higher, for we have horrific stories of people posting online their suicide notes. Maybe it is because those who are going homeless already blew past any retirement savings. Regardless, a sign of the times and this is only people who have retirement savings to tap into.

Decade of losses for young 401k investors

The 401k system is a generational scam as it exists. Yet before the Baby Boomers start to retire, your investors are already taking huge losses.

U.S. Representative George Miller, a California Democrat, held a hearing in February to highlight what he described as the shortcomings of 401(k) plans. Miller, chairman of the House Education and Labor Committee, called the plans “little more than a high-stakes crapshoot.”

Alicia Munnell, director of the Boston College center, testified about the harm the decline in stock prices had done to account balances. The center’s data, which is awaiting publication, was an attempt to quantify the extent of the damage.