My 401(k) is ‘alive and well’*
Over the years, a period spanning 2005 to the present, I’ve discussed with you many times my personal finances. But I’ve always talked supply-side — why my ability to write off this laptop computer come tax season has allowed me to be more productive, or how the Bush-era cuts in capital gains taxes have helped me finance LEO’s substantial freelancer budget.
If you were hoping to hear more of that today, you will be disappointed. Judging from the conversations I’ve had with peers and colleagues, I suspect you will be bored with this semi-intellectual chatter. Amid media reports of the decline of self-worth in America, I will address the elephant in the corner of the room: my 401(k). As it is, the business of employer-contributed savings remains, like many things, subject to the image created by the news media, which has been rife with negativity. Oddly, employers and financial analysts are loathe to discuss the details openly. I will counter that today.
I want to make as strong an assessment of this situation as you are likely to hear: My 401(k) is alive and well. Allow me to reiterate:
My 401(k) remains a profitable enterprise.
My 401(k) will survive this recession.
My 401(k) will be a part of my future.
I can hear your questions already:
What about the reports of the tens of thousands of dollars in savings lost due to the downturn in the stock market?
What about the fact that my employer has withdrawn contributions to employee savings accounts?
What about the fact that I’ve had to reorder my investments to minimize risk and stop abject financial loss at a time when my account is hemorrhaging money?
Let’s take a closer look at the attendant issues.
First, the markets are fine, and this country is not in a recession. Major economic indicators show that, while the stock market dropped precipitously several months ago, it has leveled off — albeit at a lower median than the previous, decidedly more comfortable mark.
Compare that with the long, slow death of the American auto industry — Chrysler filed for bankruptcy protection April 30, and dealers are suing to stay open — or the interesting fact that some 15 percent of realtors are no longer selling real estate. Lest we forget the once-mighty daily newspaper, an aged organ with a dependency on the aforementioned industries for ad sales. Gannett, owner of The Courier-Journal and USA Today, has conducted multiple rounds of layoffs, slashed employee benefits and imposed furloughs in the past year alone, not to mention the last few years spent trimming the physical sizes of its papers, cutting column inches, and closing state and regional bureaus.
To cope with my declining 401(k), I’ve had to do some things I didn’t want to do. I have cut expenses, and because I am such a public figure, the cuts have been highly visible. I no longer go to restaurants like I used to, and my bar tabs have dropped precipitously as I’ve turned from craft beers to domestic longnecks. I have moved my monthly haircuts to bimonthly. I drive less. I have even been forced to amend plans to spend retirement cruising backroads America in a Maserati.
All these things put pressure on my personal sub-economy, and for this I am regretful. Although I can’t really help it.
And while I’m on the subject of myself, specifically, you need to know this: I am 28 years old. I am in good health, save a few bad habits, and I get plenty of exercise. I like music, literature and theater. I read the newspaper, and not just online. I expect to outlive the shoes I am wearing.
Here’s something else to consider before you write the obituary for my 401(k): I am still the single most efficient way for myself to save money, and my gambling abilities are improving weekly.
In closing, I want to drive home my point one last time, in the most direct way I know how: My 401(k), which has lost something like half its value in the last year, will rise again like the once-great daily savings account it was. Trust me.
*Delivered as a speech to the LEO Weekly newsroom earlier this week. George’s speech is a response to Courier-Journal publisher Arnold Garson’s rousing op-ed in last Sunday’s C-J predicting a flush future for the newspaper.