Jane White's Press Releases

Obama’s Automatic IRA, Annuity Schemes Would Be A Disaster

As Baby Boomers face retirement poverty due to the measly 3% contribution rate to their 401(k) accounts, President Obama’s only reform is to simply allow workers without 401(k) plans to enroll in a “direct-deposit IRA” in which employees are forced to bankroll their own retirement.

“Given that fewer than 5% of the population contributes to personal IRAs, why would they choose to do so in the workplace?” said White, the author of America, Welcome to the Poorhouse. ”What’s more, why are America’s employee forced to bankroll their own retirement, rather than requiring higher employer contributions?”

To make matters worse, the Obama Administration is promoting the use of annuities, one of the biggest financial ripoffs in the marketplace. For one thing, promoting annuities presumes that Americans have accumulated enough to retire and they simply need their adequate savings to last a lifetime. Given that the median 401(k) account balance for those over 65 is between $45,000 and $65,000--and the median income for that age group is $65,000--few, if any Americans have accumulated the minimum “ten times final pay”, or your salary nearing retirement, to be able to afford to retire.

For another, even if Americans had accumulated enough, annuities are the worst possible solution for managing a lifetime income stream, given the irresponsible behavior of the salespeople in the industry. For example, in 2006 the Financial Industry Regulatory Authority issued an investor alert regarding annuity salespeople who conducted workplace seminars in which they convinced employees to retire early, cash out of their 401(k) accounts--causing them to pay “penalty taxes” if they were under 59 1/2--and buy a variable annuity. In another disciplinary case, the broker told the employees that he could generate annual investment returns of 18%.

In addition, in 2008, Florida Governor Charlie Crist signed a law increasing penalties on annuity salespeople to as much as $150,000 for deceptive practices such as “twisting,” in which a salesman lies about the benefits of his annuity to get clients to sell their current annuity, or “churning,” which involves replacing the annuity with a new product from the same company. In 2006, New York Attorney General Eliot Spitzer announced an agreement in which the Hartford Financial Services Group would pay $20 million in restitution and fines and implement reforms designed to bring transparency to the marketing of retirement products.

Interviews:

9/30/2009:

10/08/2009:

10/09/2009:

Book Reviews:

09/30/2009: Book Review: Welcome to the Poorhouse by Miranda Marquit

10/06/2009: "Jane White: Your 401k Isn't Enough" by Miranda Marquit

10/08/2009: "Recession is Best Time to Revive Your Retirement Plan" by Kimberly Amadeo, About.com

America, Welcome to the Poorhouse Book Review by Kimberly Amadeo, About.com

10/08/2009: "10 Steps to Avoid the Retirement Poorhouse" by Gary Stern, Minyanville.com

10/22/2009: "Tip: To retire at 65, you need 10 times your salary." by Peter King, NewsDay.com

10/23/2009: "Bookshelf: Retirement Plans Under the Microscope.", NYTimes.com

12/09/2009: "Join the revolt by sending out some e-mails.", by Barbara Whelehan at Bankrate.com

12/10/2009: "America, Welcome to the Poorhouse." by Heather at TheGreenestDollar.com

12/10/2009: "Book Review & Giveaway: "America, Welcome To The Poorhouse" by FinancialSamurai.com

12/11/2009: "REVIEW: America, Welcome to the Poorhouse (Jane White)"by Wojciech Kulicki at Fiscalfizzle.com

12/16/2009: "Review of Jane White's America, Welcome to the Poorhouse" by Michael Dink, www.dinksfinance.com

12/17/2009: "Interview with Author Jane White" by Michael Dink, www.dinksfinance.com

12/19/2009: "America, Welcome to the Poorhouse", www.northerncheapskate.com