How not to retire poor

Charles Schwab, the big discount brokerage firm, holds about 11 million individual retirement accounts. And yet Schwab CEO Walter Bettinger said there’s a problem with this system. Back in the days of company retirement plans, those retirement accounts were managed by professionals.

Now, companies tell their employees, here’s your retirement account, manage it yourself, good luck. There are two big problems with that:

“We’re asking assembly line workers to manage money like they were experts,” Bettinger said. “And we’re saddling these same workers with excessive fees which place a drag on their account growth.”

So in a speech at the National Press Club, Bettinger called for employers to assign every employee an independent financial adviser who could give reliable advice on how much to save and where to invest it, so they won’t retire poor.

“A typical 45-year-old getting independent, objective advice would have 70 percent more money in their account upon retirement than someone trying to go it alone,” said Bettinger.

And, as you might expect from a guy who runs a discount brokerage, he says most small investors are getting ripped off by fees charged by brokers firms who pretend they can beat the market.

And where Americans are today is pretty scary because left on their own, they just don’t save enough.

To be able to draw even a modest monthly pension like in the old days, by the time you retire, you should probably have at least half a million dollars in your 401(k).

And to be comfortable, you should probably have more like a million dollars.

But Bettinger said that the median balance in a 401(k) plan today is a pathetic $40,000. Which means a lot of people are going to need a Plan B. No wonder lotteries are so popular.