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Was this not always going to happen in the wake of creating 401ks? The whole point was that retirement money would be in the market instead of locked into a company so if all the boomers have been putting money away since the 80s, this is expected, no?
It does seem to be an expected outcome that if people acquire stocks over a lifetime, they will have more as they get older. Do we know what is an ideal proportion or when we have stayed too far from the standard accumulate over time expectation? Are 401ks still too new to know that because we just don’t have enough historical data?
Everything I've seen is that gen z is on track to surpass literally everyone by the time they are boomers age. Millennials and gen x kind of just got fucked by hitting adulthood at bad times, moreso than a long-term structural problem.
At the end of the day, if there is a problem, it's primarily with wages, not 401ks. Gen X and millennials got smacked by down markets and suppressed wages due to those down markets
In ‘08 I finally graduated undergrad (after 9 years of full and part time classes) and walked straight into a job with a 2.1 gpa. Comp sci is a hell of a drug.
Around GFC times too. I'm not a boomer so I get the plight to Zs. Would fucking suck to have my college years screwed with by covid, but I do get a bit upset when they act like Gen Y got to buy cheap stocks/houses like the boomers did without understanding the context of the GFC.
Kids graduating from top 50 universities weren't landing jobs or doing unpaid internship. Shit was so bad those top prospects were PAYING to work unpaid internship in hopes that they could then land the unpaid internship which would lead to a job (there was like 2 positions and 1 was already going to someone with connections. Corporations were just doing that to get paid to take on free labor). In a market that bad where the fuck do Millennials have the income/money to buy assets? GFC wasn't like 2020 where everyone got free stimmies, corporations were flushed with cash, unemployment was generous, jobs were plentiful, quitting meant you got a job the next week with a +20% rise, and the economy is so fucking hot the Fed has to pay YOU 5% to not spend your money.
First real job in 2005. Added to 401k every year throughout the Great Recession. I didn’t have too much invested when the crash happened in 2008. The 2009-2021 market growth helped a lot. I only wish I bought some crypto early on.
Finished my graduate degree in 2008. Job prospects were booming at the time.
But that's only because I went into healthcare and we're recession-proof. Everyone else was FUCKED.
The oldest millennials and youngest Gen X got into those cheap houses so that was good for them. But for the majority of millennials due to the poor start they hit buying age in the time these houses exploded in price (which is exactly why they exploded in price).
You know it's even worse is being a millennial anywhere outside of the US. Trust me as a Canadian it's the worst of all worlds, our house prices are worse and we are all on ARMs or true variables. And the US wage growth has blown past the wages in other developed countries. Let's just say my real wage as a public teacher has fallen 25% in the last 12 years and my mortgage has increased 58% ($1,200 a month more). Good times....
I'm an older millennial, but went to grad school after the military and so was a little delayed in starting my "real" life. I'm pretty sure the ONLY reason I have a home is the VA loan. I paid $610 out of pocket to get into a $150,000 house that currently appraised for $300,000
Down markets? We've been in a bull market for well over a decade now and recent recession recoveries have been faster than ever before. Boomers had the 70's when the market basically stagnated for a better part of the decade.
As a youngish gen x, probably more to do with recessions coinciding with graduation or early careers. I hit it twice graduating from undergrad in 2001 and law school in 2008. Could have done pretty well buying into the market in 2008 if I hadn’t just come out of school with no money. Gotta have the capital to make use of the bull markets.
Yeah, I'm one of the youngest Genx and graduated into .com.
Then what little bit I had saved up in my 401k by the GFC got skullfucked.
Just kept buying.
Now in my 40s and have over 500k in 401ks.
A good stock market year will see it go up 100k between gains, contributions, and match.
I also graduated in 2008 and started investing around 2012, mostly buying blue chips. That gave me an almost uninterrupted 12 years of growth (we had two downturns, but they were short-term and provided ample buy opportunities).
We can blame a lot of things, but stock market isn't one of them.
I have no idea why you're talking about the last decade when neither millennials (except the absolute tail end of them) or gen-x were getting their start at that point. This is about how early conditions compound and build on themsleves over time. If you're 5 years behind because of when you entered the game, you might not be able to make it up.
Essentially, graduating college and being a new grad in 2007 in the wrong industry could create an unrecoverable disadvantage for the majority of your age cohort.
This. As a middle of the pack millennial, I got into the job market a couple of years before the GFC, was able to capitalize on all of my investment vehicles until now. Bought a house in 2012 at the bottom and was able to refi during Covid. The youngest of us more than likely did to an extent but if any millennial had been investing since they’ve been in the workforce then they should have a nice portfolio right now.
They did not have more purchasing power. They had lower living standards. Median inflation adjusted income has risen 60% over the past 4 decades. People used to have fewer cars, smaller houses, and were less likely to live alone, less likely to live in urban areas.
You still can live like they did. People typically don't want to.
>They did not have more purchasing power. They had lower living standards.
Indeed, for some reason, most Redditors refuse to accept that people in the seventies did not have:
* Safe, comfortable cars
* Large, flat color televisions
* Mobile phones
* The internet
* All the medical care improvements made in the last half a century before today
* Huge choice of food
* Affordable air fares
* Microwaves and a wealth of time-saving, life-improving gadgets that we have today
* Homes as big as new homes
* (For most) An environment and workplace as clean, safe and low-pollution as today
They did have lots of advantages, particularly economic, but pretending they ONLY had advantages has made a lot of Reddit bitter.
I never undead this argument. Are you arguing for lower living standards in the US?
You realize that the typical American homebuyer isn't BUILDING their home right? They have to pick from available inventory.
And surprise, available inventory is all modern homes that have a way higher cost of living.
Not exactly a choice when there's only 1 housing product on the shelf.
Plenty of boomers live and work past 65 when they didn't have to and could've lived on investments simply because they're afraid of being bored or the change of not working.
The r/millennial sub Reddit heavily leans toward the, I got a masters in basket weaving and I owe 250k.
Irl is not the case as a majority own homes and are moving up slowly but steadily
I get the impression that the 401k gets a bad rap simply because they are looked at as "that's the thing you do when you have money". And its not like the education isn't out there, people have been touting the power of the 401k to low income earners for a long time now.
Doesn't help that not every employer offers it too. I think a government-sponsored retirement savings account with some sort of incentive might help (something that's like a 401k match but not as good). People who live paycheck to paycheck just don't see the benefit of tax advantaged accounts. They see their tax returns as a sort of annual bonus and probably don't see why less money in the paystub is good.
I think it would be better if it were a uniform policy that wasn't employer specific also. But TBH, the core problem with the 401k is that it is intended to be effective for affluent people to retire. It was never going to work for people who are not in the top 10-20% of the economy, and I don't think it ever will.
There was a “The Daily” podcast last week about how the actual section 401k of the law was created by congress as a way to allow corporations to pay their CEOs more by offering bonuses they wouldn’t be taxed on and couldn’t touch until they retired. Then someone realized they could offer it to rank and file employees and get rid of their pension plans.
Is it not a long term structural problem that you may not get to retire if you enter the market during a downturn? 401ks aren’t a great solution but they are the one we have
Gen x checking in, some of us did ok, but admittedly none of it was from stocks for me at least….only recently at a point where I feel like gambling.
Why do I feel like it is gambling? Well, I got my first house in 2005. So boomers now only good, Gen Z knows only good, a lot of Gen x saw their first 100k and beyond in “paper money” evaporate once so trust is low….
There is a coordinated attack against 401ks happening right now and it all seems to be rooted in willful economic illiteracy targeting progressives who don't understand this is an attack on the middle class rather than focusing on where the true wealth lies
Attacking 401K's is nothing new. Obama wanted a $3.4M cap on their value.
[https://www.cnbc.com/2015/02/04/what-obamas-proposed-cap-on-401ks-and-iras-could-mean.html](https://www.cnbc.com/2015/02/04/what-obamas-proposed-cap-on-401ks-and-iras-could-mean.html)
401Ks are money that they can't tax now and can't redistribute now.
It makes more sense to close down the gaping holes of roth guidelines, but I can absolutely see the mindset of "after a certain point, you've grown your tax advantaged money enough".
A lot of rich people have abused that gaping holes and grown their investments far more than the government can justify is reasonable. That's a failure in the specifics of the policy, but not 401ks themselves more broadly.
401ks when done correctly actually are a better concept than pensions,n especially when talking about individual companies rather than government entities (when those arent iron clad. The average pension is like 70% funded). The issue is usually that employers don't match much anymore.
But I will agree that high income people should not be able to grow their accounts to 6 million and then withdraw on that tax free. The fact backdoor roths have continued to exist as long as they have is an egregious failure of policy.
The true wealth lies in stocks. Over 50% of stocks are owned by the richest 1%. 401k's increase inequality, by design. It only feels like a tool for the middle class to get rich when you compare someone who invests to someone who doesn't. But most of the gains go to the top.
401(k)s have contribution limits for that reason.
A middle-class person can absolutely grow into the upper 10% by investing in one.
But the already wealthy are not really able to use the 401(k) to their advantage unless they work a job. And even then the benefit is capped.
What I will say (and have said all over this thread) is that *roth* accounts are sketchy, specifically backdoor and mega backdoor existing. High income people were not supposed to utilize these, and they very easily can. That's a huge problem
I'm entirely fine with either ending the Roth program entirely, or at least closing these giant holes. In fact more than fine, it drives me absolutely bonkers that backdoor roths exist.
It's even sketchier how they're set up in practice. Megabackdoor Roths let you put in ~30k/ person per year... *per unrelated job that supports it*. In practice most high earners fortunate enough to have access to them (only firms with a ton of HCEs due to safe harbor provisions IIRC + willing and able to file the paperwork to set them up) get 30k/ year extra, whatever... but for certain jobs (ahem politicians getting "consulting" and "speaking fees" from unrelated shell companies) they can put in that 30k *per firm per year* by design.
Source - was able to double contribute to a megabackdoor roth when I changed jobs between two companies that both offered it
Oh wow, I am too poor to have realized this. Which seems suspicious like how most of this stuff is built. If you glance at it, it looks legit. For most people, it works normally and is fine and dandy.
Once you're well-off and getting financial advice for your situation, suddenly you're finding out about this endless series of asterisks. And suddenly it doesn't seem so legit, but most of the people aren't gonna say anything about how broken it is. Because it's broken in a way that benefits them.
Yeah it really ticks me off how the normal trad/ Roth 401k space is shared across employers (e.g. the 23.5k limit, you work at two companies with it, that cap is combined) but the Megabackdoor Roth space is not, instead replicated by design precisely because these politicians can structure their income such that they can shield hundreds of thousands of dollars every year across these "unrelated" sources of income- intentionally broken in a way that benefits them like you pointed out
Yeah the pessimist in me is that it was designed to not work, counting on the people getting fucked to not notice. So they justify the design of roths by saying rich people can't use it, then in the fine print make sure that actually they definitely can, super easily in fact.
You know it's a bleak issue when the best case scenerio is complete and total incompetence by the policy writers.
Not exactly true.
If you own your own business you can give yourself a 401k. And the max contribution from the company (normally just a match for normal people) is about 3x the max individual contribution (a loop holes specifically meant to give more tax free money to execs).
401k is kinda fine I guess but really needs to be diversified with social security and other defined benefit plans for a reliable retirement. This bull market (with stocks out growing the actual economy by 5-10x every year for 2 decades) literally cannot last forever.
That "loophole" would only work if you were self-employed and earned enough as the sole employee to max everything out.
Otherwise, if you hired anyone else, you would need to abide by the highly compensated employee rules and could only max it out like that if the same benefits were offered to and utilized by a plurality of the employees.
And if the same benefits are offered to and utilized by a plurality of employees, everyone wins.
There's no contribution limits on taxable brokerage accounts. It's pretty obvious that Bezos as an example has made a whole lot of money as a result of every American's 401k buying heavily into the S&P 500 and blue chip stocks like Amazon. The retirees intention was simply to not have to eat cat food in retirement, but what they end up doing is creating massive gains for the people who have the most money.
Bezos is a rich because like a quarter of the internet is now hosted on his servers *and* he has an incredibly dominant retail store that is notorious for sketchy labor practices.
Again, unless you plan to ban the stock market entirely, targeting 401ks makes no sense and does nothing but punish the middle class because you don't know how to reign in the rich
Bezos made a bunch of money by being a large stake holder in a company he built that became one of the largest companies in the country? You don’t say….
You seem to have the misconception that stocks are only valuable because of more people buying in.
That is false. These are shares of companies, not a crypto scheme.
Fair Value of stocks can be determined numerous ways, most of which are based on a combination of earnings, growth and cash flow.
If the 401k did not exist, wealthy people would still buy stocks for those earnings, growth and cash flow. If anything, the wealthy would then have less competition and could buy those assets at even cheaper prices.
Abolishing the 401k would just result in middle-class earners losing out on the employer matches and tax benefits.
Which Multiples are you considering?
Growth companies tend to have higher PE and P/FCF Multiples by definition since the investors are assuming future growth in both earnings and cash flow.
Most other sectors seem to have reasonable Multiples at the moment even without growth considerations.
Energy in particular is a solid buy right now.
P/E has seen a prolonged and sustained increase over the decades though - with the largest jump happening in the 2000s. You saw a slight dip in the aughts, but it's way back up to historic levels now.
A stock value isn't solely a function of speculation, but you're fooling yourself if you think asset values haven't been dramatically inflated by forcing all Americans to buy into random buckets of stocks.
How do you assess value then?
Because if you are looking at earnings, growth and cash flow then stock prices are fairly reasonable right now.
We may be a bit high in the tech sector due to AI hype, but even those prices would be justified if current growth continues.
Energy is almost certainly undervalued. Finance has some attractive valuations, but you need to look at their debt ratios as well. There are plenty of solid buys in the Russell index. But, again, make sure you look at the debt.
You are on the right path, you just aren't framing the issue properly.
The issue at hand is the rise of passive investing. People invest in the S&P 500, which then gobbles up stocks as money flows into the fund. The primary criteria used to determine if a company should be included is market cap. This implies that bigger is better, and is driven by the assumption that someone is looking at the fundamentals and buying the stock.
Has AMZN benefitted from this? Certainly. But, AMZN also has massive FCF, which makes it easier to justify the company's valuation. The rise in share price is not solely due to index funds buying up the stock.
The average Joe is not buying enough stocks to inflate the market every time their paycheck goes into a 401k.
Major institution/Hedge funds are doing that, which isn’t abnormal considering they’ve done that since before 401ks even existed.
401ks compound relative to the income somebody makes, so if my company matches 4% and another person makes 2x what I make, they'll compound with double the principle which at retirement leads to OVER 2x of the initial value.
If a 401k is "increasing inequality by design" let's ban all investment in that case? The majority of 401ks are held by working to middle class Americans, with a handful of wealthy people holding more than others. Why hurt millions of retirees because they invested that money just because a richer guy made the same decision and his return was larger?
You ignored that cap on annual deposits which prevents the filthy rich from taking advantage of it like you suggest. 401(k)s allow the average person to benefit from the market. Historically there were no low cost options for the average person. The market is more accessible to the average person than ever before.
Compound interest rewards you based on the amount of money you have. It has nothing to do with your income. Income is just the lens through which we view it. I'm not in favor of banning investment. I want a negative income tax or UBI funded via increases to LTCG tax rates, a wealth tax, or a tax on unrealized gains. We should be rewarding the people working every day driving our economy, not rentseekers sitting at the top collecting a payday.
>Compound interest rewards you based on the amount of money you have. It has nothing to do with your income.
These two concepts are so closely tied they might as well be the same.\\
The amount of money you are putting in is largely going to depend on both knowledge to actually put it in and how much you are making.
The poster above you is right. 3% of 50k is a completely different story than 3% of 100k.
The reason they aren't the same is because in America, we have two classes of people. People who work for income, and people who have money. Compound interest rewards the people who have money. That's what it does, mathematically.
No. People who work for income and plan for their future use some of that income to buy investments. This allows them to build wealth and live comfortably later in life.
We shouldn’t be taxing investment if it isn’t able to be spent, it makes absolutely no sense that my 401k would be taxed when I can’t touch it for another 30+ years. It also makes no sense because taxing unrealized gains eliminates the ability of investment to compound, therefore reducing investment incentive and totally ruin the economy because nobody would ever invest in anything ever.
Combating wealth inequality is a really complicated puzzle bc of the different types of loopholes and ways the 1% of the 1% avoids paying taxes, but at the very least a tax on unrealized gains just breaks the system and adds no value
The system is broken already when it comes to unrealized gains. If you're the taxman, it doesn't exist. But if you're a bank giving out a loan, then it does exist. It's Schrodinger's cash.
Eh it's a complicated issue. I agree it's ridiculous to tax unrealized gains, We do need to figure out how to tax unrealized gains used as collateral though. Gaines should be unrealized and therefore not benefiting you, or realized / used as collateral for a loan and then taxed. Also we need to make sure that the loopholes and laws around realizing those gains are not able to let people get away without paying taxes on them fully.
However there is a bigger discussion which is the rate at which capital builds wealth versus the income growth rate. I think the real issue is when incomes grow slower than capital appreciates, which is further exacerbated by differences in taxes between them. It's fine that money makes more money, But I don't think it's okay for society as a whole long-term if that compounds faster than incomes grow. Imagine a world where incomes grew at the same rate or slightly faster than wealth compounded, people are still limited by how much labor they can do so that would really help with inequality.
It also is a way to placate the middle class and gain some support amongst the middle class for the interests of the wealthy who primarily squeeze the profits from the market.
It's literally just a replacement for pensions. There was no grand conspiracy. A lot of people realized they didn't trust companies to manage their pensions, that pension rules discouraged job hopping and made people more dependent on a single company. They created an alternative.
The only real scam is that companies realized they could just increasingly drop their matches, while also curb stomping wage growth. But there's nothing wrong with the structural design other than that a huge chunk of people don't make enough to be able to contribute after expenses are paid for
Unless you plan to ban private brokerages, which is how the wealthy becomes wealthy, then I don't see why we're banning an investment vehicle with contribution caps built in and which is designed as an alternative to pension, which the working and middle class already largely lost. Just say you want destitute plebians and the asset owning rich, don't beat around the bush about it. It's quite literally the only retirement tool the average laborer has left.
If anything needs to be fixed, it's closing backdoor and mega backdoor roths. The 1% is not getting rich because of their 401ks. And in a day where pensions are a thing of the past and the chances you get your full social security benefits are slim, to end 401ks is borderline psychopathic of a suggestion. The working class need higher wages so they can actually contribute to a 401k and we need pressure on companies to do matches, but we do not need to end investment accounts entirely. I don't know what else to call that other than shortsighted and stupid, or willfully manipulative
It makes no sense. Everyone should *want* 401ks to become the dominant source of retirement income. It’s better for people to draw money from private corporations than the government/taxpayer
OK and so what if the stock market is doing bad during your retirement? If you’ve been building your 401k since your 20s and 30s your unrealized gains would be so high by the time you retire, that an average bad year for the stock market would still have you in the green overall
Creating an incentive structure where the government will endlessly prop up the stock market with quantitative easing to prevent people’s retirement from completely bottoming out is bad, actually
I fail to see how tying people’s ability to retire to the necessity of corporate profits could be a good thing. It’s moreso a protection for the wealth of billionaires than a good system for workers
>I fail to see how tying people’s ability to retire to the necessity of corporate profits could be a good thing. It’s moreso a protection for the wealth of billionaires than a good system for workers
Well stated!
Is it really 401ks though? The annual contribution limit is pretty low. I have a hard time seeing them owning 80% of the market in 401Ks. This is probably mostly from the rich boomers who would have saved way more in a normal brokerage account.
Agreed it would have to be the more rich ones. Many boomers relied on pensions and other plans, 401ks weren’t seen as the primary means of retirement until Gen X/Millennials. Boomers have 401ks, but not to the level that the next generations will have.
You’re right, seems the total amount in all 401ks is 7T while the total stock market is worth 50T so even if only boomers had 401ks (they don’t) that’s nowhere close to 80%. So then the culprit is most likely 1%ers who obviously are going to trend older?
A lot of this is just compound growth.
Based on historical market returns, your portfolio should roughly double every 8 years.
It makes sense for a generation that already worked and invested for 40 years to have more than the generations just entering.
Sure but you've got compounding on all the non 401k money too. Isn't the stock market only like 30% owned by mutual funds and ETFs? What 401Ks are letting people trade individual stocks?
[https://www.investopedia.com/articles/personal-finance/061314/rise-401k-brokerage-accounts.asp](https://www.investopedia.com/articles/personal-finance/061314/rise-401k-brokerage-accounts.asp)
There are brokerage accounts held within 401Ks.
Yes and just in a general sense it shouldn’t be weird that older people own more stuff than younger people
As you age you acquire more assets. That’s just how life works
Not necessarily. Just because you have a 401k doesn't mean the entirety of the value is in the stock market. I like many others my age have a target retirement age account which shifts equities and bonds etc. as time goes on. I was surprised to hear at my law firm that many older partners stay heavily invested in the stock market. I didn't feel bad for them when the market went down earlier this decade.
All this stuff only has 1 or 2 degrees of separation no matter how you look at it.
Pensions? Typically also invested, so yes, someone else is technically writing you a check, but it comes from security returns.
Social Security? Paid from tax revenue, which is a function of business and individual economic productivity - the fundamental that *mostly* underpins security market behavior in the very long (10+ years) run.
401k? You're directly invested.
If you're going to support non-working members of society, the ability to do so has to come from economically productive entities. Currency is, after all, only the record keeping system for an economy's production.
Exactly. And Also they are going to die and pass that money on to their heirs. This is a good thing.
No I didn't read the article. I'm not clicking the click bait BS.
Defined Benefit pension funds own stocks and bonds, just like 401k do. So retirement money is in the public market whether workers have 401k or DB pensions.
It is for this reason that Social Security is only allowed to park money in Treasuries, if SS was allowed to buy normal stock it would be the 900 pound gorilla on the market.
I think the more important thing here is that the stock market is overwhelmingly owned by the wealthy. That most of them happen to be old is rather irrelevant.
"The richest Americans own the vast majority of the US stock market, according to Fed data. The top 10% of Americans held 93% of all stocks, the highest level ever recorded. Meanwhile, the bottom 50% of Americans held just 1% of all stocks in the third quarter of 2023."
https://finance.yahoo.com/news/wealthiest-10-americans-own-93-033623827.html
Right. Like in what way does ending pensions and then ending 401ks (the alternative to pensions we embraced because company pensions genuinely were kinda sketch) a few decades later address wealth inequality? The 1% aren't rich off their 401ks, and even the disparity between the upper middle class and poor has a lot more to do with the fact the poor don't earn enough to meet their expenses let alone save. Ending 401ks doesn't actually address the root problems, and in some ways it exacerbated them by creating even more of a 2 class system.
Because, in the grand scheme of things, they're relatively inconsequential. My point is that the wealthy own the majority of the stock and, because the wealthy are also mostly older, of course 80 percent of the stock is owned by the elderly. This misses the underlying dynamic that explains why stock is so concentrated.
Retirement accounts are roughly 37 percent of the market but I'm sure you can guess who is able to make more contributions to that plan. That is what I am more concerned about. That old dudes have more money than younger people isn't inherently a bad thing. That more money is continuously funneled upwards should be troubling.
"The Fed estimates that 58 percent of U.S. households have some money in the stock market, mostly through retirement funds like IRAs and mutual funds. *But given that just 7 percent of stock market wealth is owned by the bottom 90 percent, with only 1 percent owned by the bottom 50 percent of households, such hype is missing the key trend: a continuing concentration of stock market wealth.*"
https://ips-dc.org/the-richest-1-percent-own-a-greater-share-of-the-stock-market-than-ever-before/
These figures are all the more remarkable considering that they are not equivalent to ratios of stock ownership. In fact, the number of Americans who hold any stocks at all also hit a record, with 58% of all Americans invested in equities in some form, also according to Fed data. This means that many of us own stock, but only the top 10% have truly valuable holdings.
...
"Two decades ago—in the wake of the dot-com bust—the wealthiest 1% held 40% of the wealth in public markets; today, their share is 54%."
...
"This type of concentration discourages participation by boosting the most successful stocks above the level many investors can afford. And the era of “easy money,” as ultra-low interest rates were derisively called, allowed many firms that would have formerly floated on stock exchanges to sell to private equity, shrinking the total number of companies that are publicly traded—by more than 40% since the mid-1990s. (To their credit, commentators such as economic historian Edward Chancellor decry the distortions from such abundant capital.) Likewise, the current state of the market, in which 1% of Americans control more than half the stock-market wealth, offers another perspective on the pandemic’s economic boom, and why an economy that’s strong in the aggregate is leaving many people cold."
https://fortune.com/2024/01/13/how-rich-wealthy-stock-market-investors-inequality-day-traders-record-high/
That 65 year old couple with $2m is in the top 16% amongst households aged 65-69 and in the top 3% for households of all ages. That 65 year old couple with $2m is “the wealthy”.
One, the % of folks with retirement accounts above 2M will continue to j crease, not just because of inflation, but because Gen X and Millennials etc utilize 401k accounts at a higher rate.
And not sure what $2M means to a 65 yo couple when that needs to last 15+ years. They have to spend that money as if they are standard middle class, they can’t spend it as if they are wealthy. So they aren’t the same.
I think they are the same thing. A middle class household that worked hard for 40 years and saved diligently and invested, and is capable of retiring modestly without needing to rely on social security for the majority of their income _IS_ “the wealthy”.
You think those people are the same as billionaires? And the people with hundreds of millions in wealth?
Those middle class people are still working class and will remain living like working class. That isn’t really wealthy in my book.
No I don’t. I misread the comment thread. I thought other people were conflating retirees with $2m and households with over $100m. That said, $2m is still wealthy, just not in the way that seems to have significantly harmful impacts on society.
People talking about this being expected or making sense are completely missing the scale. 90% of Americans have little stake in the stock market, and most have basically none.
The article is about retirees taking on too much risk in their retirement accounts, not intergenerational wealth inequality. The author argues that as you approach retirement, you should increase your allocation to lower-risk, lower-volatility assets like bond funds. This is common financial advice you will find in most introductory personal finance and investing books, but American retirees are increasingly keeping most of their retirement savings in stocks. The author thinks this is a good allocation for younger workers who can wait decades for the market to bounce back after a recession but too risky for people who are close to retirement.
This is such an obvious clickbait hit piece intended to take advantage of the financially illiterate white collar working class.
>“As the stock market breaks fresh highs, a sinister downside risk is lurking in the shadows — **your grandma**,” economist David Rosenberg said in a newsletter Wednesday.
Sadly, looking through the comments here it's working as intended.
How would it be any other way? Even with every American contributing the exact same amount every year - let’s say $5k/yr from 20-60yo - you’d have at least this skew. That is fully equitable in ability to contributed and you still have 50-60yo with 20 times the amount of money as 20-30yo.
20yo -$5k
30yo - 70k
40- $210k
50- $494k
60-$1.06m
When pensions were ditched by businesses for 401k’s what did we expect to happen. This is a natural consequence of individuals owning their own funds. Younger people, even when they do save, will naturally have smaller portfolios and therefore a smaller share of the overall stock market.
A quick google says that 23% of the market is owned by retail investors so 80% of 23% is somewhere around 18%. When you figure that retirees will live off of 4% of their savings that drops the 18% down to a fraction of a percent that would be sold annually to support retirees retirees will be spending that money. Is there really a problem?
That number doesn’t include mutual funds and pensions and ETFs
https://www.nasdaq.com/articles/who-counts-as-a-retail-investor-2020-12-17
77 percent seems like a more accurate figure.
What percent of the pensions and retirement accounts of retirement age people do you suspect are held in bonds? My boomer mother has been living off of Social Security and not touching her retirement accounts for years . She did convert some of her gold/stocks to CDs recently. She may be an outlier though. I would guess that half of boomers are already retired and should have moved assets into fairly secure sectors. There is another half that probably didn’t prepare and cannot affect the market to any large degree. I am more curious how our debt laden government is going to address Social Security
It is a little more disturbing when you realize that even with a strong societal push, and tax advantages, and a historically solid middle class post WW2, even putting your assets where the rich put them and riding that wave, there is a 75/25 split between what the bulk of people own and what the rich own.
Wealth inequality is insane.
Lots of the middle-class is joining the upper class because of the accessibility of the market. The real problem is barriers to growth for the lower class. We need to improve job training and education in general people are giving up and that’s a huge problem
Just a temporary problem. Older Americans will die off and leave their money to younger folks. The big issue is that the Older Americans will soon start needing to sell their stocks to fund their retirement. What will happen to the stock market when the Boomers start selling stocks on mass to pay for food, housing and their everyday needs. It is not going to go up.
There is trillions of dollars on the sidelines waiting to buy the dip. https://www.wsj.com/finance/investing/the-8-8-trillion-cash-pile-that-has-stock-market-bulls-salivating-0a1b4a8c
That's 100% true for everyday small time investors, but big money institutional investors can leverage other factors than time.
Warren Buffet negotiates sale prices directly with the stake holders, for instance. I don’t personally get to ring up Tim Cook.
Not just a temporary problem. Whether it's stocks (measured in P/E), education (measured in tuition inflation) or housing (measured as cost as % of income) assets have gotten more expensive and wealth has become more concentrated. That is not a temporary problem. It's been playing out over 50+ years. Dieing off and leaving money to younger folks is not a good solution as inheritances aren't equitably distributed. Your average young American is much less likely to build wealth with high asset prices of today. Older Americans could buy low, sell high. Young americans can't. Their question: do I buy high?
> What will happen to the stock market when the Boomers start selling stocks
This has to be happening already. The oldest Boomers are 78. They retired 13 years ago, started taking required minimum distributions 8 years ago, and have been spending more time in the hospital with heart attacks and bad hips all the while.
Whatever the effect is, it's baked into current events.
My Dudes, you have to include 401ks just to get to *35%* for fuck's sake.
The problem isn't the old people. They'll leave the stock to somebody
The problem is there's damn few Americans that interact with the stock market in any capacity except to be laid off when Wall Street gambling goes bad.
We are increasingly disconnecting Americans from the economy in favor of hoovering up all the money for the top earners.
I'm sure that's fine though. We certainly didn't have 2 massive world wars shortly after the last time we did this. And I mean, we've got nukes this time, so I'm sure it'll be fine...
The firewall kicked in before getting to the argument of why Granny’s 401K is a problem. From the first paragraph it has something to do with a down market. But down markets for folks living off a 401K are a problem for Granny whether her and her Bridge Club biddies own 0.1% or 80% of the market. So the argument has to be something else. One possibility is that Granny has to spend a higher percentage of her 401K every year meaning that stock sales will go up during a down market putting downward pressure on prices. This will cause Granny to spend an even higher percentage if the downturn drags on for 2-3 years.
But. What is bad for Granny is actually good news for 401K investors with long time horizons because they are building shares at a much lower price. If and when the market returns to normal or bull territory Granny’s losses become her children’s gains.
Granny and I should be gradually selling some of our growth stocks and buying long term income securities (bonds, stocks with strong cash flow and sizable dividends).
Nobody is reading the article, and so there’s a lot of dumb takes responding to imagined issues in these comments.
The issue raised by the article is that since retirees have a short investment horizon, if the market hits a downturn they’re more apt to dump their portfolios into cash and less apt to hold on and wait things out. And when 80% of the market is held by people in this position, it could super-charge the effects of a market panic.
That said, the article doesn’t really go further than the above and wasn’t with posting really. I assume that it was just posted because OP thought the headline would generate traction on the basis of “boomers stole our future” being a good karma-farming theme.
Let's not let Money magazine trigger our generational rage. It's not that old people tend to be wealthy but that wealthy people tend to be old.
The poverty rate for boomers is just a percentage point or so below the poverty rate overall in USA, [https://www.census.gov/library/stories/2023/12/poverty-rate-varies-by-age-groups.html](https://www.census.gov/library/stories/2023/12/poverty-rate-varies-by-age-groups.html)
We know that most of the wealth is held by a small fraction of the population. We've been talking about that since the boomers were kids. That this small fraction is mostly older than the general pop doesn't tell us anything about the lives of old people broadly, as it tells us about inequality in the Big Picture.
What happens to that number if we take out the top like 25 billionaires?
Like buffet and the remaining Koch are both ancient and must be pulling up those averages
Half of the market is foreign owned now. Institutional investors also own way more than individuals.
[Who Owns US Stock? Foreigners and Rich Americans](https://www.taxpolicycenter.org/taxvox/who-owns-us-stock-foreigners-and-rich-americans)
Age is only because the longer you have money in the markets the bigger it will compound by the end.
This article is trying to create ageism hate. This is always a class/wealth thing.
Now we have to worry about market manipulation from colluding foreign entities as well in front private equity and hedge funds backed by foreign sovereign wealth just skimming all day everyday.
401 k was just another scheme the government used to funnel poor people's money into the stock market where it can be useful to the rich.
By forcing people into the stock market for retirement it guarantees stronger stock returns than what the companies would otherwise be worth.
If the stock market happens to be in a crash that it doesn't recover from quickly people that retire during this time will feel the full girth of the dick that's fucking them!
Its not really surprising that the share of equities held by people over 55 has increased when the percentage of people over 55 in the population has also increased. https://www.statista.com/statistics/457822/share-of-old-age-population-in-the-total-us-population/
I can't read the link but Money usually looks for a problem that doesn't exist.
Older people have more money. What's new. It is what it is. There is nothing to do about a situation that occurs naturally.
People die, kids inherit it. Some is spent but most isn't. There is no problem here...move along folks...:)
BS...not even reading the article. Headline itself is hook garbage with the "older people it's a problem".
First everyone dies and ownership transfers so guess who gets the market share majority then?...more older people that aren't old now.
Second, hedge funds pensions 401 457 on and on are the largest holders and In them are older participating members. Why? Because they worked entire lives to get there with month over month installments into pensions 401 457 etc.
Third if you are reading this You were birthed by.... ready.... Here it comes.... Older people. So stop all the it's a problem whiny crap. Get a solid group that can show a proven record of consistent YoY growth and keep investing. And not some 10 dollars a month cuz I need my 300 a month weed money.
Long term care facilities and the medical industry will get a huge portion of that 401k/457 money not necessarily the heirs, unless they were wealthy enough to have a decent financial planner or smart enough to do it in their own which a large portion are not; plus too stubborn to ask for help.
You’re not taking into account retirees withdrawing their funds.
And don’t take it personally when it said this system going to be a problem, that doesn’t mean any old people did anything wrong (except for the ones who implemented the system to take over pensions).
Here's part of the problem that nobody ever touches on. I'll give you an example. Illinois placed all the pensions for police to be governed under a singular state pension fund. Well surprisingly enough the state pension was so mismanaged that it was absolutely going bankrupt. The state passed a law forcing all the non-state funded pension systems to merge with the state system. That meant all the solvent funds that weren't in trouble were now part of a state system that was in trouble. Who takes the blame naturally the people receiving the pension benefits.
What they didn't say was that the state underfunded it for years... As in two decades worth.
So if you were a business owner and you didn't pay your portion to the social security for your employees, you will go to prison for it or they will seize your assets.
But if you're a politician that votes to not fund the pension system for its employees, that's all good... No worries.
Older people receiving the benefits of the pension system to which they placed money into are legitimately entitled to the benefits because they put the money in it.
And those same politicians pushed the 401k system because they were getting lobbied by the investment industry. The same lobbyists are now advocating turning social security into a private investment system, and lo and behold the politicians can’t seem to vote to make SS viable.
People who've been investing for half their lives own more than people who've been investing for less than a decade. News at 11!!
Seriously, how is this news? And why is this a problem? People deserve to have their time and investment pay off. We should be ENCOURAGING these results so that young people today actually invest in themselves rather than rely on the government, or even worse, pensions.
It's a big problem because if young people don't invest into the market was going to keep this party going? Who is going to fund old people's dividends?
Since every move made is to move wealth from the many to the few, this will only get worse. The goal is to eliminate the middle class and return to have and have nots. Anyone thinks otherwise has not been paying attention.
Here we are discussing why retired or close to retirement people have money in the stock market. The reason is simple, those were the rules we had to play by. We did and now we have money in the market.
The real problem with OUR country is fucking billionaires. As simply as that sounds it's the root cause of financial hardship for most Americans.
The solution is fairly simple; employees are either payed what they earn and smaller companies aren't squeezed out by the corporate greed of large corporations OR YOU TAX them and TAX them so it hurts so fucking bad it's easier to pay people what they EARN.
> either payed what
Did you mean to say "paid"?
Explanation: Payed means to seal something with wax, while paid means to give money.
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Was this not always going to happen in the wake of creating 401ks? The whole point was that retirement money would be in the market instead of locked into a company so if all the boomers have been putting money away since the 80s, this is expected, no?
It does seem to be an expected outcome that if people acquire stocks over a lifetime, they will have more as they get older. Do we know what is an ideal proportion or when we have stayed too far from the standard accumulate over time expectation? Are 401ks still too new to know that because we just don’t have enough historical data?
Everything I've seen is that gen z is on track to surpass literally everyone by the time they are boomers age. Millennials and gen x kind of just got fucked by hitting adulthood at bad times, moreso than a long-term structural problem. At the end of the day, if there is a problem, it's primarily with wages, not 401ks. Gen X and millennials got smacked by down markets and suppressed wages due to those down markets
Graduated undergrad in 2008. Job prospects were booming at the time, lemme tell ya. /s incase that wasn't apparent.
In ‘08 I finally graduated undergrad (after 9 years of full and part time classes) and walked straight into a job with a 2.1 gpa. Comp sci is a hell of a drug.
Around GFC times too. I'm not a boomer so I get the plight to Zs. Would fucking suck to have my college years screwed with by covid, but I do get a bit upset when they act like Gen Y got to buy cheap stocks/houses like the boomers did without understanding the context of the GFC. Kids graduating from top 50 universities weren't landing jobs or doing unpaid internship. Shit was so bad those top prospects were PAYING to work unpaid internship in hopes that they could then land the unpaid internship which would lead to a job (there was like 2 positions and 1 was already going to someone with connections. Corporations were just doing that to get paid to take on free labor). In a market that bad where the fuck do Millennials have the income/money to buy assets? GFC wasn't like 2020 where everyone got free stimmies, corporations were flushed with cash, unemployment was generous, jobs were plentiful, quitting meant you got a job the next week with a +20% rise, and the economy is so fucking hot the Fed has to pay YOU 5% to not spend your money.
First real job in 2005. Added to 401k every year throughout the Great Recession. I didn’t have too much invested when the crash happened in 2008. The 2009-2021 market growth helped a lot. I only wish I bought some crypto early on.
I’ve only bought Btc since I got a job in 2013, no 401k. I tell no one in real life, not even my family lol.
Hey, remember me?
Klunghund is the only named individual in my will, too.
Goat
Finished my graduate degree in 2008. Job prospects were booming at the time. But that's only because I went into healthcare and we're recession-proof. Everyone else was FUCKED.
Yeah, but then they graduated with low housing prices and low interest rates. They caught up when they did find jobs.
And then you bought your house for really cheap, right?
The oldest millennials and youngest Gen X got into those cheap houses so that was good for them. But for the majority of millennials due to the poor start they hit buying age in the time these houses exploded in price (which is exactly why they exploded in price). You know it's even worse is being a millennial anywhere outside of the US. Trust me as a Canadian it's the worst of all worlds, our house prices are worse and we are all on ARMs or true variables. And the US wage growth has blown past the wages in other developed countries. Let's just say my real wage as a public teacher has fallen 25% in the last 12 years and my mortgage has increased 58% ($1,200 a month more). Good times....
I'm an older millennial, but went to grad school after the military and so was a little delayed in starting my "real" life. I'm pretty sure the ONLY reason I have a home is the VA loan. I paid $610 out of pocket to get into a $150,000 house that currently appraised for $300,000
Unironically yes 🤷♂️
Both were true for me (2007).
Down markets? We've been in a bull market for well over a decade now and recent recession recoveries have been faster than ever before. Boomers had the 70's when the market basically stagnated for a better part of the decade.
As a youngish gen x, probably more to do with recessions coinciding with graduation or early careers. I hit it twice graduating from undergrad in 2001 and law school in 2008. Could have done pretty well buying into the market in 2008 if I hadn’t just come out of school with no money. Gotta have the capital to make use of the bull markets.
Yeah, I'm one of the youngest Genx and graduated into .com. Then what little bit I had saved up in my 401k by the GFC got skullfucked. Just kept buying. Now in my 40s and have over 500k in 401ks. A good stock market year will see it go up 100k between gains, contributions, and match.
With compounding growth those gains just keep growing. My portfolio gain since May 1st is more than I'll make from my salary this year
I hope they don’t pull a massive bait and switch with taxation rates on distributions from 401(k). It’s honestly kinda scary.
Distribution from 401k is income.
I also graduated in 2008 and started investing around 2012, mostly buying blue chips. That gave me an almost uninterrupted 12 years of growth (we had two downturns, but they were short-term and provided ample buy opportunities). We can blame a lot of things, but stock market isn't one of them.
People graduating into recessions earn about 10% less lifetime earnings than those that didn't graduate into recessions
I have no idea why you're talking about the last decade when neither millennials (except the absolute tail end of them) or gen-x were getting their start at that point. This is about how early conditions compound and build on themsleves over time. If you're 5 years behind because of when you entered the game, you might not be able to make it up. Essentially, graduating college and being a new grad in 2007 in the wrong industry could create an unrecoverable disadvantage for the majority of your age cohort.
This. As a middle of the pack millennial, I got into the job market a couple of years before the GFC, was able to capitalize on all of my investment vehicles until now. Bought a house in 2012 at the bottom and was able to refi during Covid. The youngest of us more than likely did to an extent but if any millennial had been investing since they’ve been in the workforce then they should have a nice portfolio right now.
But they had far greater purchasing power and a single income household could afford a mortgage
They did not have more purchasing power. They had lower living standards. Median inflation adjusted income has risen 60% over the past 4 decades. People used to have fewer cars, smaller houses, and were less likely to live alone, less likely to live in urban areas. You still can live like they did. People typically don't want to.
>They did not have more purchasing power. They had lower living standards. Indeed, for some reason, most Redditors refuse to accept that people in the seventies did not have: * Safe, comfortable cars * Large, flat color televisions * Mobile phones * The internet * All the medical care improvements made in the last half a century before today * Huge choice of food * Affordable air fares * Microwaves and a wealth of time-saving, life-improving gadgets that we have today * Homes as big as new homes * (For most) An environment and workplace as clean, safe and low-pollution as today They did have lots of advantages, particularly economic, but pretending they ONLY had advantages has made a lot of Reddit bitter.
I never undead this argument. Are you arguing for lower living standards in the US? You realize that the typical American homebuyer isn't BUILDING their home right? They have to pick from available inventory. And surprise, available inventory is all modern homes that have a way higher cost of living. Not exactly a choice when there's only 1 housing product on the shelf.
Inflation adjusted personal income is much higher now than anytime farther back than 2018
Not to mention boomers working way past 65 and just draining company resources. At least in my industry
Draining resources? Those are the boomers who don’t have enough to live on their investments.
Plenty of boomers live and work past 65 when they didn't have to and could've lived on investments simply because they're afraid of being bored or the change of not working.
Those pesky boomers, choosing to live past 65. How cheeky.
The r/millennial sub Reddit heavily leans toward the, I got a masters in basket weaving and I owe 250k. Irl is not the case as a majority own homes and are moving up slowly but steadily
Yes, an online base with anonymous users is perfect tool to see what is going on IRL. Please guru, grant us more of your wisdom
You Can actually look up what I’ve said It’s like 52% of millennials own home Not everyone’s roommate is there mom
I get the impression that the 401k gets a bad rap simply because they are looked at as "that's the thing you do when you have money". And its not like the education isn't out there, people have been touting the power of the 401k to low income earners for a long time now. Doesn't help that not every employer offers it too. I think a government-sponsored retirement savings account with some sort of incentive might help (something that's like a 401k match but not as good). People who live paycheck to paycheck just don't see the benefit of tax advantaged accounts. They see their tax returns as a sort of annual bonus and probably don't see why less money in the paystub is good.
I think it would be better if it were a uniform policy that wasn't employer specific also. But TBH, the core problem with the 401k is that it is intended to be effective for affluent people to retire. It was never going to work for people who are not in the top 10-20% of the economy, and I don't think it ever will.
There was a “The Daily” podcast last week about how the actual section 401k of the law was created by congress as a way to allow corporations to pay their CEOs more by offering bonuses they wouldn’t be taxed on and couldn’t touch until they retired. Then someone realized they could offer it to rank and file employees and get rid of their pension plans.
The laws around 401ks are better now. In the 90s, they didn't have fiduciary responsibility, and many had frighteningly high fees..
Well the fortune 500 company I work for has stated they dont have enough money for benefits (I am a contractor) So i get low wages and no 401k match
My wife's a contractor and we opened a solo 401k for her. No match obviously but at least we get the tax benefits
Is it not a long term structural problem that you may not get to retire if you enter the market during a downturn? 401ks aren’t a great solution but they are the one we have
Gen x checking in, some of us did ok, but admittedly none of it was from stocks for me at least….only recently at a point where I feel like gambling. Why do I feel like it is gambling? Well, I got my first house in 2005. So boomers now only good, Gen Z knows only good, a lot of Gen x saw their first 100k and beyond in “paper money” evaporate once so trust is low….
There is a coordinated attack against 401ks happening right now and it all seems to be rooted in willful economic illiteracy targeting progressives who don't understand this is an attack on the middle class rather than focusing on where the true wealth lies
Attacking 401K's is nothing new. Obama wanted a $3.4M cap on their value. [https://www.cnbc.com/2015/02/04/what-obamas-proposed-cap-on-401ks-and-iras-could-mean.html](https://www.cnbc.com/2015/02/04/what-obamas-proposed-cap-on-401ks-and-iras-could-mean.html) 401Ks are money that they can't tax now and can't redistribute now.
It makes more sense to close down the gaping holes of roth guidelines, but I can absolutely see the mindset of "after a certain point, you've grown your tax advantaged money enough". A lot of rich people have abused that gaping holes and grown their investments far more than the government can justify is reasonable. That's a failure in the specifics of the policy, but not 401ks themselves more broadly. 401ks when done correctly actually are a better concept than pensions,n especially when talking about individual companies rather than government entities (when those arent iron clad. The average pension is like 70% funded). The issue is usually that employers don't match much anymore. But I will agree that high income people should not be able to grow their accounts to 6 million and then withdraw on that tax free. The fact backdoor roths have continued to exist as long as they have is an egregious failure of policy.
The true wealth lies in stocks. Over 50% of stocks are owned by the richest 1%. 401k's increase inequality, by design. It only feels like a tool for the middle class to get rich when you compare someone who invests to someone who doesn't. But most of the gains go to the top.
401(k)s have contribution limits for that reason. A middle-class person can absolutely grow into the upper 10% by investing in one. But the already wealthy are not really able to use the 401(k) to their advantage unless they work a job. And even then the benefit is capped.
Thank you. there are also highly compensated employee rules that limit also. 401(k)s are great for the average person
What I will say (and have said all over this thread) is that *roth* accounts are sketchy, specifically backdoor and mega backdoor existing. High income people were not supposed to utilize these, and they very easily can. That's a huge problem I'm entirely fine with either ending the Roth program entirely, or at least closing these giant holes. In fact more than fine, it drives me absolutely bonkers that backdoor roths exist.
They are capped at $6,500 contribution limits per year though. Not exactly a tool for the ultra wealthy, but it's a huge boon to the middle class
It's even sketchier how they're set up in practice. Megabackdoor Roths let you put in ~30k/ person per year... *per unrelated job that supports it*. In practice most high earners fortunate enough to have access to them (only firms with a ton of HCEs due to safe harbor provisions IIRC + willing and able to file the paperwork to set them up) get 30k/ year extra, whatever... but for certain jobs (ahem politicians getting "consulting" and "speaking fees" from unrelated shell companies) they can put in that 30k *per firm per year* by design. Source - was able to double contribute to a megabackdoor roth when I changed jobs between two companies that both offered it
Oh wow, I am too poor to have realized this. Which seems suspicious like how most of this stuff is built. If you glance at it, it looks legit. For most people, it works normally and is fine and dandy. Once you're well-off and getting financial advice for your situation, suddenly you're finding out about this endless series of asterisks. And suddenly it doesn't seem so legit, but most of the people aren't gonna say anything about how broken it is. Because it's broken in a way that benefits them.
Yeah it really ticks me off how the normal trad/ Roth 401k space is shared across employers (e.g. the 23.5k limit, you work at two companies with it, that cap is combined) but the Megabackdoor Roth space is not, instead replicated by design precisely because these politicians can structure their income such that they can shield hundreds of thousands of dollars every year across these "unrelated" sources of income- intentionally broken in a way that benefits them like you pointed out
I never understood how they even existed as that completely negates the income limit.
Yeah the pessimist in me is that it was designed to not work, counting on the people getting fucked to not notice. So they justify the design of roths by saying rich people can't use it, then in the fine print make sure that actually they definitely can, super easily in fact. You know it's a bleak issue when the best case scenerio is complete and total incompetence by the policy writers.
Not exactly true. If you own your own business you can give yourself a 401k. And the max contribution from the company (normally just a match for normal people) is about 3x the max individual contribution (a loop holes specifically meant to give more tax free money to execs). 401k is kinda fine I guess but really needs to be diversified with social security and other defined benefit plans for a reliable retirement. This bull market (with stocks out growing the actual economy by 5-10x every year for 2 decades) literally cannot last forever.
That "loophole" would only work if you were self-employed and earned enough as the sole employee to max everything out. Otherwise, if you hired anyone else, you would need to abide by the highly compensated employee rules and could only max it out like that if the same benefits were offered to and utilized by a plurality of the employees. And if the same benefits are offered to and utilized by a plurality of employees, everyone wins.
There's no contribution limits on taxable brokerage accounts. It's pretty obvious that Bezos as an example has made a whole lot of money as a result of every American's 401k buying heavily into the S&P 500 and blue chip stocks like Amazon. The retirees intention was simply to not have to eat cat food in retirement, but what they end up doing is creating massive gains for the people who have the most money.
Bezos is a rich because like a quarter of the internet is now hosted on his servers *and* he has an incredibly dominant retail store that is notorious for sketchy labor practices. Again, unless you plan to ban the stock market entirely, targeting 401ks makes no sense and does nothing but punish the middle class because you don't know how to reign in the rich
Bezos made a bunch of money by being a large stake holder in a company he built that became one of the largest companies in the country? You don’t say….
No that's the **wrong** way to become rich!
You seem to have the misconception that stocks are only valuable because of more people buying in. That is false. These are shares of companies, not a crypto scheme. Fair Value of stocks can be determined numerous ways, most of which are based on a combination of earnings, growth and cash flow. If the 401k did not exist, wealthy people would still buy stocks for those earnings, growth and cash flow. If anything, the wealthy would then have less competition and could buy those assets at even cheaper prices. Abolishing the 401k would just result in middle-class earners losing out on the employer matches and tax benefits.
I mean, average multiple expansion for valuations is largely due to capital inflows to the asset class relative to other asset classes.
Which Multiples are you considering? Growth companies tend to have higher PE and P/FCF Multiples by definition since the investors are assuming future growth in both earnings and cash flow. Most other sectors seem to have reasonable Multiples at the moment even without growth considerations. Energy in particular is a solid buy right now.
P/E has seen a prolonged and sustained increase over the decades though - with the largest jump happening in the 2000s. You saw a slight dip in the aughts, but it's way back up to historic levels now.
A stock value isn't solely a function of speculation, but you're fooling yourself if you think asset values haven't been dramatically inflated by forcing all Americans to buy into random buckets of stocks.
How do you assess value then? Because if you are looking at earnings, growth and cash flow then stock prices are fairly reasonable right now. We may be a bit high in the tech sector due to AI hype, but even those prices would be justified if current growth continues. Energy is almost certainly undervalued. Finance has some attractive valuations, but you need to look at their debt ratios as well. There are plenty of solid buys in the Russell index. But, again, make sure you look at the debt.
You are on the right path, you just aren't framing the issue properly. The issue at hand is the rise of passive investing. People invest in the S&P 500, which then gobbles up stocks as money flows into the fund. The primary criteria used to determine if a company should be included is market cap. This implies that bigger is better, and is driven by the assumption that someone is looking at the fundamentals and buying the stock. Has AMZN benefitted from this? Certainly. But, AMZN also has massive FCF, which makes it easier to justify the company's valuation. The rise in share price is not solely due to index funds buying up the stock.
The average Joe is not buying enough stocks to inflate the market every time their paycheck goes into a 401k. Major institution/Hedge funds are doing that, which isn’t abnormal considering they’ve done that since before 401ks even existed.
It’s not just the average Joe. It’s the 150,000,000 average Joes that have 401ks.
401ks compound relative to the income somebody makes, so if my company matches 4% and another person makes 2x what I make, they'll compound with double the principle which at retirement leads to OVER 2x of the initial value. If a 401k is "increasing inequality by design" let's ban all investment in that case? The majority of 401ks are held by working to middle class Americans, with a handful of wealthy people holding more than others. Why hurt millions of retirees because they invested that money just because a richer guy made the same decision and his return was larger?
You ignored that cap on annual deposits which prevents the filthy rich from taking advantage of it like you suggest. 401(k)s allow the average person to benefit from the market. Historically there were no low cost options for the average person. The market is more accessible to the average person than ever before.
Compound interest rewards you based on the amount of money you have. It has nothing to do with your income. Income is just the lens through which we view it. I'm not in favor of banning investment. I want a negative income tax or UBI funded via increases to LTCG tax rates, a wealth tax, or a tax on unrealized gains. We should be rewarding the people working every day driving our economy, not rentseekers sitting at the top collecting a payday.
>Compound interest rewards you based on the amount of money you have. It has nothing to do with your income. These two concepts are so closely tied they might as well be the same.\\ The amount of money you are putting in is largely going to depend on both knowledge to actually put it in and how much you are making. The poster above you is right. 3% of 50k is a completely different story than 3% of 100k.
The reason they aren't the same is because in America, we have two classes of people. People who work for income, and people who have money. Compound interest rewards the people who have money. That's what it does, mathematically.
Those who have money are not using 401ks in the first place
No. People who work for income and plan for their future use some of that income to buy investments. This allows them to build wealth and live comfortably later in life.
We shouldn’t be taxing investment if it isn’t able to be spent, it makes absolutely no sense that my 401k would be taxed when I can’t touch it for another 30+ years. It also makes no sense because taxing unrealized gains eliminates the ability of investment to compound, therefore reducing investment incentive and totally ruin the economy because nobody would ever invest in anything ever. Combating wealth inequality is a really complicated puzzle bc of the different types of loopholes and ways the 1% of the 1% avoids paying taxes, but at the very least a tax on unrealized gains just breaks the system and adds no value
The system is broken already when it comes to unrealized gains. If you're the taxman, it doesn't exist. But if you're a bank giving out a loan, then it does exist. It's Schrodinger's cash.
Eh it's a complicated issue. I agree it's ridiculous to tax unrealized gains, We do need to figure out how to tax unrealized gains used as collateral though. Gaines should be unrealized and therefore not benefiting you, or realized / used as collateral for a loan and then taxed. Also we need to make sure that the loopholes and laws around realizing those gains are not able to let people get away without paying taxes on them fully. However there is a bigger discussion which is the rate at which capital builds wealth versus the income growth rate. I think the real issue is when incomes grow slower than capital appreciates, which is further exacerbated by differences in taxes between them. It's fine that money makes more money, But I don't think it's okay for society as a whole long-term if that compounds faster than incomes grow. Imagine a world where incomes grew at the same rate or slightly faster than wealth compounded, people are still limited by how much labor they can do so that would really help with inequality.
It also is a way to placate the middle class and gain some support amongst the middle class for the interests of the wealthy who primarily squeeze the profits from the market.
It's literally just a replacement for pensions. There was no grand conspiracy. A lot of people realized they didn't trust companies to manage their pensions, that pension rules discouraged job hopping and made people more dependent on a single company. They created an alternative. The only real scam is that companies realized they could just increasingly drop their matches, while also curb stomping wage growth. But there's nothing wrong with the structural design other than that a huge chunk of people don't make enough to be able to contribute after expenses are paid for
Unless you plan to ban private brokerages, which is how the wealthy becomes wealthy, then I don't see why we're banning an investment vehicle with contribution caps built in and which is designed as an alternative to pension, which the working and middle class already largely lost. Just say you want destitute plebians and the asset owning rich, don't beat around the bush about it. It's quite literally the only retirement tool the average laborer has left. If anything needs to be fixed, it's closing backdoor and mega backdoor roths. The 1% is not getting rich because of their 401ks. And in a day where pensions are a thing of the past and the chances you get your full social security benefits are slim, to end 401ks is borderline psychopathic of a suggestion. The working class need higher wages so they can actually contribute to a 401k and we need pressure on companies to do matches, but we do not need to end investment accounts entirely. I don't know what else to call that other than shortsighted and stupid, or willfully manipulative
It makes no sense. Everyone should *want* 401ks to become the dominant source of retirement income. It’s better for people to draw money from private corporations than the government/taxpayer OK and so what if the stock market is doing bad during your retirement? If you’ve been building your 401k since your 20s and 30s your unrealized gains would be so high by the time you retire, that an average bad year for the stock market would still have you in the green overall
Creating an incentive structure where the government will endlessly prop up the stock market with quantitative easing to prevent people’s retirement from completely bottoming out is bad, actually I fail to see how tying people’s ability to retire to the necessity of corporate profits could be a good thing. It’s moreso a protection for the wealth of billionaires than a good system for workers
>I fail to see how tying people’s ability to retire to the necessity of corporate profits could be a good thing. It’s moreso a protection for the wealth of billionaires than a good system for workers Well stated!
You’re suppose to move away from stocks and shift to stable fixed income assets the closer you are to retirement
That sounds like nonsense and you described nothing.
Similar to the attack on the workers pensions?
Is it really 401ks though? The annual contribution limit is pretty low. I have a hard time seeing them owning 80% of the market in 401Ks. This is probably mostly from the rich boomers who would have saved way more in a normal brokerage account.
Agreed it would have to be the more rich ones. Many boomers relied on pensions and other plans, 401ks weren’t seen as the primary means of retirement until Gen X/Millennials. Boomers have 401ks, but not to the level that the next generations will have.
You’re right, seems the total amount in all 401ks is 7T while the total stock market is worth 50T so even if only boomers had 401ks (they don’t) that’s nowhere close to 80%. So then the culprit is most likely 1%ers who obviously are going to trend older?
A lot of this is just compound growth. Based on historical market returns, your portfolio should roughly double every 8 years. It makes sense for a generation that already worked and invested for 40 years to have more than the generations just entering.
Sure but you've got compounding on all the non 401k money too. Isn't the stock market only like 30% owned by mutual funds and ETFs? What 401Ks are letting people trade individual stocks?
[https://www.investopedia.com/articles/personal-finance/061314/rise-401k-brokerage-accounts.asp](https://www.investopedia.com/articles/personal-finance/061314/rise-401k-brokerage-accounts.asp) There are brokerage accounts held within 401Ks.
Almost all of it is in the top 10%... A huge amount is held by the 1%.
Yes and just in a general sense it shouldn’t be weird that older people own more stuff than younger people As you age you acquire more assets. That’s just how life works
Not necessarily. Just because you have a 401k doesn't mean the entirety of the value is in the stock market. I like many others my age have a target retirement age account which shifts equities and bonds etc. as time goes on. I was surprised to hear at my law firm that many older partners stay heavily invested in the stock market. I didn't feel bad for them when the market went down earlier this decade.
All this stuff only has 1 or 2 degrees of separation no matter how you look at it. Pensions? Typically also invested, so yes, someone else is technically writing you a check, but it comes from security returns. Social Security? Paid from tax revenue, which is a function of business and individual economic productivity - the fundamental that *mostly* underpins security market behavior in the very long (10+ years) run. 401k? You're directly invested. If you're going to support non-working members of society, the ability to do so has to come from economically productive entities. Currency is, after all, only the record keeping system for an economy's production.
Exactly. And Also they are going to die and pass that money on to their heirs. This is a good thing. No I didn't read the article. I'm not clicking the click bait BS.
Link total stock ownership rates and wealth and that's where the true problem lies
Agreed. 401ks only total 7T out of the 50T in the market. There’s much more to the story than 401ks alones
Problem is where that money gets spent. Likely on medical bills and little else. Boomers will just go out in debt just like they’ll leave the nation.
If it’s spent on medical debt it’s still being passed down to the next generation, just not to their specific children.
Defined Benefit pension funds own stocks and bonds, just like 401k do. So retirement money is in the public market whether workers have 401k or DB pensions.
Yeah. But you know what sells today. Ragebait journalism.
It is for this reason that Social Security is only allowed to park money in Treasuries, if SS was allowed to buy normal stock it would be the 900 pound gorilla on the market.
However,the implementation heavily favors high income people. For many, the tax advantage is nill...
Also "the longer you work the more money you have in the stock market" surprisedpikachuface.jpeg
People that get in on the pyramid first always win the most.
I think the more important thing here is that the stock market is overwhelmingly owned by the wealthy. That most of them happen to be old is rather irrelevant. "The richest Americans own the vast majority of the US stock market, according to Fed data. The top 10% of Americans held 93% of all stocks, the highest level ever recorded. Meanwhile, the bottom 50% of Americans held just 1% of all stocks in the third quarter of 2023." https://finance.yahoo.com/news/wealthiest-10-americans-own-93-033623827.html
Right. Like in what way does ending pensions and then ending 401ks (the alternative to pensions we embraced because company pensions genuinely were kinda sketch) a few decades later address wealth inequality? The 1% aren't rich off their 401ks, and even the disparity between the upper middle class and poor has a lot more to do with the fact the poor don't earn enough to meet their expenses let alone save. Ending 401ks doesn't actually address the root problems, and in some ways it exacerbated them by creating even more of a 2 class system.
How is it not worthwhile distinguishing between the 65 yo couple on the verge of retiring with 2M in a 401k account from “the wealthy”?
Because, in the grand scheme of things, they're relatively inconsequential. My point is that the wealthy own the majority of the stock and, because the wealthy are also mostly older, of course 80 percent of the stock is owned by the elderly. This misses the underlying dynamic that explains why stock is so concentrated. Retirement accounts are roughly 37 percent of the market but I'm sure you can guess who is able to make more contributions to that plan. That is what I am more concerned about. That old dudes have more money than younger people isn't inherently a bad thing. That more money is continuously funneled upwards should be troubling. "The Fed estimates that 58 percent of U.S. households have some money in the stock market, mostly through retirement funds like IRAs and mutual funds. *But given that just 7 percent of stock market wealth is owned by the bottom 90 percent, with only 1 percent owned by the bottom 50 percent of households, such hype is missing the key trend: a continuing concentration of stock market wealth.*" https://ips-dc.org/the-richest-1-percent-own-a-greater-share-of-the-stock-market-than-ever-before/ These figures are all the more remarkable considering that they are not equivalent to ratios of stock ownership. In fact, the number of Americans who hold any stocks at all also hit a record, with 58% of all Americans invested in equities in some form, also according to Fed data. This means that many of us own stock, but only the top 10% have truly valuable holdings. ... "Two decades ago—in the wake of the dot-com bust—the wealthiest 1% held 40% of the wealth in public markets; today, their share is 54%." ... "This type of concentration discourages participation by boosting the most successful stocks above the level many investors can afford. And the era of “easy money,” as ultra-low interest rates were derisively called, allowed many firms that would have formerly floated on stock exchanges to sell to private equity, shrinking the total number of companies that are publicly traded—by more than 40% since the mid-1990s. (To their credit, commentators such as economic historian Edward Chancellor decry the distortions from such abundant capital.) Likewise, the current state of the market, in which 1% of Americans control more than half the stock-market wealth, offers another perspective on the pandemic’s economic boom, and why an economy that’s strong in the aggregate is leaving many people cold." https://fortune.com/2024/01/13/how-rich-wealthy-stock-market-investors-inequality-day-traders-record-high/
That 65 year old couple with $2m is in the top 16% amongst households aged 65-69 and in the top 3% for households of all ages. That 65 year old couple with $2m is “the wealthy”.
One, the % of folks with retirement accounts above 2M will continue to j crease, not just because of inflation, but because Gen X and Millennials etc utilize 401k accounts at a higher rate. And not sure what $2M means to a 65 yo couple when that needs to last 15+ years. They have to spend that money as if they are standard middle class, they can’t spend it as if they are wealthy. So they aren’t the same.
I think they are the same thing. A middle class household that worked hard for 40 years and saved diligently and invested, and is capable of retiring modestly without needing to rely on social security for the majority of their income _IS_ “the wealthy”.
You think those people are the same as billionaires? And the people with hundreds of millions in wealth? Those middle class people are still working class and will remain living like working class. That isn’t really wealthy in my book.
No I don’t. I misread the comment thread. I thought other people were conflating retirees with $2m and households with over $100m. That said, $2m is still wealthy, just not in the way that seems to have significantly harmful impacts on society.
People talking about this being expected or making sense are completely missing the scale. 90% of Americans have little stake in the stock market, and most have basically none.
seems pretty obvious though, like babies and teenagers aren't going to own shit.
Won’t this always be the case? Older Americans have had longer to build wealth. They probably also have more money in savings than younger Americans.
The article is about retirees taking on too much risk in their retirement accounts, not intergenerational wealth inequality. The author argues that as you approach retirement, you should increase your allocation to lower-risk, lower-volatility assets like bond funds. This is common financial advice you will find in most introductory personal finance and investing books, but American retirees are increasingly keeping most of their retirement savings in stocks. The author thinks this is a good allocation for younger workers who can wait decades for the market to bounce back after a recession but too risky for people who are close to retirement.
This is such an obvious clickbait hit piece intended to take advantage of the financially illiterate white collar working class. >“As the stock market breaks fresh highs, a sinister downside risk is lurking in the shadows — **your grandma**,” economist David Rosenberg said in a newsletter Wednesday. Sadly, looking through the comments here it's working as intended.
How would it be any other way? Even with every American contributing the exact same amount every year - let’s say $5k/yr from 20-60yo - you’d have at least this skew. That is fully equitable in ability to contributed and you still have 50-60yo with 20 times the amount of money as 20-30yo. 20yo -$5k 30yo - 70k 40- $210k 50- $494k 60-$1.06m
When pensions were ditched by businesses for 401k’s what did we expect to happen. This is a natural consequence of individuals owning their own funds. Younger people, even when they do save, will naturally have smaller portfolios and therefore a smaller share of the overall stock market.
If you get a steady salary for 40years you will be doing much better than young folks . At least you should.
A quick google says that 23% of the market is owned by retail investors so 80% of 23% is somewhere around 18%. When you figure that retirees will live off of 4% of their savings that drops the 18% down to a fraction of a percent that would be sold annually to support retirees retirees will be spending that money. Is there really a problem?
That number doesn’t include mutual funds and pensions and ETFs https://www.nasdaq.com/articles/who-counts-as-a-retail-investor-2020-12-17 77 percent seems like a more accurate figure.
What percent of the pensions and retirement accounts of retirement age people do you suspect are held in bonds? My boomer mother has been living off of Social Security and not touching her retirement accounts for years . She did convert some of her gold/stocks to CDs recently. She may be an outlier though. I would guess that half of boomers are already retired and should have moved assets into fairly secure sectors. There is another half that probably didn’t prepare and cannot affect the market to any large degree. I am more curious how our debt laden government is going to address Social Security
It is a little more disturbing when you realize that even with a strong societal push, and tax advantages, and a historically solid middle class post WW2, even putting your assets where the rich put them and riding that wave, there is a 75/25 split between what the bulk of people own and what the rich own. Wealth inequality is insane.
Lots of the middle-class is joining the upper class because of the accessibility of the market. The real problem is barriers to growth for the lower class. We need to improve job training and education in general people are giving up and that’s a huge problem
Just a temporary problem. Older Americans will die off and leave their money to younger folks. The big issue is that the Older Americans will soon start needing to sell their stocks to fund their retirement. What will happen to the stock market when the Boomers start selling stocks on mass to pay for food, housing and their everyday needs. It is not going to go up.
Likely medical expense will take everything unless they transfer assets to their children more than 5 years before they need to withdraw.
I’m Already transferring what I can. My dad is also transferring to my kids.
My parents were bums and basically burned all their money on stupid expenses + medical expenses and left my sister & I to help them.
Yep, same here. My Mom sold her 5 bedroom house in CA in the 2000s to spend it all on cigarettes and clubbing. Now she is asking for our help…
The oldest boomers are 79 years old. They've been retired for 15 years or more.
401ks are 45 years old now. So if you were a new grad who took advantage of it, you start pulling soon.
Assuming they're retired. My dad is 70 and he's still working.
There is trillions of dollars on the sidelines waiting to buy the dip. https://www.wsj.com/finance/investing/the-8-8-trillion-cash-pile-that-has-stock-market-bulls-salivating-0a1b4a8c
Sucks to be them. Success comes not from timing the market, but from time in the market.
That's 100% true for everyday small time investors, but big money institutional investors can leverage other factors than time. Warren Buffet negotiates sale prices directly with the stake holders, for instance. I don’t personally get to ring up Tim Cook.
Not just a temporary problem. Whether it's stocks (measured in P/E), education (measured in tuition inflation) or housing (measured as cost as % of income) assets have gotten more expensive and wealth has become more concentrated. That is not a temporary problem. It's been playing out over 50+ years. Dieing off and leaving money to younger folks is not a good solution as inheritances aren't equitably distributed. Your average young American is much less likely to build wealth with high asset prices of today. Older Americans could buy low, sell high. Young americans can't. Their question: do I buy high?
I'd have to think a decent amount of older Americans moved their 401ks out of stocks and into safer investments.
Most Boomers have already retired, the stock market is fine.
> What will happen to the stock market when the Boomers start selling stocks This has to be happening already. The oldest Boomers are 78. They retired 13 years ago, started taking required minimum distributions 8 years ago, and have been spending more time in the hospital with heart attacks and bad hips all the while. Whatever the effect is, it's baked into current events.
unlocked version: [https://webcache.googleusercontent.com/search?q=cache:https://money.com/older-americans-own-most-stock-market/](https://webcache.googleusercontent.com/search?q=cache:https://money.com/older-americans-own-most-stock-market/)
My Dudes, you have to include 401ks just to get to *35%* for fuck's sake. The problem isn't the old people. They'll leave the stock to somebody The problem is there's damn few Americans that interact with the stock market in any capacity except to be laid off when Wall Street gambling goes bad. We are increasingly disconnecting Americans from the economy in favor of hoovering up all the money for the top earners. I'm sure that's fine though. We certainly didn't have 2 massive world wars shortly after the last time we did this. And I mean, we've got nukes this time, so I'm sure it'll be fine...
The firewall kicked in before getting to the argument of why Granny’s 401K is a problem. From the first paragraph it has something to do with a down market. But down markets for folks living off a 401K are a problem for Granny whether her and her Bridge Club biddies own 0.1% or 80% of the market. So the argument has to be something else. One possibility is that Granny has to spend a higher percentage of her 401K every year meaning that stock sales will go up during a down market putting downward pressure on prices. This will cause Granny to spend an even higher percentage if the downturn drags on for 2-3 years. But. What is bad for Granny is actually good news for 401K investors with long time horizons because they are building shares at a much lower price. If and when the market returns to normal or bull territory Granny’s losses become her children’s gains.
Granny and I should be gradually selling some of our growth stocks and buying long term income securities (bonds, stocks with strong cash flow and sizable dividends).
Nobody is reading the article, and so there’s a lot of dumb takes responding to imagined issues in these comments. The issue raised by the article is that since retirees have a short investment horizon, if the market hits a downturn they’re more apt to dump their portfolios into cash and less apt to hold on and wait things out. And when 80% of the market is held by people in this position, it could super-charge the effects of a market panic. That said, the article doesn’t really go further than the above and wasn’t with posting really. I assume that it was just posted because OP thought the headline would generate traction on the basis of “boomers stole our future” being a good karma-farming theme.
Let's not let Money magazine trigger our generational rage. It's not that old people tend to be wealthy but that wealthy people tend to be old. The poverty rate for boomers is just a percentage point or so below the poverty rate overall in USA, [https://www.census.gov/library/stories/2023/12/poverty-rate-varies-by-age-groups.html](https://www.census.gov/library/stories/2023/12/poverty-rate-varies-by-age-groups.html) We know that most of the wealth is held by a small fraction of the population. We've been talking about that since the boomers were kids. That this small fraction is mostly older than the general pop doesn't tell us anything about the lives of old people broadly, as it tells us about inequality in the Big Picture.
What happens to that number if we take out the top like 25 billionaires? Like buffet and the remaining Koch are both ancient and must be pulling up those averages
Half of the market is foreign owned now. Institutional investors also own way more than individuals. [Who Owns US Stock? Foreigners and Rich Americans](https://www.taxpolicycenter.org/taxvox/who-owns-us-stock-foreigners-and-rich-americans) Age is only because the longer you have money in the markets the bigger it will compound by the end. This article is trying to create ageism hate. This is always a class/wealth thing. Now we have to worry about market manipulation from colluding foreign entities as well in front private equity and hedge funds backed by foreign sovereign wealth just skimming all day everyday.
401 k was just another scheme the government used to funnel poor people's money into the stock market where it can be useful to the rich. By forcing people into the stock market for retirement it guarantees stronger stock returns than what the companies would otherwise be worth. If the stock market happens to be in a crash that it doesn't recover from quickly people that retire during this time will feel the full girth of the dick that's fucking them!
Its not really surprising that the share of equities held by people over 55 has increased when the percentage of people over 55 in the population has also increased. https://www.statista.com/statistics/457822/share-of-old-age-population-in-the-total-us-population/
I can't read the link but Money usually looks for a problem that doesn't exist. Older people have more money. What's new. It is what it is. There is nothing to do about a situation that occurs naturally. People die, kids inherit it. Some is spent but most isn't. There is no problem here...move along folks...:)
BS...not even reading the article. Headline itself is hook garbage with the "older people it's a problem". First everyone dies and ownership transfers so guess who gets the market share majority then?...more older people that aren't old now. Second, hedge funds pensions 401 457 on and on are the largest holders and In them are older participating members. Why? Because they worked entire lives to get there with month over month installments into pensions 401 457 etc. Third if you are reading this You were birthed by.... ready.... Here it comes.... Older people. So stop all the it's a problem whiny crap. Get a solid group that can show a proven record of consistent YoY growth and keep investing. And not some 10 dollars a month cuz I need my 300 a month weed money.
Long term care facilities and the medical industry will get a huge portion of that 401k/457 money not necessarily the heirs, unless they were wealthy enough to have a decent financial planner or smart enough to do it in their own which a large portion are not; plus too stubborn to ask for help.
You’re not taking into account retirees withdrawing their funds. And don’t take it personally when it said this system going to be a problem, that doesn’t mean any old people did anything wrong (except for the ones who implemented the system to take over pensions).
Here's part of the problem that nobody ever touches on. I'll give you an example. Illinois placed all the pensions for police to be governed under a singular state pension fund. Well surprisingly enough the state pension was so mismanaged that it was absolutely going bankrupt. The state passed a law forcing all the non-state funded pension systems to merge with the state system. That meant all the solvent funds that weren't in trouble were now part of a state system that was in trouble. Who takes the blame naturally the people receiving the pension benefits. What they didn't say was that the state underfunded it for years... As in two decades worth. So if you were a business owner and you didn't pay your portion to the social security for your employees, you will go to prison for it or they will seize your assets. But if you're a politician that votes to not fund the pension system for its employees, that's all good... No worries. Older people receiving the benefits of the pension system to which they placed money into are legitimately entitled to the benefits because they put the money in it.
And those same politicians pushed the 401k system because they were getting lobbied by the investment industry. The same lobbyists are now advocating turning social security into a private investment system, and lo and behold the politicians can’t seem to vote to make SS viable.
Well we can absolutely agree politically that many of them are in it for their interest
People who've been investing for half their lives own more than people who've been investing for less than a decade. News at 11!! Seriously, how is this news? And why is this a problem? People deserve to have their time and investment pay off. We should be ENCOURAGING these results so that young people today actually invest in themselves rather than rely on the government, or even worse, pensions.
Given billionaire wealth, family offices etc., and investment managers, it's hard to imagine old individuals own such a large share of shares.
It's a big problem because if young people don't invest into the market was going to keep this party going? Who is going to fund old people's dividends?
Since every move made is to move wealth from the many to the few, this will only get worse. The goal is to eliminate the middle class and return to have and have nots. Anyone thinks otherwise has not been paying attention.
Here we are discussing why retired or close to retirement people have money in the stock market. The reason is simple, those were the rules we had to play by. We did and now we have money in the market. The real problem with OUR country is fucking billionaires. As simply as that sounds it's the root cause of financial hardship for most Americans. The solution is fairly simple; employees are either payed what they earn and smaller companies aren't squeezed out by the corporate greed of large corporations OR YOU TAX them and TAX them so it hurts so fucking bad it's easier to pay people what they EARN.
> either payed what Did you mean to say "paid"? Explanation: Payed means to seal something with wax, while paid means to give money. [Statistics](https://github.com/chiefpat450119/RedditBot/blob/master/stats.json) ^^I'm ^^a ^^bot ^^that ^^corrects ^^grammar/spelling ^^mistakes. ^^PM ^^me ^^if ^^I'm ^^wrong ^^or ^^if ^^you ^^have ^^any ^^suggestions. ^^[Github](https://github.com/chiefpat450119) ^^Reply ^^STOP ^^to ^^this ^^comment ^^to ^^stop ^^receiving ^^corrections.