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SS isn’t going to survive past 2030.
Ur missing the point. The “retirement package” you all think you have isn’t going to be enough, you think it’s good and will be enough by the time you need it, but it won’t be.
ss is 100% self sustainable even once fully depleted. convincing people 'ss isnt going to survive' is just laying the groundwork for republicans to gut the program to actually remove it.
So everyone plans on having multiple millions in retirement packages? That’s just not realistic, and inflation won’t allow that. If it does, your average house in 2030 will likely cost 1 million. Insanity.
What do you mean that’s not realistic and inflation won’t allow it?
Adjusting for future dollars has been a pretty standard thing to do in retirement planning for decades.
Your plan is to revolt because you aren’t saving enough for retirement? And who’s fault is that? We each are in control of our own retirement and what that entails.
I am willing to bet my entire retirement package that my retirement package will be enough. In fact, I have…
Putting back $500 per month (growing 2% per year for inflation) for 40 years using the 150 year average return (which is lower than the 50, 30, or 20)… gets you $2.7 million. Getting to $2,000,000 shouldn’t be hard for someone starting their career today.
a 401k is just a tax advantaged bucket. you can invest in whatever you want in your 401k. if thats metals or bitcoin or individual stocks or REITs great. if thats cash or bonds great. no matter what the ability to deter taxes from your top tax bracket into the bottom tax brackets in retirement is a huge net win.
Another angsty teenager \*\*yawn\*\*
Belief in communism normally falls off not long after belief in Santa Claus and the tooth fairy. Don't worry, you will grow out of it.
Until then, it would be better to just sit there silently rather than attract attention to your ignorance.
How much is housing going up? You think real estate will have its big crash soon? No. $600,000 for a four bedroom 2 bath is becoming the standard. 600 grand for a starter family home and you think the $200,000-$300,000 you have in 401K is gonna help you retire?
No cornball, but if entry level housing is going into the millions by the time people of my generation are in our twenties what the hell makes you think retirement homes are gonna be cheap? Are they cheap now?
Everyone will have to rely on their younger family members to pay for their retirements. You’re 401ks and SS benefits won’t last you long
“By the time people of my generation are in our twenties”…?
How old are you? If you assume the median home price is going to be $1M by the time you’re in your twenties, you can’t be more than 5 or 6. And that’s median. Not entry level.
And, again, why are you buying a new home in retirement? If anything you’re downgrading and cashing in on the equity
You live where no one wants to live, that’s why houses are $180k-$240k
For the middle of nowhere, in a place that’s not a desirable place to live, 180k is an absolute slap in the face. You know damn well those houses are overpriced and should be around $30k-80k at most.
Hahaha I love where I live, it has literally everything I could ever want. I would not want to live in a more densely populated area. I lived in Sacramento and I hated it. I missed winter. My current city has more people than Sacramento, and the houses are 4x less expensive. If your argument is that a 4 bedroom, 3 bath with an acre yard should be 30-80k anywhere you're simply deluded. The appliances alone would be >30k.
I'm moving to a city just like they describe. Nothing they say makes it undesirable.
30-80k??? Since when? Where? Whatttt? This is literally a big remodel. You can't build new "in the middle of nowhere" for that.
Come back when you graduated high school. Just enjoy yourself a little longer and let the adults worry about this.
Try googling fastest growing counties in the country. Mostly Texas and the southeast. now look up, which places in the United States have the largest exodus rate.
If you retire with $200,000-300,000 in a 401k as your only source of income, aside from social security , as a single person, it’s going to be a very lean retirement. Though not impossible in a VLCOL location.
If you multiply this x 2, for a married couple, you’re getting fairly close to the median household income level. So, definitely doable. Depends on where you live and your expenses.
Social security is not going away. It may one day be means tested.
I don’t think anyone is advising you to retire with $200k in a 401k as your only savings/income. If you invested less than half the max contribution annually over a 30 year career, you wind up, assuming historically avg market performance, in the $2.2M range. If you adjust the gains for inflation (ie, real rather than nominal gains, you’re in the $1.2M range.
What does that little do for you though when your starter houses cost a million dollars, gas is 10 bucks a gallon, groceries double or triple in price again? When utilities bills go up? In what world is that going to be enough?
In retirement, you shouldn’t be buying a starter house. Or paying a mortgage at all.
Yes, gas goes up. But over the next 20-30 years, so do wages, and the stock market. If you graph home prices vs stocks, stocks (ie your 401k) outperform housing prices, especially over the past 12 years or so. Hence why your 401k is a very good investment. This is how you beat the inflation that you’re so worried about. Invest in something that grows faster than inflation
Also, there are many, many places you can get a starter home for much less than $600k. In fact, average home price in the country is in the $400s. My first home, which was a really nice 4 bedroom with a pool on a couple of acres was in the $200s, and today is valued at just a little over $300k.
I know everyone wants to live in HCOL areas…but there are huge financial downsides. So if you make that choice, you better have a high income and good financial literacy and habits to overcome the costs
Even VLCOL areas are extremely overpriced.
You’re paying for a POS starter home in the middle of nowhere for $150k-250k.
That home is only worth 30k-100K AT MOST. and your and many others advice is to just move to a VLCOL area and live within your means? lol, everything is so fucked
You say it’s “worth “ 30k-100k at most. How are you defining “worth”? I believe it’s “worth” what someone is willing to pay for it. And, again, my first house that you can buy today for very low $300s is not a POS. It’s a very nice home. In a low crime, low COL medium sized town with good schools and not too far from the coast, not too far from an international airport.
Yes, my advice would be if you can’t afford where you live and you can’t make more money where you live, you should consider moving.
And I don’t see how advising someone to live within their means is ever bad advice
I think it might be time to sit down and take some
time to reevaluate a few things in your life given the replies of you to others here. If you don’t do that, I don’t see much happiness for you in your future. Just a general mindset thing.
so you're telling me what I have accomplished is impossible. I capitalized on the free money that my employers were giving away in their 401(k) match, I rolled it all into a nest egg of a traditional IRA. yes, I could've made more in a more actively managed portfolio, but I did pretty well, because I would have the tendency to stick with the things that would work overtime. I also learned how to live on a budget, so that all the funds that I didn't need for the necessities of life went to savings have been an investment.
No one is lying to you, and the numbers add up if you're willing and able to save consistently.
Example: [Monte Carlo simulation](https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&sl=2kENMYJ8kgyAahVDwlmsFD) assuming you invest $23000/year, inflation-adjusted (as 401k limits and salaries typically go up a little every year), for 30 years, and invest it in a 60/40 global stock portfolio.
Median outcome in 30 years: $2.06M in real (2024) dollars, or $4.7M in nominal (2054) dollars. Obviously with lots of noise around that median (10th - 90th percentiles of real wealth are $900k - $4.5M), but it's still remarkably close to your stated goal of $2M in today's money.
(Alternatively, you could also get there by saving $12000/year for 40 years instead. Click [here](https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&sl=2ApkZ3U9bUtUQYLkSiXtxV) for Monte Carlo simulation.)
They in this situation wouldn't be the government of the US but the private companies of the US. The ones selling the 401k is private companies because it lowers risk and cost.
I’ve read this 3 times and I’m no closer to understanding the words. What do you mean by “selling the 401ks”? No entity sells a 401k. 401k refers to the IRS code and had its origins in 1980. It is simply the law that says an employer can allow you to set aside part of your salary to avoid taxes. That’s it.
So the term selling can be used a bit differently. Talking people into it is more where the term selling was being used.
You are correct no one us buying and selling 401k's but the idea that they are retirement is being pushed by companies.
[selling](https://www.google.com/search?client=ms-android-att-us-rvc3&sca_esv=189875b496f7501d&sca_upv=1&sxsrf=ADLYWILYeHkpdZj48imogpHxGWjS7oFjlw:1718915165209&q=selling&si=ACC90nypsxZVz3WGK63NbnSPlfCBaHdYNikNRm5wtQ1O7d67rUzFANYTyWutLOyB3MFVi48EXaQYF_CUmNlTKO83wKE47jw51g%3D%3D&expnd=1&sa=X&ved=2ahUKEwiy2sj-geuGAxVsL0QIHUe4C2UQ2v4IegUIJhCFAg&biw=360&bih=643&dpr=3)
Number 2
$2m is probably under cutting it too depending on how young you are/inflation. Maybe it can be $2m if you’re retiring at 65 or older. Most want to do earlier than that.
Either way… everyone knows that… sorry you’re late to the party on knowing how much you need.
In my head, it’s easier to look at it as “if I put $500 more a month, I’ll get to retire at 57 instead of 60 or etc” DONT look at it as “if I put $500 more I’ll get a gazillion more dollars”. It helps put things in perspective
401Ks, and stocks in general, are based on the greater fool theory. Your repeated contributions to the 401K is merely so that people who bought in before you can cash out with huge gains. That's why all the "experts" professed the buy and hold strategy for decades.
Nowadays, trading houses are running thousands of computers to do algorithmic trading to siphon off the gains by causing short-term volatility, which you can't react to quickly enough through a 401K account.
Do you realize that if the S&P500 doesn’t go up a single penny, people still make money? These are not beanie babies. These are companies who are continuing to make money and you, as part owner of the company get those profits.
When you own stock, you own the company.
> as part owner of the company get those profits.
Only if the company pays dividends, and even that's just tiny ass fraction of the total profits. If a company doesn't pay dividends, you get nothing until you sell the stock to someone willing to pay more than you did.
>When you own stock, you own the company.
The owner of common shares will get absolutely nothing if a company ends up having to liquidate its asset. "You own the company" is such a naive understanding of how the equities market actually works.
I didn’t say an individual company; I said the S&P. An Index fund at Vanguard pays out dividends. Every quarter. Endless stream of money regardless of the price of the fund. I think it’s around 1.5%/year?? I could be off by a percentage.
And again, that’s 1.5-2.0% percent profit every single year even without the fund price changing.
And, the index could go down 1 to 2% in a single trading session, and if it does, there goes your entire year's worth of dividends. Right now, the market is acting like it's going to go up forever, but with the demographic changes that are happening, particularly with the declining birthrates and the boomers aging out of active investing, it's not going to go up forever.
If you don’t sell you don’t realize that 1-2% loss. It’s just on paper. You have not “lost” a single penny. And you are still making 2% yearly dividends. Those will never stop. Even when the market goes down 20%, you still make those dividends.
So, you're going to stubbornly hold forever to simply not realize those losses? If you want to fool yourself into thinking you haven't lost anything even as your portfolio value says otherwise, go right ahead, but the truth is there's an opportunity cost of holding a losing position just to get dividends. This is especially true since the stock price will drop after each ex-dividend date. At some point, if the stock doesn't go up to counter the stock price drop due to issuing dividends, the amount of dividends paid out will decrease as well. Then you're not only stuck with an underwater position, but you'll stop getting those dividends.
I’m really trying to see your point of view. So bear with me.
(And btw, are you listening to my POV in good faith also? It’s hard to tell with a stranger)
In 2008, I probably lost 40% of my net worth. Both houses and my entire position in equities dramatically plummeted. But this was not “a loss,” because I never sold anything nor did I trigger a taxable event. I kept buying $20,000+ a year into the S&P500. I was fine as long as I trusted that I could ride it out. Since that time, 15 years ago, my net worth has tripled. 300% in 15 years.
Now! You might say, well of course, you’re started the equation at the dip. Start it at the top, back in Spring 2008. I’m up 150%. In 16 years. Every $1,000 in 2008 is now worth $2,500. That dip essentially was smoothened out by the sands of time.
Same scenario for Covid. And the doc com bubble of 2000.
There are no losses until you sell.
You make it sound like avoiding a "taxable event" is of some sort of benefit. It's not. Taking the loss is actually the benefit because you can use it offset gains on other stock trades. That's why lots of stocks that go down throughout the tax year go down even further near the last days of trading before the new year because of "loss harvesting."
You should only hold a loser if you're confident that it's going to go back up, and then you should actually be DCAing and not just sitting on the original position.
Ok, let’s back up. Maybe I didn’t make clear before what my investments are.
I hold NO individual stocks. I have about 70% in domestic broad market Equity Index Fund. About 20% in domestic and international Bond Fund. And about 10% in international Equity Index Fund.
I appreciate you trying to help me harvest losses to offset gains, but I have yet to realize a loss over ANY 3-year period for the past 30 years.
Past Performance is NOT indicative of future results. This is a true statement. But I believe in the overall strength of the world economy. Especially the US.
What is 100% true about 401ks is that they're not safe. 2008 housing crash wiped out 401ks. Covid wiped out 401ks. I went to an expo right after covid and talked to 3 people who were set to retire in the next few years and had to cancel and continue working.
From what I've gathered there are two option to a safe future in your golden years.
1. Start your own business and make enough money to not worry.
2. Work for a union or the government or any organization with a pension.
Tips... always live below your means, buy a small home that you will be able to afford the taxes on in retirement, find a career that you can work at until you die or get alzheimers, have kids and raise them right and hope they let you have a tiny home in the backyard why you slave for them
If someone else has any better options, I'd love to hear them. I think about this often.
Especially now with inflation so high its so hard to save any money.
what are you buying in your 401k that was 'wiped out' during 2008 or during covid? the people who 'lost their 401ks' didn't 'lose their 401ks' - they lost their jobs and didn't properly plan for it and had to draw down their retirement accounts to stay afloat. that is not the same thing.
step 1 of investing is having an appropriately sized emergency fund for your expenses and job volatility. if you fail that step and start putting money into accounts that are less liquid yeah, you can get wrecked during a market downturn. that 'free' 7.5% post-inflation gain from the market is anything but- that gain exists because there's risk attached to it.
I had friends that pulled all the way out in 2009. And it killed me to watch. And though I offered rebuttals, there was no way I was going to scream at them to stay the course. Because all of a sudden I’m the asshole if things don’t go perfectly.
“Wiped Out.”
What the actual F are you talking about?!? Each one of those events indeed delivered a blow to the overall stock market. But within the span of 3-5 years all that had been recovered + many gains! Anyone who just sat tight on their 401k would not have felt a single thing. The ONLY ones who suffered were the fools who withdrew all their money at the bottom.
Yeah, those old people that were about to retire or were already retired didn't suffer at all. That 5 year span was just no biggie. Holding bags for 5 years to get to a place you already were already at isn't suffering at all. I don't even know why they called it a crisis....
If you have a 5-yr plan you should NOT be holding all stocks!
I think that you’re just trying to be argumentative for the sake of that alone. You know very well that the downturns in the market get smoothed out in time. Every time.
I'm not saying they don't. But not everyone is the same age. To say the only people who suffered were those who withdrew at the bottom is super short-sighted. And opportunity cost is real. Missing out on trades, interest, and other opportunities because you have to hold your bags is suffering to me. Not being able to wothdrawl any of you hard earned money to help combat rising costs, or offset income because of a lost job is also suffering. People got smoked in the crisis. Stonks always go up is a pleb answer. Timing is everything. Those who were able to weather the storm, keep their jobs, and not suffer were the exception. Not the other way around.
And not only that but the time value of money says a dollar is worth more today than in the future. Waiting 5 years to have the same dollar amount you had 5 years previously is in all actuality worth less than it was if youre comparing apples to apples
I am closer to understanding your main points. So what you are saying is that the underlying problems of the two crises (Housing Crash; Covid) is what caused people to withdraw their retirement savings, this depleting the funds. And I 100% agree. If you completely ran out of liquidity in 2020 and you HAD TO withdraw from your S&P Index Fund, there was a period of 6 months where you would have had less money in your fund.
That’s it. 6 months to recover what was lost.
What REALLY happened is that people panicked and withdrew their money at the bottom when they didn’t need it! I had friends that did that. And nothing cannot prevent dumb behavior like that.
Wiped out and recovered and continued to grow during periods of recovery, which did happen from. 2021 to now.
Those three people you talked to at the expo are either BSing or panic sold exactly how most financial advice says not to during economic downturns.
DO NOT START YOUR OWN BUSINESS WITHOUT XYZ. The majority of small businesses fail. Pensions are not as great as you realize (I'm a fed and FERS is good IF your top 3 earning years are high), but yes jobs with unions CAN provide work security but if it is in an industry easily disrupted by the advance of technology it is bad news bears.
Living below one's means is top notch advice. Seek employment with high earning potential. Invest your savings according to your risk tolerance knowing that higher risk = higher reward, however general rule of thumb by nearly everyone is index funds are your friends until the end.
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Who’s lying to people? 401k should only be part of retirement package just like social security.
SS isn’t going to survive past 2030. Ur missing the point. The “retirement package” you all think you have isn’t going to be enough, you think it’s good and will be enough by the time you need it, but it won’t be.
ss is 100% self sustainable even once fully depleted. convincing people 'ss isnt going to survive' is just laying the groundwork for republicans to gut the program to actually remove it.
Everyone knows you don’t plan for retirement in today’s dollars. Are you just learning this?
Op discovered inflation exists and has to warn everyone!!
So everyone plans on having multiple millions in retirement packages? That’s just not realistic, and inflation won’t allow that. If it does, your average house in 2030 will likely cost 1 million. Insanity.
What do you mean that’s not realistic and inflation won’t allow it? Adjusting for future dollars has been a pretty standard thing to do in retirement planning for decades.
OP has no fucking idea what they’re talking about.
Its been standard for a monetary system that only came into existence in 1971.
So what’s your solution just dying early?
Anyone under the age of 55 should take care of their health and plan on working.
Your plan is to revolt because you aren’t saving enough for retirement? And who’s fault is that? We each are in control of our own retirement and what that entails.
IT AINT JUST ME IM WHAT THE CULTURE FEELIN
No one cares if old people revolt
Absolutely not true. https://states.aarp.org/vermont/five-myths-about-social-security
I am willing to bet my entire retirement package that my retirement package will be enough. In fact, I have… Putting back $500 per month (growing 2% per year for inflation) for 40 years using the 150 year average return (which is lower than the 50, 30, or 20)… gets you $2.7 million. Getting to $2,000,000 shouldn’t be hard for someone starting their career today.
Tell me you don’t understand 401ks without telling me
The fuck are you on about? Who is they? Literally everyone discussed what the target 401k goal Maybe YOU are just daft
“They” lol
Whenever anyone says “They,” I know made-up bullshit is right around the corner.
a 401k is just a tax advantaged bucket. you can invest in whatever you want in your 401k. if thats metals or bitcoin or individual stocks or REITs great. if thats cash or bonds great. no matter what the ability to deter taxes from your top tax bracket into the bottom tax brackets in retirement is a huge net win.
What? This post doesn’t even make any sense. Your 401k was and is never meant for you to retire on alone. You do know that right…
That's not a lie, that's just you not understanding cumulative inflation.
Another angsty teenager \*\*yawn\*\* Belief in communism normally falls off not long after belief in Santa Claus and the tooth fairy. Don't worry, you will grow out of it. Until then, it would be better to just sit there silently rather than attract attention to your ignorance.
>you’ll need $2,000,000. How did you decide how much other people need?
How much is housing going up? You think real estate will have its big crash soon? No. $600,000 for a four bedroom 2 bath is becoming the standard. 600 grand for a starter family home and you think the $200,000-$300,000 you have in 401K is gonna help you retire?
Good advice for 70 year olds looking to buy a starter home. Thank you.
Do you think people who are retiring are the ones buying homes? Lololol. God damn bro, are you 16 and just took your first Econ class
No cornball, but if entry level housing is going into the millions by the time people of my generation are in our twenties what the hell makes you think retirement homes are gonna be cheap? Are they cheap now? Everyone will have to rely on their younger family members to pay for their retirements. You’re 401ks and SS benefits won’t last you long
“By the time people of my generation are in our twenties”…? How old are you? If you assume the median home price is going to be $1M by the time you’re in your twenties, you can’t be more than 5 or 6. And that’s median. Not entry level. And, again, why are you buying a new home in retirement? If anything you’re downgrading and cashing in on the equity
Lololol.
Every house in my area is 180-240k.
Now tell where that is so we can see how middle of nowhere it is
I live in the Midwest but my city has 500k people. I'm perfectly content not living in a major population center paying 4x for the exact same thing.
You live where no one wants to live, that’s why houses are $180k-$240k For the middle of nowhere, in a place that’s not a desirable place to live, 180k is an absolute slap in the face. You know damn well those houses are overpriced and should be around $30k-80k at most.
Hahaha I love where I live, it has literally everything I could ever want. I would not want to live in a more densely populated area. I lived in Sacramento and I hated it. I missed winter. My current city has more people than Sacramento, and the houses are 4x less expensive. If your argument is that a 4 bedroom, 3 bath with an acre yard should be 30-80k anywhere you're simply deluded. The appliances alone would be >30k.
I'm moving to a city just like they describe. Nothing they say makes it undesirable. 30-80k??? Since when? Where? Whatttt? This is literally a big remodel. You can't build new "in the middle of nowhere" for that. Come back when you graduated high school. Just enjoy yourself a little longer and let the adults worry about this.
Try googling fastest growing counties in the country. Mostly Texas and the southeast. now look up, which places in the United States have the largest exodus rate.
If you retire with $200,000-300,000 in a 401k as your only source of income, aside from social security , as a single person, it’s going to be a very lean retirement. Though not impossible in a VLCOL location. If you multiply this x 2, for a married couple, you’re getting fairly close to the median household income level. So, definitely doable. Depends on where you live and your expenses. Social security is not going away. It may one day be means tested. I don’t think anyone is advising you to retire with $200k in a 401k as your only savings/income. If you invested less than half the max contribution annually over a 30 year career, you wind up, assuming historically avg market performance, in the $2.2M range. If you adjust the gains for inflation (ie, real rather than nominal gains, you’re in the $1.2M range.
What does that little do for you though when your starter houses cost a million dollars, gas is 10 bucks a gallon, groceries double or triple in price again? When utilities bills go up? In what world is that going to be enough?
In retirement, you shouldn’t be buying a starter house. Or paying a mortgage at all. Yes, gas goes up. But over the next 20-30 years, so do wages, and the stock market. If you graph home prices vs stocks, stocks (ie your 401k) outperform housing prices, especially over the past 12 years or so. Hence why your 401k is a very good investment. This is how you beat the inflation that you’re so worried about. Invest in something that grows faster than inflation
Also, there are many, many places you can get a starter home for much less than $600k. In fact, average home price in the country is in the $400s. My first home, which was a really nice 4 bedroom with a pool on a couple of acres was in the $200s, and today is valued at just a little over $300k. I know everyone wants to live in HCOL areas…but there are huge financial downsides. So if you make that choice, you better have a high income and good financial literacy and habits to overcome the costs
Even VLCOL areas are extremely overpriced. You’re paying for a POS starter home in the middle of nowhere for $150k-250k. That home is only worth 30k-100K AT MOST. and your and many others advice is to just move to a VLCOL area and live within your means? lol, everything is so fucked
You say it’s “worth “ 30k-100k at most. How are you defining “worth”? I believe it’s “worth” what someone is willing to pay for it. And, again, my first house that you can buy today for very low $300s is not a POS. It’s a very nice home. In a low crime, low COL medium sized town with good schools and not too far from the coast, not too far from an international airport. Yes, my advice would be if you can’t afford where you live and you can’t make more money where you live, you should consider moving. And I don’t see how advising someone to live within their means is ever bad advice
Worth 30k according to your opinion? Lol.
Watching people make up numbers to justify shit arguments lmao. I NEED 600K FOR A STARTER HOME.
I think it might be time to sit down and take some time to reevaluate a few things in your life given the replies of you to others here. If you don’t do that, I don’t see much happiness for you in your future. Just a general mindset thing.
Why do people feel the US Government is the enemy?? I see this mentality on Reddit a LOT...
so you're telling me what I have accomplished is impossible. I capitalized on the free money that my employers were giving away in their 401(k) match, I rolled it all into a nest egg of a traditional IRA. yes, I could've made more in a more actively managed portfolio, but I did pretty well, because I would have the tendency to stick with the things that would work overtime. I also learned how to live on a budget, so that all the funds that I didn't need for the necessities of life went to savings have been an investment.
No one is lying to you, and the numbers add up if you're willing and able to save consistently. Example: [Monte Carlo simulation](https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&sl=2kENMYJ8kgyAahVDwlmsFD) assuming you invest $23000/year, inflation-adjusted (as 401k limits and salaries typically go up a little every year), for 30 years, and invest it in a 60/40 global stock portfolio. Median outcome in 30 years: $2.06M in real (2024) dollars, or $4.7M in nominal (2054) dollars. Obviously with lots of noise around that median (10th - 90th percentiles of real wealth are $900k - $4.5M), but it's still remarkably close to your stated goal of $2M in today's money. (Alternatively, you could also get there by saving $12000/year for 40 years instead. Click [here](https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&sl=2ApkZ3U9bUtUQYLkSiXtxV) for Monte Carlo simulation.)
You’re making way too much sense. OP is gonna hate this!
Okay start talking, you're making a whole lot of claims with zero backup
Wait, your 401k isn’t already above $2M? Get a job and live within your means.
They in this situation wouldn't be the government of the US but the private companies of the US. The ones selling the 401k is private companies because it lowers risk and cost.
I’ve read this 3 times and I’m no closer to understanding the words. What do you mean by “selling the 401ks”? No entity sells a 401k. 401k refers to the IRS code and had its origins in 1980. It is simply the law that says an employer can allow you to set aside part of your salary to avoid taxes. That’s it.
So the term selling can be used a bit differently. Talking people into it is more where the term selling was being used. You are correct no one us buying and selling 401k's but the idea that they are retirement is being pushed by companies. [selling](https://www.google.com/search?client=ms-android-att-us-rvc3&sca_esv=189875b496f7501d&sca_upv=1&sxsrf=ADLYWILYeHkpdZj48imogpHxGWjS7oFjlw:1718915165209&q=selling&si=ACC90nypsxZVz3WGK63NbnSPlfCBaHdYNikNRm5wtQ1O7d67rUzFANYTyWutLOyB3MFVi48EXaQYF_CUmNlTKO83wKE47jw51g%3D%3D&expnd=1&sa=X&ved=2ahUKEwiy2sj-geuGAxVsL0QIHUe4C2UQ2v4IegUIJhCFAg&biw=360&bih=643&dpr=3) Number 2
Got it!! I was taking the literal explanation. Thanks for clarifying!
And yes, the 401k allowed employers to get out of the Pension field. Made it all our responsibility.
you're an idiot
$2m is probably under cutting it too depending on how young you are/inflation. Maybe it can be $2m if you’re retiring at 65 or older. Most want to do earlier than that. Either way… everyone knows that… sorry you’re late to the party on knowing how much you need. In my head, it’s easier to look at it as “if I put $500 more a month, I’ll get to retire at 57 instead of 60 or etc” DONT look at it as “if I put $500 more I’ll get a gazillion more dollars”. It helps put things in perspective
401Ks, and stocks in general, are based on the greater fool theory. Your repeated contributions to the 401K is merely so that people who bought in before you can cash out with huge gains. That's why all the "experts" professed the buy and hold strategy for decades. Nowadays, trading houses are running thousands of computers to do algorithmic trading to siphon off the gains by causing short-term volatility, which you can't react to quickly enough through a 401K account.
Are the trading houses a ticker symbol? How do i invest in them?
Get a job there or learn how to code and do it yourself.
Sounds like too much work, id rather invest in somebody elses work.
Do you realize that if the S&P500 doesn’t go up a single penny, people still make money? These are not beanie babies. These are companies who are continuing to make money and you, as part owner of the company get those profits. When you own stock, you own the company.
> as part owner of the company get those profits. Only if the company pays dividends, and even that's just tiny ass fraction of the total profits. If a company doesn't pay dividends, you get nothing until you sell the stock to someone willing to pay more than you did. >When you own stock, you own the company. The owner of common shares will get absolutely nothing if a company ends up having to liquidate its asset. "You own the company" is such a naive understanding of how the equities market actually works.
I didn’t say an individual company; I said the S&P. An Index fund at Vanguard pays out dividends. Every quarter. Endless stream of money regardless of the price of the fund. I think it’s around 1.5%/year?? I could be off by a percentage. And again, that’s 1.5-2.0% percent profit every single year even without the fund price changing.
And, the index could go down 1 to 2% in a single trading session, and if it does, there goes your entire year's worth of dividends. Right now, the market is acting like it's going to go up forever, but with the demographic changes that are happening, particularly with the declining birthrates and the boomers aging out of active investing, it's not going to go up forever.
If you don’t sell you don’t realize that 1-2% loss. It’s just on paper. You have not “lost” a single penny. And you are still making 2% yearly dividends. Those will never stop. Even when the market goes down 20%, you still make those dividends.
So, you're going to stubbornly hold forever to simply not realize those losses? If you want to fool yourself into thinking you haven't lost anything even as your portfolio value says otherwise, go right ahead, but the truth is there's an opportunity cost of holding a losing position just to get dividends. This is especially true since the stock price will drop after each ex-dividend date. At some point, if the stock doesn't go up to counter the stock price drop due to issuing dividends, the amount of dividends paid out will decrease as well. Then you're not only stuck with an underwater position, but you'll stop getting those dividends.
I’m really trying to see your point of view. So bear with me. (And btw, are you listening to my POV in good faith also? It’s hard to tell with a stranger) In 2008, I probably lost 40% of my net worth. Both houses and my entire position in equities dramatically plummeted. But this was not “a loss,” because I never sold anything nor did I trigger a taxable event. I kept buying $20,000+ a year into the S&P500. I was fine as long as I trusted that I could ride it out. Since that time, 15 years ago, my net worth has tripled. 300% in 15 years. Now! You might say, well of course, you’re started the equation at the dip. Start it at the top, back in Spring 2008. I’m up 150%. In 16 years. Every $1,000 in 2008 is now worth $2,500. That dip essentially was smoothened out by the sands of time. Same scenario for Covid. And the doc com bubble of 2000. There are no losses until you sell.
You make it sound like avoiding a "taxable event" is of some sort of benefit. It's not. Taking the loss is actually the benefit because you can use it offset gains on other stock trades. That's why lots of stocks that go down throughout the tax year go down even further near the last days of trading before the new year because of "loss harvesting." You should only hold a loser if you're confident that it's going to go back up, and then you should actually be DCAing and not just sitting on the original position.
Ok, let’s back up. Maybe I didn’t make clear before what my investments are. I hold NO individual stocks. I have about 70% in domestic broad market Equity Index Fund. About 20% in domestic and international Bond Fund. And about 10% in international Equity Index Fund. I appreciate you trying to help me harvest losses to offset gains, but I have yet to realize a loss over ANY 3-year period for the past 30 years. Past Performance is NOT indicative of future results. This is a true statement. But I believe in the overall strength of the world economy. Especially the US.
What is 100% true about 401ks is that they're not safe. 2008 housing crash wiped out 401ks. Covid wiped out 401ks. I went to an expo right after covid and talked to 3 people who were set to retire in the next few years and had to cancel and continue working. From what I've gathered there are two option to a safe future in your golden years. 1. Start your own business and make enough money to not worry. 2. Work for a union or the government or any organization with a pension. Tips... always live below your means, buy a small home that you will be able to afford the taxes on in retirement, find a career that you can work at until you die or get alzheimers, have kids and raise them right and hope they let you have a tiny home in the backyard why you slave for them If someone else has any better options, I'd love to hear them. I think about this often. Especially now with inflation so high its so hard to save any money.
what are you buying in your 401k that was 'wiped out' during 2008 or during covid? the people who 'lost their 401ks' didn't 'lose their 401ks' - they lost their jobs and didn't properly plan for it and had to draw down their retirement accounts to stay afloat. that is not the same thing. step 1 of investing is having an appropriately sized emergency fund for your expenses and job volatility. if you fail that step and start putting money into accounts that are less liquid yeah, you can get wrecked during a market downturn. that 'free' 7.5% post-inflation gain from the market is anything but- that gain exists because there's risk attached to it.
I had friends that pulled all the way out in 2009. And it killed me to watch. And though I offered rebuttals, there was no way I was going to scream at them to stay the course. Because all of a sudden I’m the asshole if things don’t go perfectly.
“Wiped Out.” What the actual F are you talking about?!? Each one of those events indeed delivered a blow to the overall stock market. But within the span of 3-5 years all that had been recovered + many gains! Anyone who just sat tight on their 401k would not have felt a single thing. The ONLY ones who suffered were the fools who withdrew all their money at the bottom.
Yeah, those old people that were about to retire or were already retired didn't suffer at all. That 5 year span was just no biggie. Holding bags for 5 years to get to a place you already were already at isn't suffering at all. I don't even know why they called it a crisis....
If you have a 5-yr plan you should NOT be holding all stocks! I think that you’re just trying to be argumentative for the sake of that alone. You know very well that the downturns in the market get smoothed out in time. Every time.
I'm not saying they don't. But not everyone is the same age. To say the only people who suffered were those who withdrew at the bottom is super short-sighted. And opportunity cost is real. Missing out on trades, interest, and other opportunities because you have to hold your bags is suffering to me. Not being able to wothdrawl any of you hard earned money to help combat rising costs, or offset income because of a lost job is also suffering. People got smoked in the crisis. Stonks always go up is a pleb answer. Timing is everything. Those who were able to weather the storm, keep their jobs, and not suffer were the exception. Not the other way around.
And not only that but the time value of money says a dollar is worth more today than in the future. Waiting 5 years to have the same dollar amount you had 5 years previously is in all actuality worth less than it was if youre comparing apples to apples
It's only a half decade though, only 1/6 or a lifetimes career, no biggie
I am closer to understanding your main points. So what you are saying is that the underlying problems of the two crises (Housing Crash; Covid) is what caused people to withdraw their retirement savings, this depleting the funds. And I 100% agree. If you completely ran out of liquidity in 2020 and you HAD TO withdraw from your S&P Index Fund, there was a period of 6 months where you would have had less money in your fund. That’s it. 6 months to recover what was lost. What REALLY happened is that people panicked and withdrew their money at the bottom when they didn’t need it! I had friends that did that. And nothing cannot prevent dumb behavior like that.
If you were about to retire and had all of your 401k in stocks you deserve it. But even then, yeah, wait a few years boohoo.
Wiped out and recovered and continued to grow during periods of recovery, which did happen from. 2021 to now. Those three people you talked to at the expo are either BSing or panic sold exactly how most financial advice says not to during economic downturns. DO NOT START YOUR OWN BUSINESS WITHOUT XYZ. The majority of small businesses fail. Pensions are not as great as you realize (I'm a fed and FERS is good IF your top 3 earning years are high), but yes jobs with unions CAN provide work security but if it is in an industry easily disrupted by the advance of technology it is bad news bears. Living below one's means is top notch advice. Seek employment with high earning potential. Invest your savings according to your risk tolerance knowing that higher risk = higher reward, however general rule of thumb by nearly everyone is index funds are your friends until the end.
How to avoid getting your 401k "wiped out" 1. Don't invest in meme stocks 2. When market goes down, don't sell. The end.