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Theoretically there's a better expected value with the 401K, but that's not what almost anyone wants. People want a moderate upward trend in value with no chanc
by tbihl 7y ago
Theoretically there's a better expected value with the 401K, but that's not what almost anyone wants. People want a moderate upward trend in value with no chance of going under.
An interesting place to see this is in groups of US military members talking about the pension plan they just had the option to switch. The 401k version has a higher expected value than the pension version, yet many people who are themselves sticking things out to pension age prefer the pension age. Though it may be that people staying in the military trend risk averse.
- thayne 7y ago> Though it may be that people staying in the military trend risk averse. I'm sure this is more nuanced, and risk aversion may depend on the type of risk (ex. financial risk vs physical risk). But it still sounds really strange to me to characterize individuals who volunteered to join an organization that may (and probably will) put then in very dangerous situations as "risk averse".
- tbihl 7y agoYeah, that's fair. My experience is the navy, which is mostly a safer-than-average industrial environment.