4 ms·

You greatly overestimate how many americans have pension plans and underestimate how rich the richest americans are

by ahoy 6y ago

erik_seaberg 6y ago
It's mostly the latter. Looks like 32% have 401(k) plans and 13% have pensions. They may not have a big share of the total market cap, but a stock market crash would blow up a lot of retirement planning.
- listenallyall 6y ago
  >> a stock market crash would blow up a lot of retirement planning The low interest rates we've experienced over the last decade, which have only gotten lower as of late, have actually blown up retirement plans. Used to be, $500,000 saved at 8% meant you could retire off the $40k interest + social security. It also meant that growing a savings account into $500,000 was not out of reach, even on a modest income. This was the plan many people in the 60's, 70's, 80's worked towards. Now, getting to $500k in savings is much more difficult as compound interest is so much lower. And if you happened to get there, you'd earn a whopping $5000, maybe less, in interest per year.
  - legolas2412 6y ago
    Wow, never considered how a stagnating economy will hurt retirement. This was eye opening in terms of numbers
  - eanzenberg 6y ago
    Which is a good thing to me. I’d rather people “work” to earn rather than easily collecting rent through interest. Work in quotes since applying capital in risky investments is work compared to stashing money in an interest bearing account.
    - nostrademons 6y ago
      Also shows why having everybody "earn" a living off interest & investment income isn't feasible - if everybody's doing that, nobody's doing the work that generates the cash to pay the interest in the first place. The best you could hope for is a younger generation of increasingly productive new workers being able to spin off enough profits to provide a return on the capital that generated that productivity. But the demographic time-bomb of relatively few Homelanders supporting relatively many Baby Boomers is going to upend that, and the stagnating productivity of the last couple decades isn't going to help.
    - jjoonathan 6y ago
      Just as much rent is getting collected, but it's going straight to the top rather than into retirement plans.
    - listenallyall 6y ago
      What? Putting money in an index fund, or buying Apple stock, or a 401k, is "work"? Companies don't even get the money from secondary stock purchases, so the invested money is doing absolutely nothing. Banks use deposits to create loans whose funds go directly to the companies receiving those loans. Banks which interview the loan applicants, review financials, ask for references, and which themselves tend to be pillars of the community (before the proliferation of national banks) and have a vested interest in helping it to thrive. So, no, your premise is 180 degrees wrong. Savers were once paid high interest rates precisely because their dollars were necessary to directly fund risky investments like a new business or expansion. The bank's function was to determine high vs low risk and allocate depositors' money efficiently. Meanwhile, buying an index fund or Amazon stock and having a few irrelevant proxy votes on decisions already made, is the definition of "stashing" it away with zero utility.
      - aianus 6y ago
        > Companies don't even get the money from secondary stock purchases, so the invested money is doing absolutely nothing. There would be no IPO market without a secondary market. Almost nobody is interested in buying a stock at IPO and holding it forever without being able to sell it.

You greatly overestimate how many americans have pension plans and underestimate how rich the richest americans are

by ahoy 6y ago

You greatly overestimate how many americans have pension plans and underestimate how rich the richest americans are

It's mostly the latter. Looks like 32% have 401(k) plans and 13% have pensions. They may not have a big share of the total market cap, but a stock market crash would blow up a lot of retirement planning.

listenallyall 6y ago
>> a stock market crash would blow up a lot of retirement planning The low interest rates we've experienced over the last decade, which have only gotten lower as of late, have actually blown up retirement plans. Used to be, $500,000 saved at 8% meant you could retire off the $40k interest + social security. It also meant that growing a savings account into $500,000 was not out of reach, even on a modest income. This was the plan many people in the 60's, 70's, 80's worked towards. Now, getting to $500k in savings is much more difficult as compound interest is so much lower. And if you happened to get there, you'd earn a whopping $5000, maybe less, in interest per year.
- legolas2412 6y ago
  Wow, never considered how a stagnating economy will hurt retirement. This was eye opening in terms of numbers
- eanzenberg 6y ago
  Which is a good thing to me. I’d rather people “work” to earn rather than easily collecting rent through interest. Work in quotes since applying capital in risky investments is work compared to stashing money in an interest bearing account.
  - nostrademons 6y ago
    Also shows why having everybody "earn" a living off interest & investment income isn't feasible - if everybody's doing that, nobody's doing the work that generates the cash to pay the interest in the first place. The best you could hope for is a younger generation of increasingly productive new workers being able to spin off enough profits to provide a return on the capital that generated that productivity. But the demographic time-bomb of relatively few Homelanders supporting relatively many Baby Boomers is going to upend that, and the stagnating productivity of the last couple decades isn't going to help.
  - jjoonathan 6y ago
    Just as much rent is getting collected, but it's going straight to the top rather than into retirement plans.
  - listenallyall 6y ago
    What? Putting money in an index fund, or buying Apple stock, or a 401k, is "work"? Companies don't even get the money from secondary stock purchases, so the invested money is doing absolutely nothing. Banks use deposits to create loans whose funds go directly to the companies receiving those loans. Banks which interview the loan applicants, review financials, ask for references, and which themselves tend to be pillars of the community (before the proliferation of national banks) and have a vested interest in helping it to thrive. So, no, your premise is 180 degrees wrong. Savers were once paid high interest rates precisely because their dollars were necessary to directly fund risky investments like a new business or expansion. The bank's function was to determine high vs low risk and allocate depositors' money efficiently. Meanwhile, buying an index fund or Amazon stock and having a few irrelevant proxy votes on decisions already made, is the definition of "stashing" it away with zero utility.
    - aianus 6y ago
      > Companies don't even get the money from secondary stock purchases, so the invested money is doing absolutely nothing. There would be no IPO market without a secondary market. Almost nobody is interested in buying a stock at IPO and holding it forever without being able to sell it.