3 ms·

That's a bit callous of you, not to mention shortsighted. If the Baby Boomer generation loses financial security, they will as a group A) tighten their spending

by Qub3d 5y ago

That's a bit callous of you, not to mention shortsighted. If the Baby Boomer generation loses financial security, they will as a group A) tighten their spending habits and B) not retire. Either of these effects on their own would hurt the younger generations, and together would make the already slow wealth building hit a brick wall. (I'm 25, for the record, and I don't expect to be debt-free or a homeowner until well into middle age) While it really shouldn't be true, and at the level of financial mechanics probably isn't, the stock market has become the measure of the economy. Remember, pensions are dead and buried, and the nuclear family standard means that relying on your children (read: you and I) is not the bulwark it once was. That means 401(k) performance is really, really important, as terrible as that may be -- its just the reality right now.

thehappypm 5y ago
It’s really not callous. If a boomer’s 401(k) is still heavy on stocks they’re being greedy! De-risk, people. I don’t want to let inflation tank my economy to protect a generation of greedy grandparents.
- Qub3d 5y ago
  Generally 401(k) plan ratios are not managed individually. Most will have target date funds[0] that automatically transition in to progressively less-risky investments as you get closer to retirement. The problem is... almost no financial instruments outside of stocks can provide a meaningful return any more, so even the target date funds are almost all stock. I noted your other "time in the market beats timing the market" comment, which suggests you are an active investor. That's great! But very few Americans are active investors, and expecting them to become so is unrealistic. Its a problem of realpolitik, which is why, going back to my original comment, you should still care, if only for how it will affect you. [0]: Here is an example prospectus of a 2055 target date fund. Note the graph showing the changing allocation of stocks/bonds/money-market funds (or CDs). By retirement, nearly half the portfolio is still stocks. https://prospectus-express.broadridge.com/summary.asp?clientid=adpretpre&fundid=02507F373 https://prospectus-express.broadridge.com/summary.asp?client...
  - thehappypm 5y ago
    Half stocks is a great example of diversification. If there’s a huge correction (say 20%) they’ll lose 10% — hardly something that would drop you from prosperous to poverty stricken.
- nick__m 5y ago
  If they are one of the lucky few with a defined benefit public pension, like my parents have, having your RRSP (401(k) in Canada) biased towards stocks is a sounds investment policy.

by Qub3d 5y ago

thehappypm 5y ago

It’s really not callous. If a boomer’s 401(k) is still heavy on stocks they’re being greedy! De-risk, people. I don’t want to let inflation tank my economy to protect a generation of greedy grandparents.

Qub3d 5y ago
Generally 401(k) plan ratios are not managed individually. Most will have target date funds[0] that automatically transition in to progressively less-risky investments as you get closer to retirement. The problem is... almost no financial instruments outside of stocks can provide a meaningful return any more, so even the target date funds are almost all stock. I noted your other "time in the market beats timing the market" comment, which suggests you are an active investor. That's great! But very few Americans are active investors, and expecting them to become so is unrealistic. Its a problem of realpolitik, which is why, going back to my original comment, you should still care, if only for how it will affect you. [0]: Here is an example prospectus of a 2055 target date fund. Note the graph showing the changing allocation of stocks/bonds/money-market funds (or CDs). By retirement, nearly half the portfolio is still stocks. https://prospectus-express.broadridge.com/summary.asp?clientid=adpretpre&fundid=02507F373 https://prospectus-express.broadridge.com/summary.asp?client...
- thehappypm 5y ago
  Half stocks is a great example of diversification. If there’s a huge correction (say 20%) they’ll lose 10% — hardly something that would drop you from prosperous to poverty stricken.
nick__m 5y ago
If they are one of the lucky few with a defined benefit public pension, like my parents have, having your RRSP (401(k) in Canada) biased towards stocks is a sounds investment policy.