3 ms·

Who doesn't know how a 401k works? Honestly, who? Mutual fund - ok the mechanics are a bit more complicated but pretty straightforward.

rm_-rf_slash 4y ago
I would reckon minimum wage workers who have never been offered a company sponsored retirement plan or had enough to save for retirement at the end of the month, would not likely understand the mechanics of a system they can’t even participate in. In other words, a lot of people.
- boringg 4y ago
  No offense but I don't think it's minimum wage workers who are putting tons of money into the crypto market. And my argument about who doesn't understand 401k is to the demographic who invested in this specific asset class which likely isn't minimum wage workers.
- staticassertion 4y ago
  The point is that people who participate in 401ks likely understand (in the majority) how they work to a reasonable degree. It's not reasonable to compare it to crypto where the people who participate understand virtually nothing about it.
BaseballPhysics 4y ago
A large number of people don't even know how tax brackets work (hence some people thinking that if they get a raise they'll lose money). Basic financial literacy is not as common as you seem to think.
- rurp 4y ago
  Similar to this, federal tax withholding is poorly understand by many people. A lot of people want to give the govt an interest free loan every year and don't understand why anyone wouldn't.
  - BaseballPhysics 4y ago
    Absolutely. I recently explained this to my retiree mother-in-law who was overpaying taxes each year for fear that she'd owe money at the end of the tax year, forgetting that every dollar she overpays is another dollar she's drawing down from her saving that isn't earning (modest) interest. Not that I can claim I'm being any smarter. I really should instruct my employer to reduce my tax withholdings, as I'm saving into a tax advantaged account to which contributions result in an income deduction. Every dollar I get at the end of the tax year in a refund is a dollar I'm not saving during the year (thus losing out on some long-term gains). But at least I know better. ;)

rm_-rf_slash 4y ago

I would reckon minimum wage workers who have never been offered a company sponsored retirement plan or had enough to save for retirement at the end of the month, would not likely understand the mechanics of a system they can’t even participate in. In other words, a lot of people.

boringg 4y ago
No offense but I don't think it's minimum wage workers who are putting tons of money into the crypto market. And my argument about who doesn't understand 401k is to the demographic who invested in this specific asset class which likely isn't minimum wage workers.
staticassertion 4y ago
The point is that people who participate in 401ks likely understand (in the majority) how they work to a reasonable degree. It's not reasonable to compare it to crypto where the people who participate understand virtually nothing about it.

BaseballPhysics 4y ago

A large number of people don't even know how tax brackets work (hence some people thinking that if they get a raise they'll lose money). Basic financial literacy is not as common as you seem to think.

rurp 4y ago
Similar to this, federal tax withholding is poorly understand by many people. A lot of people want to give the govt an interest free loan every year and don't understand why anyone wouldn't.
- BaseballPhysics 4y ago
  Absolutely. I recently explained this to my retiree mother-in-law who was overpaying taxes each year for fear that she'd owe money at the end of the tax year, forgetting that every dollar she overpays is another dollar she's drawing down from her saving that isn't earning (modest) interest. Not that I can claim I'm being any smarter. I really should instruct my employer to reduce my tax withholdings, as I'm saving into a tax advantaged account to which contributions result in an income deduction. Every dollar I get at the end of the tax year in a refund is a dollar I'm not saving during the year (thus losing out on some long-term gains). But at least I know better. ;)