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Who do you think the shareholders are? That's right, it includes 401(k) and retirement plan owners. It's a way to diversify your retirement beyond a single c

Who do you think the shareholders are? That's right, it includes 401(k) and retirement plan owners. It's a way to diversify your retirement beyond a single company. A pension plan in a company that can disappear and that can make investments on your behalf without any control is the big con. The fact that people contribute less to their 401(k) means they care less about saving for retirement, not that the plans themselves are a con. I personally don't even have a 401(k) because I am self employed and there are other options.

toomuchtodo 3y ago
https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-americans-own-a-record-89percent-of-all-us-stocks.html https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-... ("The wealthiest 10% of Americans own a record 89% of all U.S. stocks") https://www.usnews.com/news/national-news/articles/2021-03-15/who-owns-stocks-in-america-mostly-its-the-wealthy-and-white https://www.usnews.com/news/national-news/articles/2021-03-1... ("Median household owns $15k in equities") (unless you're wealthy, you are a token participant in the capital markets)
- deleted 3y ago
  [deleted]
- nightski 3y ago
  I'm fine being a token participant as long as it means I've been seeing significant gains over the past decade, which I have.
  - toomuchtodo 3y ago
    I'm not faulting the selfish position, simply pointing out the game is rigged for everyone except outliers (like yourself or the ultra wealthy). These are just facts, not feelings, when you review the data about who has sufficient cashflow for inflows into investments during accumulation phases as well as their current and potential future investment exposure to these asset classes. Congrats on the luck (no snark, honestly). But let us not extrapolate luck and personal anecdotes to solutions for systems. "In God We Trust, all others must bring data", working backwards from first principles, etc.
    - nightski 3y ago
      They aren't facts. The number of millionaires in the U.S. has exploded. Many are benefiting from the markets. It's not luck. The fact that many would rather spend than save does not change that these opportunities are for everyone. The best selling car in America is the F-150 which is quite expensive...
      - toomuchtodo 3y ago
        > They aren't facts. The number of millionaires in the U.S. has exploded. Many are benefiting from the markets. It's not luck. Are you sure it's not luck? https://blogs.scientificamerican.com/beautiful-minds/the-role-of-luck-in-life-success-is-far-greater-than-we-realized/ https://blogs.scientificamerican.com/beautiful-minds/the-rol... ("The Role of Luck in Life Success Is Far Greater Than We Realized") https://www.technologyreview.com/2018/03/01/144958/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/ https://www.technologyreview.com/2018/03/01/144958/if-youre-... | Ref: https://arxiv.org/abs/1802.07068 https://arxiv.org/abs/1802.07068 ("Talent vs. Luck: The Role of Randomness in Success and Failure") https://www.pbs.org/newshour/economy/making-sense/analysis-if-youre-rich-youre-more-lucky-than-smart-and-theres-math-to-prove-it https://www.pbs.org/newshour/economy/making-sense/analysis-i... ("Analysis: If you’re rich, you’re more lucky than smart. And there’s math to prove it") https://www.marketwatch.com/story/when-you-realize-how-much-luck-goes-into-investing-you-might-change-your-methods-2017-11-13 https://www.marketwatch.com/story/when-you-realize-how-much-... ("When you realize how much luck goes into investing, you might change your methods")
      - Retric 3y ago
        Millionaire is a fairly trivial threshold these days. Social security is now paying some people 54k/year inflation adjusted which would take well over 1 million to safely generate. A couple living on social security + 2 million in assets may be financially secure but they are still middle class.
      - gottorf 3y ago
        > The best selling car in America is the F-150 To be fair, F-150 and other pickup truck sales figures are buoyed by fleet purchases. The better figure to cite may be that the average new car transaction is now north of $48k; ten years ago, it was around $30k, and this rise has beaten general inflation.
- robertlagrant 3y ago
  > > ("The wealthiest 10% of Americans own a record 89% of all U.S. stocks") This is tautologous. "Wealthy" means mostly "built, and still owns a decent chunk of, a company whose shares are highly valued". Also, I could, like my parents, own nothing in the stock market, but have a paid off house and decent savings and a state pension, and be doing well. Proportion of capital markets ownership is too skewed a metric to reason about.
  - jwestbury 3y ago
    > This is tautologous. No, it's not, and it's a problem that you're thinking this way. A tautology would be "Americans in the top 10% of wealth are wealthier than the bottom 90%." A tautology is necessarily true according to logic. Logic does not dictate that the top 10% own 90% of the equities. And, in fact, there's a strong argument that societies with extreme inequality in wealth distribution are structurally unsound societies (I don't mean that they're economically unsound, though I'd argue that, too).
    - robertlagrant 3y ago
      I'm saying "owning most of the stocks" is completely equivalent to "wealthiest". The exact percentage isn't important. It's not as though those wealthy people need to have lots of actual cash to be considered wealthy in such stats; they just need to own enough of a company that's providing lots of value, or due to, that drives up the wealth stat. > there's a strong argument that societies with extreme inequality in wealth distribution are structurally unsound societies (I don't mean that they're economically unsound, though I'd argue that, too). This just depends on how you define "structurally unsound" and "economically unsound".
      - ang_cire 3y ago
        > "owning most of the stocks" is completely equivalent to "wealthiest" That's still not a tautology just because in practice it is usually true, and is easily disproven as such: Stock values could all nosedive to nothing, and the wealthiest people would still mostly all be the wealthiest due to non-stock assets.
margalabargala 3y ago
Pensions tend to be much more generous. They are also riskier. People see the generosity of pension plans and (understandably) want that, without having the risk.
gosub100 3y ago
> means they care less about saving for retirement They shouldn't be "caring" so much about the high cost of living I guess?
clbrmbr 3y ago
Totally agree about diversification. Reliance on a company pension fund is terrifying. That said, the old pension model forced workers to make large contributions. The 401k model does not. (Unless your company has some amazing match deal… I’ve only ever seen shitty deals like 25% of up to 4% of salary, whereas more like a 30% savings rate is what’s really needed.)
- frumper 3y ago
  For comparison's sake. I have a pretty good pension plan and my employer contributes about 27% of my gross salary to it along with the 8% I contribute. If someone offered a 401k match of 300% on my 8% I'd call that a good deal, but what you described is what people more often get.
  - cool_dude85 3y ago
    Careful here. Some of that 27% is no doubt to achieve full funding, so shouldn't really be thought of as the "cost" to provide the pension per se, rather, the cost to catch up on previous underfunding.
fnordpiglet 3y ago
Pension plans hold equity and other assets from many companies. They are essentially like mutual funds with a defined annuity payout. Defined benefit plans should never have died out, they should have been part of a total mix. There is no reason you can’t have pensions along side social security along side 401k/IRA plans. This gives retirees multiple avenues for payout each with their own risk profile. The 401k is a great idea as a retirement supplement for folks who are interested in saving more and managing investments. But many (most?) people are not sophisticated enough to (a) take advantage of tax deferred savings vs paying rent and buying food, (b) muck with investment options roll overs and all the like. We are about to see a mass humanitarian catastrophe over the next 20 years as the 401k dependent generations retire, social security buckles, and we learn why pensions existed to begin with all over again.
- lotsofpulp 3y ago
  There is no difference between a defined benefit pension plan and a target date retirement fund, except you avoid the extra agency risk that comes with giving control of your savings to the board of the pension plan and its vendors. The only defined benefit pension plan that has a leg up on index funds is a taxpayer funded one, because it has the power to tax, assuming the taxing jurisdiction will remain sufficiently economically productive decades into the future (see Detroit for an example of one that did not and hence was able to cut benefits to DB pension recipients). Personally, I would only value a DB pension paid by the federal government, since it can always print money. Otherwise, give me my 0.03% expense ratio index funds.
  - fnordpiglet 3y ago
    Investment target date plans are optional and still include the challenges of people executing roll overs, taking loans, cashing out with penalties, and actually choosing the right investment target date plan. Pensions are not optional, you can’t cash them out, you can’t take a loan, and they don’t require any logistics to maintain after you’ve moved on. The biggest flaw of 401ks is their optionality which allows present self to buy a new car making retired self homeless. You (and I) aren’t the issue here - it’s the majority of people who are unsophisticated. They are autopiloting through life, assuming social security is a retirement plan or that they’ll save later when they’re closer to retirement. This is an awful lot of people. The truth is as a society we will be carrying them in their old age because we didn’t pay up front, instead we set up an optional plan assuming they would pay up front. Instead we will collectively be figuring out a way to deal with the massive underprepared aged population using present dollars rather than compounded dollars.
anjel 3y ago
Plain and simple: It's a way to tear up ERISA oversight and pension guarantees and instead get fed to the wolves of wall street. Who doesn't know someone who's 401k was wiped out just months before they were about to retire in 2001 or 2008? Why make rules where you can't change your portfolio settings more that twice a year and in very productive and limited ways in exchange for inescapable Management fees?
- briHass 3y ago
  Someone on the brink of retirement would not be 100% stocks, ideally more like 60% at most. Both of those cases were about a 50% drop peak to trough, so the loss was around 30% on paper. In the '08 case, the market recovered in about 4-5 years. Holding firm and sticking to a 60/40 allocation would've meant very little realized losses prior to it bouncing back. For the '01 case, it's hard to find much sympathy for a stock heavy portfolio that took a 50% haircut, considering that grew 400% in the 10 years that preceded it.
- nradov 3y ago
  I don't know anyone whose 401(k) plan was wiped out just before retirement. Some of them experienced small losses. Management fees are generally very low unless you pick the worst mutual fund options.

toomuchtodo 3y ago

https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-americans-own-a-record-89percent-of-all-us-stocks.html https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-... ("The wealthiest 10% of Americans own a record 89% of all U.S. stocks") https://www.usnews.com/news/national-news/articles/2021-03-15/who-owns-stocks-in-america-mostly-its-the-wealthy-and-white https://www.usnews.com/news/national-news/articles/2021-03-1... ("Median household owns $15k in equities") (unless you're wealthy, you are a token participant in the capital markets)

deleted 3y ago
[deleted]
nightski 3y ago
I'm fine being a token participant as long as it means I've been seeing significant gains over the past decade, which I have.
- toomuchtodo 3y ago
  I'm not faulting the selfish position, simply pointing out the game is rigged for everyone except outliers (like yourself or the ultra wealthy). These are just facts, not feelings, when you review the data about who has sufficient cashflow for inflows into investments during accumulation phases as well as their current and potential future investment exposure to these asset classes. Congrats on the luck (no snark, honestly). But let us not extrapolate luck and personal anecdotes to solutions for systems. "In God We Trust, all others must bring data", working backwards from first principles, etc.
  - nightski 3y ago
    They aren't facts. The number of millionaires in the U.S. has exploded. Many are benefiting from the markets. It's not luck. The fact that many would rather spend than save does not change that these opportunities are for everyone. The best selling car in America is the F-150 which is quite expensive...
    - toomuchtodo 3y ago
      > They aren't facts. The number of millionaires in the U.S. has exploded. Many are benefiting from the markets. It's not luck. Are you sure it's not luck? https://blogs.scientificamerican.com/beautiful-minds/the-role-of-luck-in-life-success-is-far-greater-than-we-realized/ https://blogs.scientificamerican.com/beautiful-minds/the-rol... ("The Role of Luck in Life Success Is Far Greater Than We Realized") https://www.technologyreview.com/2018/03/01/144958/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/ https://www.technologyreview.com/2018/03/01/144958/if-youre-... | Ref: https://arxiv.org/abs/1802.07068 https://arxiv.org/abs/1802.07068 ("Talent vs. Luck: The Role of Randomness in Success and Failure") https://www.pbs.org/newshour/economy/making-sense/analysis-if-youre-rich-youre-more-lucky-than-smart-and-theres-math-to-prove-it https://www.pbs.org/newshour/economy/making-sense/analysis-i... ("Analysis: If you’re rich, you’re more lucky than smart. And there’s math to prove it") https://www.marketwatch.com/story/when-you-realize-how-much-luck-goes-into-investing-you-might-change-your-methods-2017-11-13 https://www.marketwatch.com/story/when-you-realize-how-much-... ("When you realize how much luck goes into investing, you might change your methods")
    - Retric 3y ago
      Millionaire is a fairly trivial threshold these days. Social security is now paying some people 54k/year inflation adjusted which would take well over 1 million to safely generate. A couple living on social security + 2 million in assets may be financially secure but they are still middle class.
    - gottorf 3y ago
      > The best selling car in America is the F-150 To be fair, F-150 and other pickup truck sales figures are buoyed by fleet purchases. The better figure to cite may be that the average new car transaction is now north of $48k; ten years ago, it was around $30k, and this rise has beaten general inflation.
robertlagrant 3y ago
> > ("The wealthiest 10% of Americans own a record 89% of all U.S. stocks") This is tautologous. "Wealthy" means mostly "built, and still owns a decent chunk of, a company whose shares are highly valued". Also, I could, like my parents, own nothing in the stock market, but have a paid off house and decent savings and a state pension, and be doing well. Proportion of capital markets ownership is too skewed a metric to reason about.
- jwestbury 3y ago
  > This is tautologous. No, it's not, and it's a problem that you're thinking this way. A tautology would be "Americans in the top 10% of wealth are wealthier than the bottom 90%." A tautology is necessarily true according to logic. Logic does not dictate that the top 10% own 90% of the equities. And, in fact, there's a strong argument that societies with extreme inequality in wealth distribution are structurally unsound societies (I don't mean that they're economically unsound, though I'd argue that, too).
  - robertlagrant 3y ago
    I'm saying "owning most of the stocks" is completely equivalent to "wealthiest". The exact percentage isn't important. It's not as though those wealthy people need to have lots of actual cash to be considered wealthy in such stats; they just need to own enough of a company that's providing lots of value, or due to, that drives up the wealth stat. > there's a strong argument that societies with extreme inequality in wealth distribution are structurally unsound societies (I don't mean that they're economically unsound, though I'd argue that, too). This just depends on how you define "structurally unsound" and "economically unsound".
    - ang_cire 3y ago
      > "owning most of the stocks" is completely equivalent to "wealthiest" That's still not a tautology just because in practice it is usually true, and is easily disproven as such: Stock values could all nosedive to nothing, and the wealthiest people would still mostly all be the wealthiest due to non-stock assets.

margalabargala 3y ago

Pensions tend to be much more generous. They are also riskier. People see the generosity of pension plans and (understandably) want that, without having the risk.

gosub100 3y ago

> means they care less about saving for retirement They shouldn't be "caring" so much about the high cost of living I guess?

clbrmbr 3y ago

Totally agree about diversification. Reliance on a company pension fund is terrifying. That said, the old pension model forced workers to make large contributions. The 401k model does not. (Unless your company has some amazing match deal… I’ve only ever seen shitty deals like 25% of up to 4% of salary, whereas more like a 30% savings rate is what’s really needed.)

frumper 3y ago
For comparison's sake. I have a pretty good pension plan and my employer contributes about 27% of my gross salary to it along with the 8% I contribute. If someone offered a 401k match of 300% on my 8% I'd call that a good deal, but what you described is what people more often get.
- cool_dude85 3y ago
  Careful here. Some of that 27% is no doubt to achieve full funding, so shouldn't really be thought of as the "cost" to provide the pension per se, rather, the cost to catch up on previous underfunding.

fnordpiglet 3y ago

Pension plans hold equity and other assets from many companies. They are essentially like mutual funds with a defined annuity payout. Defined benefit plans should never have died out, they should have been part of a total mix. There is no reason you can’t have pensions along side social security along side 401k/IRA plans. This gives retirees multiple avenues for payout each with their own risk profile. The 401k is a great idea as a retirement supplement for folks who are interested in saving more and managing investments. But many (most?) people are not sophisticated enough to (a) take advantage of tax deferred savings vs paying rent and buying food, (b) muck with investment options roll overs and all the like. We are about to see a mass humanitarian catastrophe over the next 20 years as the 401k dependent generations retire, social security buckles, and we learn why pensions existed to begin with all over again.

lotsofpulp 3y ago
There is no difference between a defined benefit pension plan and a target date retirement fund, except you avoid the extra agency risk that comes with giving control of your savings to the board of the pension plan and its vendors. The only defined benefit pension plan that has a leg up on index funds is a taxpayer funded one, because it has the power to tax, assuming the taxing jurisdiction will remain sufficiently economically productive decades into the future (see Detroit for an example of one that did not and hence was able to cut benefits to DB pension recipients). Personally, I would only value a DB pension paid by the federal government, since it can always print money. Otherwise, give me my 0.03% expense ratio index funds.
- fnordpiglet 3y ago
  Investment target date plans are optional and still include the challenges of people executing roll overs, taking loans, cashing out with penalties, and actually choosing the right investment target date plan. Pensions are not optional, you can’t cash them out, you can’t take a loan, and they don’t require any logistics to maintain after you’ve moved on. The biggest flaw of 401ks is their optionality which allows present self to buy a new car making retired self homeless. You (and I) aren’t the issue here - it’s the majority of people who are unsophisticated. They are autopiloting through life, assuming social security is a retirement plan or that they’ll save later when they’re closer to retirement. This is an awful lot of people. The truth is as a society we will be carrying them in their old age because we didn’t pay up front, instead we set up an optional plan assuming they would pay up front. Instead we will collectively be figuring out a way to deal with the massive underprepared aged population using present dollars rather than compounded dollars.

anjel 3y ago

Plain and simple: It's a way to tear up ERISA oversight and pension guarantees and instead get fed to the wolves of wall street. Who doesn't know someone who's 401k was wiped out just months before they were about to retire in 2001 or 2008? Why make rules where you can't change your portfolio settings more that twice a year and in very productive and limited ways in exchange for inescapable Management fees?

briHass 3y ago
Someone on the brink of retirement would not be 100% stocks, ideally more like 60% at most. Both of those cases were about a 50% drop peak to trough, so the loss was around 30% on paper. In the '08 case, the market recovered in about 4-5 years. Holding firm and sticking to a 60/40 allocation would've meant very little realized losses prior to it bouncing back. For the '01 case, it's hard to find much sympathy for a stock heavy portfolio that took a 50% haircut, considering that grew 400% in the 10 years that preceded it.
nradov 3y ago
I don't know anyone whose 401(k) plan was wiped out just before retirement. Some of them experienced small losses. Management fees are generally very low unless you pick the worst mutual fund options.