Comment on Keep in mind that social security is set to run out in 10 years time.
AngryCommieKender@lemmy.world 7 months agoAlso Gen X, graduated in '96, and was warned by my econ/government teacher that we need to have well funded IRAs, because we won’t be getting enough social security benefits to even pay for food, much less rent, medicine, or healthcare.
frezik@midwest.social 7 months ago
It was supposed to be a three-pronged plan: Social Security, 401k, and corporate pension. Each of these has problems on their own, but a hybrid solution could cover for each other’s issues.
Now, corporate pensions are rare, 401k’s are highly vulnerable to stock market crashes, and Social Security is being slowly strangled.
reverendsteveii@lemm.ee 7 months ago
not really. short term investments and speculation are vulnerable to short term market forces, but a 401k that sits for 30 years with regular contributions and profits reinvested is all but guaranteed to make money. Long term investments like that are extremely stable, just put the money in your 401k and don’t look at returns until you’re actually considering retirement.
frezik@midwest.social 7 months ago
What’s critical is where the stock market is at when you retire. Plus, stock market crashes coming with general economic problems mean older people lose their jobs, can’t find another one, and are forced to retire with 40% of their 401k value knocked out. This is exactly what happened to people in 2008 and '09.
Conversely, the stock market did really well in the years after that. The people who were able to hold out past 2012 were able to get a nice nest egg saved up.
It’s a dice roll. It can work as one part of a larger system, but not on its own.
reverendsteveii@lemm.ee 7 months ago
40% of the value before the crash, I assume? In that case, what’s the difference between their contributions and the total value even with that 40% gone? Remember that the real value of an investment is how much money is there now vs how much you put in, not how much money is there at peak value vs how much money is there now.
rchive@lemm.ee 7 months ago
The demographics are probably a bigger part of it. The ratio of people collecting to people paying in is much larger now and the length of time people collect on it is longer since people live longer now.
explodicle@local106.com 7 months ago
No problem, just make a self-directed IRA that buys bitcoin. Immune to stock market crashes!
rayyy@lemmy.world 7 months ago
Most corporate pension for workers are a joke. All the money goes to the top few.