Pensions worked the same way. The difference is personal responsibility and inequity of employment and wage. But who’s 401k deprecates in value over the long term anyways? If you select a target fund that should be fine.
Yeah the comment treats 401ks like they are checking accounts rather than investment accounts. Outside of a major recession, a 401k should outperform inflation. And if it grows at 5% (conservatively) during a 30-year career and then you happen to have to retire during a 2008-scale recession, you’ll still have way more than your principal investment in there.
Is it possible that commenter is putting money into retirement accounts but not putting that money into any funds, etfs, or bonds? But even then, I would hope it’s in a money market type core position where they are getting some return. But I rolled over all my stuff into a target fund at my new employer 9 years ago. I’m up 21% on my cost basis.
I mean maybe, but 401ks almost always require you to set a target fund or indicate a preferred risk level just to set an account up. So unless the commenter went out of their way to not allow their 401k to be invested, it would almost certainly be invested in, at least/lowest risk, an interest bearing cash equivalent, like a MMF as you mentioned. And MMFs were crazy last year, some earning like 7% with essentially no risk and great liquidity.
Pensions worked the same way. The difference is personal responsibility and inequity of employment and wage. But who’s 401k deprecates in value over the long term anyways? If you select a target fund that should be fine.
Yeah the comment treats 401ks like they are checking accounts rather than investment accounts. Outside of a major recession, a 401k should outperform inflation. And if it grows at 5% (conservatively) during a 30-year career and then you happen to have to retire during a 2008-scale recession, you’ll still have way more than your principal investment in there.
Is it possible that commenter is putting money into retirement accounts but not putting that money into any funds, etfs, or bonds? But even then, I would hope it’s in a money market type core position where they are getting some return. But I rolled over all my stuff into a target fund at my new employer 9 years ago. I’m up 21% on my cost basis.
I mean maybe, but 401ks almost always require you to set a target fund or indicate a preferred risk level just to set an account up. So unless the commenter went out of their way to not allow their 401k to be invested, it would almost certainly be invested in, at least/lowest risk, an interest bearing cash equivalent, like a MMF as you mentioned. And MMFs were crazy last year, some earning like 7% with essentially no risk and great liquidity.
Yeah, it’s a bit of a stretch. I know folks forget to do this when setting up IRAs, but kind of hard to do with 401k. Who knows.