As you'd expect the contribution percentage increases with age (and the amount presumably increases even more). But even under 25s are at about 5% which is more than I would have expected though this is presumably just among people who have the option.
"The market is like a large movie theater with a small door. And the best way to detect a sucker is to see if his focus is on the size of the theater rather than that of the door." - Nassim Nicholas Taleb in Skin in the Game
(This is not to say that you, specifically, are a "sucker", and I don't love the term. But I think Taleb has a lot to offer on considering risk.)
You're looking at market cap when you should be looking at volume. 5% of the stock market going liquid at a higher than ambient rate can reduce valuations by significantly more than 5%, possibly multiples more. And as we saw with interest rate hikes and bonds the past couple of years, something like that is a systemic risk and the fallout can easily cascade.
ghaff|2 years ago
As you'd expect the contribution percentage increases with age (and the amount presumably increases even more). But even under 25s are at about 5% which is more than I would have expected though this is presumably just among people who have the option.
onlyrealcuzzo|2 years ago
Boomer 401ks are probably <5% of the stock market, and they aren't going to 0 overnight.
The idea that boomer 401k withdrawals is going to crash the stock market or tamp out future growth is pretty strange.
Defined benefit & defined contribution pension plans are both larger chunks of the stock market than 401ks.
And all of those together are a smaller chunk than foreigner holdings.
goo|2 years ago
(This is not to say that you, specifically, are a "sucker", and I don't love the term. But I think Taleb has a lot to offer on considering risk.)
friend_and_foe|2 years ago
lotsofpulp|2 years ago
401k are a type of defined contribution retirement plan.
https://en.wikipedia.org/wiki/Defined_contribution_plan