Re:Is everything falling apart?
by dwater on Friday April 29, 2022 @01:49PM
(#31208499)
Pensions do have risk, but you act as if 401(k) style plans don’t. Imagine how difficult it would be to plan fastidiously for your retirement and then have the stock market collapse and wipe out 1/4 or 1/2 of your savings. Yes, you should diversify your investments to reduce your exposure, but in this instance the risk and responsibility is on you the individual. Isn’t it strange how two different systems that on paper have totally different risk profiles both have a huge risk of low and middle net worth individuals getting wiped out?
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In practice there is no risk of defined contribution plans getting wiped out unless the account holder does something exceptionally stupid. Most plans default to using target date mutual funds which automatically rebalance to reduce stock exposure every year. If there's a major stock market crash then older employees will have very little exposure and younger employees have plenty of time to financially recover.