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   XPost: alt.politics.democrats.d, talk.politics.guns   
   From: biden@incompetent.com   
      
   The U.S. stock market rout that has put U.S. equities in a bear market   
   isn't just reducing the net worth of billionaires like Elon Musk and Jeff   
   Bezos. It's also taking a toll on Americans' retirement savings, wiping   
   out trillions of dollars in value.   
      
   The selloff has erased nearly $3 trillion from U.S. retirement accounts,   
   according to Alicia Munnell, director of the Center for Retirement   
   Research at Boston College. By her calculations, 401(k) plan participants   
   have lost about $1.4 trillion from their accounts since the end of 2021.   
   People with IRAs — most of which are 401(k) rollovers — have lost $2   
   trillion this year.   
      
   This year's stock slump is the most severe market downturn since March of   
   2020, when COVID-19 erupted in the U.S. Historically, 401(k) investments   
   take about two years after a market decline of this size to regain their   
   previous value.   
      
   "Anybody who has to retire when the market is down is in a bad position,"   
   Munnell said.   
      
   "Younger people, you can kind of wait it out — these things have come back   
   time and time again," she added. "But people who use their retirement   
   money to support themselves really suffer in this kind of event."   
      
   Investor concerns about spiraling inflation and growing recession risks   
   are weighing on financial markets. Reflecting those fears, the Dow Jones   
   Industrial Average on Thursday fellow below 30,000 points for the first   
   time since January of 2021. The S&P 500 is down 24% from its record high   
   in January, while the Nasdaq is down more than 30% from its November peak,   
   putting both in bear market terrain.   
      
   Bubble losing air   
   Retirement accounts are the main channel through which most Americans are   
   exposed to the ups and downs of the stock market. Nearly three-quarters of   
   all 401(k) money is held in stocks, according to a Vanguard report from   
   2021. This year it's been mostly down: The S&P 500 has sunk 22%, the Dow   
   Jones Industrial Average has lost nearly 13% and the Nasdaq Composite has   
   fallen more than 30%.   
      
   To be sure, many Wall Street professionals viewed last year's run-up in   
   stocks as a bubble fueled by speculators looking for a place to park new   
   money. But that doesn't make the loss any easier to swallow for most   
   workers, who lack the time, skill or interest to try to time the markets.   
      
   "One could argue that these recent losses are simply wiping out the   
   extraordinary gains that occurred from mid-2020 to the end of 2021, so   
   that people are not actually worse off than before the pandemic," Munnell   
   wrote in a blog post, shared first with CBS MoneyWatch. But human nature   
   being what it is, "the prior gains may have felt permanent, so the recent   
   losses are no less painful."   
      
   More risk, less reward   
   For many low-income people, the growing popularity of so-called target-   
   date funds has also made retirement savings more risky, Munnell noted.   
   Left to their own devices, richer investors tend to choose riskier assets,   
   like stocks. However, due in part to automated retirement tools, the   
   lowest-paid participants today are slightly more likely to have money in   
   stocks, according to Vanguard data she analyzed.   
      
   Among workers with 401(k)s, those with annual incomes under $30,000 a year   
   had 81% of their retirement fund in stocks, while for those making over   
   $150,000, the figure was 76%.   
      
   Target-date funds are a popular set-it-and-forget-it option for choosing a   
   retirement plan, with more than half of all 401(k) participants holding a   
   target-date fund, according to Morningstar Direct, an investment research   
   firm.   
      
   But data shared by Morningstar show that the most popular target-date   
   funds — mutual funds that hold a range of investments and that   
   automatically adjust according to a "target" retirement date — have lost   
   between 10% and 22% of their assets under management this year. (Those   
   losses are due to a fall in stock values as well as participants moving   
   money out of their accounts, Morningstar noted.)   
      
   Paltry 401(k) savings   
   With the median 401(k) account having a balance of just $17,700 before the   
   pandemic, this year's market decline would lop off more than $3,500 in   
   value. A would-be retiree with a balance of over $81,000 — which would put   
   them in the top 25% of savers — would see their nest egg shrink to just   
   $64,800.   
      
   Such figures underscore how much riskier retirement is today than for   
   previous generations of workers, the vast majority of whom had employer-   
   provided pensions that legally entitled them to a steady monthly payout   
   after leaving the workforce.   
      
   "When the shift from defined benefit to defined contribution [plans]   
   happened, that shift meant that the individual bore the investment risk,"   
   Munnell said. "When the stock market is booming, it's easy to forget that.   
   But when the market tanks, you have to remember that."   
      
   https://www.cbsnews.com/news/stocks-drop-recession-retirement-savings-   
   401k-ira-3-trillion-2022/   
      
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