Most of boomers will have their 401k (unknowingly) invested into the stock market by their employers
That’s not what a 401(k) is. A 401(k) is just a regular investment account that has special rules around taxes because it’s meant to be cashed out when you retire. Everything in a 401(k) is in the stock market (though it can include bonds, mutual funds, etc. too), and none of it is managed by the employer. The employer just makes contributions that the employee decides how to manage.
It’s entirely possible that people don’t understand their 401(k)s, and that the employer went with a full service broker that manages the 401(k)s on behalf of the employees. But, it’s not possible for the employer to invest 401(k)s into the stock market because the employer simply makes cash contributions and then it’s hands off.
Pensions are different. Pensions are things where the company agrees to pay the employee a certain amount when they retire. In that case the employer is definitely investing in the stock market – although, in this case, they almost certainly hire a company to manage it for them.
That’s not entirely true. Your employer chooses the financial investment platform and a few select equities that you can invest in. I get like 12 options, including a money market and a few ETFs. I’m also subject to very high maintenance fees.
So, YMMV. Larger firms will often have better investing options for their employees.
True, sometimes a bad employer has a bad 401(k) setup with limited choices. But, they’re still not the ones investing in the stocks or mutual funds. They just choose the 401(k) partner and then you have to pick from their offerings.
That’s not what a 401(k) is. A 401(k) is just a regular investment account that has special rules around taxes because it’s meant to be cashed out when you retire. Everything in a 401(k) is in the stock market (though it can include bonds, mutual funds, etc. too), and none of it is managed by the employer. The employer just makes contributions that the employee decides how to manage.
It’s entirely possible that people don’t understand their 401(k)s, and that the employer went with a full service broker that manages the 401(k)s on behalf of the employees. But, it’s not possible for the employer to invest 401(k)s into the stock market because the employer simply makes cash contributions and then it’s hands off.
Pensions are different. Pensions are things where the company agrees to pay the employee a certain amount when they retire. In that case the employer is definitely investing in the stock market – although, in this case, they almost certainly hire a company to manage it for them.
That’s not entirely true. Your employer chooses the financial investment platform and a few select equities that you can invest in. I get like 12 options, including a money market and a few ETFs. I’m also subject to very high maintenance fees.
So, YMMV. Larger firms will often have better investing options for their employees.
True, sometimes a bad employer has a bad 401(k) setup with limited choices. But, they’re still not the ones investing in the stocks or mutual funds. They just choose the 401(k) partner and then you have to pick from their offerings.
i see, thanks for the correction.