Tipping point 401k withdrawals exceed contributions

[FIREd_2015]

Interesting article in WSJ today (subscription needed) about overall 401k withdrawals now exceed contributions. The latest available data was for 2013. I would think this would also have some effect on the overall stock market performance going forward if this trend continues.

"...We’ve reached a tipping point largely due to the combination of retiring baby boomers and younger workers who are incapable or less interested in saving..."

Here is a similar article from time.com that does not require a subscription:

401(k) Plans, Baby Boomers & Millennials: Retirement Withdrawals Exceed Contributions

 

[old woman]

I rolled all mine to a IRA the minute I retired does that count as a withdrawal?

 

[Andre1969]

I rolled all mine to a IRA the minute I retired does that count as a withdrawal?

I'm guessing that it does. Personally, I tend to mentally lump 401Ks and IRAs in one big group as simply "retirement funds" as opposed to after-tax stuff. But I think most of that data used for these types of articles separates IRAs and 401Ks.

I wonder if there's any data easily available on IRA contributions, versus withdrawals?

 

[FIREd_2015]

I rolled all mine to a IRA the minute I retired does that count as a withdrawal?

The WSJ article was pretty short and didn't say what counted as a withdrawal. Even if it did I think it's still a significant event. There was a Fed paper a while back that suggested it could hod down equity valuations and another by Vanguard that concluded it wouldn't.

 

[ERD50]

The Times article doesn't give numbers, just adjectives. Just how big of an imbalance is this? Did it go from (IN-OUT)/(TOTAL OF ALL 401K VALUE) of some very small positive number to some very small negative number?

Does it have enough to affect the market? Or is it just a headline?

-ERD50

 

[Bestwifeever]

Interesting artcle--thanks. From the WSJ article the item is based on:

Asset managers hope they can replace the outflows with a new surge from millennials or other products, such as individual retirement accounts. One industry data provider said most funds leaving 401(k)-style plans are migrating to IRAs.

(You can see the whole WSJ article behind the paywall by doing a google search on its title, "Money Flows Out of 401(k) Plans as Baby Boomers Age" and clicking on the first result.)

I bolded the part that also reflects what happened to DH's 401(k)--it's now an IRA all at Vanguard. The WSJ article looks like it is about how money managers will handle this migration and what current managers of 401(k) plans face, more than how the markets are being affected, it seems to me.

 

[Big_Hitter]

this isn't surprising - there are a crap ton of people retiring right now - it's simple demographics combined with the economy and ACA


now, what about investment earnings on the balances?

I bet inv earnings + contributions are greater than withdrawals, in aggregate

 

[Big_Hitter]

I rolled all mine to a IRA the minute I retired does that count as a withdrawal?

yarp

 

[marko]

Interesting article in WSJ today (subscription needed)

If you "paint" (highlight) the title of a WSJ article (and most other subscription reports), then right click, you'll see "search [article title] on Google". Click that and you can read the entire article.

 

[FIREd_2015]

The Times article doesn't give numbers, just adjectives. Just how big of an imbalance is this? Did it go from (IN-OUT)/(TOTAL OF ALL 401K VALUE) of some very small positive number to some very small negative number?

Does it have enough to affect the market? Or is it just a headline?

-ERD50

The Times article doesn't give numbers, just adjectives. Just how big of an imbalance is this? Did it go from (IN-OUT)/(TOTAL OF ALL 401K VALUE) of some very small positive number to some very small negative number?

Does it have enough to affect the market? Or is it just a headline?

-ERD50

For those that aren't able to view the article, the WSJ article showed a bar chart for 2010-2013 but didn't include the actual number except for 2013. So based on my interpretation of graph:

2010 net inflow of ~ $16 billion
2011 net inflow of ~ $25 billion
2012 net inflow of ~ $11 billion
2013 net outflow of $11.4 billion