post #21 of 21
2/18/09 at 2:18pm
Quote:
Originally Posted by annethcz View Post
I agree that 401K contributions are one reasons that market prices are as high as they are. Gives you something to think about, when you consider the number of baby boomers who will be retiring soon and will want to take out their money to put them in more stable investment vehicles. What will prices do then? You will have millions of baby boomers who want to sell stocks, and not enough Gen Xers and Yers to BUY the stocks. Supply and demand says that stock prices will decrease further when Boomers want to sell and not enough X and Yers want to buy.


While many people do make automatic contributions into 401Ks, I know of a lot of people (myself included) who have decreased 401K contributions in the last year. We DO have the money to invest in 401ks, our wages are more than adequate to support our family, but we're choosing to allocate that money differently this year, based on our personal circumstances and what we see happening in the overall economy.
ITA. As more companies drop their 401k match (DH's just did), there will be less of an incentive for Gen Xers to max out their 401ks. Suddenly, Roth IRAs, IRAs holding just plain old cash look like better bets with lower fees, more control, etc.