The more I study the economy, the more I fear 401(k)s are doomed — am I overreacting?

Is it worth it to save money anymore? Does it make sense to contribute to your retirement savings if it seems like inflation, corporate greed, corruption, and wage stagnation all but guarantee it will be worthless in a few years? What is a better alternative?

24/7 Wall St. Key Points:

• The value of 401(k) funds is dwindling, even if many people don’t understand why.
• Those who manage retirement funds will always make more than those who save.
• Also: Take this quiz to see if you’re on track to retire (Sponsored)

These are the questions many of us find ourselves with as we look out into the world that we can’t afford to live in anymore. The author of our post in question had the same questions and took them to the community in r/wallstreetbets to see what answers they could offer.  

Please remember that the financial advice you find online, including this article, is not legal advice. These are opinions. Please speak with a professional before you make any financial decision.

The Question

A jar of 401(k) savings.

The author begins by giving an image of their financial situation: flying coach of the economy that others create while he has to work long hours, gamble, and hide their savings in simple 401(k) funds while the tide rises against them.

They cite financial data that shows an increasing portion of the profits are being given to private equity while the rest of us have to trust that our share of the winnings from the stock market is actually fair, when it isn’t.

They say that private equity has no obligation to report anything about their behavior or the performance of the funds they manage. You have to believe that the person handling your investments has nothing to report, or you can leave.

Meanwhile, the meager results of our 401(k) funds dwindle until they will be worthless in the future.

The Community Response

Hiding money under the mattress.

Most of the comments disregarded or mocked the author of the post. Much of the data he cited was misinterpreted and the author themselves didn’t quite understand the data they cited themselves.

The data that served the basis for their fears showed that the number of publicly-traded companies has remained relatively stable while the number of companies backed by private equity have skyrocketed. While this has certainly created a greater pool of wealth that goes directly to private equity, the stocks in 401(k) funds has had the same spread of companies for a while.

Of course, just because the author didn’t quite understand the data doesn’t mean he is wrong. A few savvy and patient commenters took the time to point this out. While the cause of the death of 401(k) funds might be unknown or misunderstood, it is still happening. Private equity is snapping up many more local, smaller companies, removing the profits from the community and local economy and putting them in the pockets of fat CEOs. It remains to be seen how the consequences of rampant greed of private equity will damage our economy in the long term, but we have already begun to see rising prices, loss of competition, and widespread corruption.

For now, however, your 401(k) remains safe.