The front page of the Oct. 17 New York Post screams that 401ks this year are more like 401KO—as in the retirement savings vehicle is down for the count.
An opinion piece from The Heritage Foundation’s Stephen Moore and E.J. Antoni claims that 401k plans have suffered $2.1 trillion in losses since the start of this year, according to their just-completed analysis of how the highest inflation rate in almost 40 years has impacted the retirement funds of ordinary Americans.
“The average 401k plan had over $135,000 at the start of this year. Today, those assets have shrunk on average to about $101,000. In other words, the average 401k plan is down about $34,000—more than 25% in less than one year,” the column claims.
In terms of purchasing power, Moore and Antoni say inflation also has brought the “real value,” in 2021 dollars, of the average 401k down another $5,000, from $101,000 to $96,000.
They add that the 401k plan with $300,000 saved up is likely to have lost about $75,000.
The finger of blame from the right-leaning Heritage Foundation is pointed squarely at President Joe Biden, who the authors take to task for seven straight months of 8%+ inflation. “A year ago we were assured by the White House economic wizards that these rapid price increases in everything from groceries, to rental cars, to gasoline at the pump, to health insurance were merely ‘transitory.’ Whoops,” the column states.
The Washington D.C-based research and educational institution—whose mission is to build and promote conservative public policies—points out that the major stock indices are all way down since Biden came into office.
Per FactCheck.org, the S&P 500 index rose 166% over the eight years Obama was in office, and it climbed another 67.8% during Trump’s four years. But since Biden took office, the S&P 500 was down 3.4% at the close of the market on Oct. 13, and down 23% for the year.
The Dow Jones Industrial Average, was down 2.9% since Biden took office. For the year, the Dow had dropped 17.3% as of Oct. 13.
The NASDAQ has been hit the hardest, down 19.3% since Biden took office and a staggering 31.9% so far this year.
Moore and Antoni claim monthly savings have fallen 83% since Biden took office.
They also calculated that over the past 20 months, the rise in consumer prices over wages means that the average family in America has lost nearly $6,000 in purchasing power.
SEE ALSO:
• Stephen Moore: ‘We Need 401ks, Not Social Security’
• Inflation Wreaking Havoc with Workers’ Retirement Saving
• 401k Participants Largely Stand Pat in First Half of 2022
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
