Reality check or tempered expectations? The number of 401(k) investors who believe they can retire early has, as expected, decreased over the last few years of market turmoil. Since 2007, the number of investors who think their 401(k) or IRA accounts will be the largest source of income in retirement has fallen 7 percentage points – from 52% to 45%.
High Confidence! (yoppy)
Great Expectations?
Was the trend towards high confidence in 401(k)s to allow folks to retire early a side effect of low volatility climbing markets? In 2007, it hadn’t even been too long since the technology bubble burst – yet confidence was high among investors that the 401(k) was th key to early retirement. The numbers since 1995 have increased in an even more depressing way… In 1995, only 12% of people said they would work past 65. Gallup results now show more than a third of respondents take that position.
My question: how realistic were the 1995 expectations to begin with? I agree that it’s good to aim high (shoot for the stars, even if you miss you’ll land on the moon!), but with only 12% of the populations expecting to hit their retirement marks, (in 1995… even 33%+ now for that matter!) is anyone being realistic? It seems to me irrational exuberance had many forms – including over expectations of market returns. Just as it is now becoming more and more evident public pension plans played the same game, private investors aren’t off the hook. All I’m saying is: be realistic, and budget for all possibilities. What do you think about investor’s confidence?
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