Is Private Equity Right For Your 401(k)? A Look At Potential Risks And Rewardshttps://t.co/ju83Hq4H1K https://t.co/Cx3UpNdJYE ...

U.S. Retirement System Challenges - U.S Social Security is facing insolvency by 2033, potentially leading to a 20% benefit cut if the trust fund runs short [1] - The U S retirement system received a C+ rating from the Mercer CFA Institute Global Pension Index in 2024, indicating a solid system with significant risks [1][2] - 401(k) system may not be effective as funds are often withdrawn before retirement for various needs [3] - By 2050, the world could face a $400 trillion shortfall in retirement savings, with the U S being a major contributor to this problem [29] - In 2019, the estimated loss of savings due to 401(k) cash outs ranged from $60 billion to $105 billion [19] Global Comparison and Solutions - Countries are raising retirement ages and requiring mandatory contributions to address issues like longer lifespans and fewer workers paying into the system [4] - A grade retirement systems often feature a net replacement rate of at least 65% for median income earners, private pension coverage of at least 80% of the working-age population, and pension contributions of at least 12% of wages [5][6] - The Netherlands, with its mandatory contributions, serves as a model, transitioning from defined benefit to defined contribution plans [7][9][10] - Australia's mandatory defined contribution plan, covering everyone, is highlighted as a successful approach [11] U.S. Strengths and Weaknesses - U S retirement plan assets are 250% (two and a half times) the median of OECD countries, indicating high savings rates [14] - Despite high savings, the median retirement savings for baby boomers is zero, highlighting inequality [15] - While 70% of U S workers had access to a retirement plan as of March 2023, only 53% participated, indicating a coverage issue [17] - The U S system's voluntary nature and allowance of pre-retirement withdrawals are criticized, but the high savings rates and retirement incomes suggest some success [10][13][34]

There's a big difference in the maximum annual contributions allowed to a 401(k) or an IRA regardless of whether it's a Roth or a traditional account. https://t.co/ZHFakoKDVB ...

Roth Vs Traditional 401(k): Which Is Better For You? https://t.co/Lj0OHPRkD1 https://t.co/L3ZRYqWC6G ...

Roth Vs Traditional 401(k): Which Is Better For You? https://t.co/WJ1HC5yYjH https://t.co/ruMhMzY1MX ...

You should be able to roll over your 401(k) into a Roth IRA, but be prepared to pay taxes when you make the transition. When you withdraw funds, they won't be taxed. https://t.co/aMw8isAvHt ...

Market Trend - BTC 401(k) access could potentially drive the price to $200,000 in 2025 [1]

Retirement Concerns & Expectations - 64% of Americans surveyed are more worried about running out of money in retirement than dying, and 25% believe they won't ever be able to retire [1] - Roughly 80% of Gen X, millennial, and Gen Z workers believe it will be harder for their generation to achieve financial security than it was for their parents [4] - 70% of U S workers surveyed who have not retired yet considered pushing back their retirement date [22] Social Security & Pension System - Social Security benefits are a major income source for 58% of US retirees [16] - In 1989, 63% of full-time workers at companies with more than 100 employees had a pension, but today only about 15% of private industry workers do [9] - The US Social Security system is facing insolvency within seven years [17] Generational Differences in Retirement Preparedness - Younger workers today often have more in retirement accounts by age 30 than boomers did [6] - 39% of Gen Z, 36% of millennials, and 24% of Gen X have student loans, compared with about 7% of boomers [14] - The top 10% of millennials have 20% more wealth than the top baby boomers at the same age [13] Factors Affecting Retirement - Retirement ages are rising in more than half of OECD countries due to improved longevity and health [2] - Over half of people retire sooner than they ever plan to [3] - Three main reasons younger Americans will likely have to work longer than baby boomers are: longer and healthier lives, Social Security benefits won't cover the full cost of living, and many Americans don't save enough [7]

Market Trends & Regulatory Landscape - The executive order signed last week aims to make it easier for 401(k)s to include alternative investments like private equity and crypto [1][15] - Regulatory clarity and direction from the SEC and DOL are crucial in the coming weeks and months [15][16] Investment Opportunities & Strategies - Defined benefit plans, pension funds, endowments, and foundations have been investing in private assets for 30 years with positive returns [4][5] - Empower has formed partnerships with several alternative managers to provide access to these strategies [6] - The approach is to allocate no more than 15% of assets to private assets, using a collective investment trust or target date type construct with a liquidity sleeve [10] - Defined contribution market could see an allocation to privates between 10% and 20% over the next 10 years, potentially becoming a $4-5 trillion market [14][15] Potential Risks & Considerations - There is a convergence happening between the public and private markets regarding valuations, potentially impacting performance [8] - Illiquidity of private investments raises concerns about accessibility for retirees needing immediate access to funds [8][9] - Fee structures for private alternatives are meaningfully higher than in the public space, and the true returns post-fees need consideration [13][14] Company Performance & Strategy - Empower has 19 million customers and $2 trillion on its platform [12] - Empower aims to provide access to private assets, with the fiduciary (plan sponsor, advisor, and investment consultant) determining timing and strategies [12][13]

401(k) Plan Evolution - 401(k) plans should empower individuals to make their own investment decisions [1] - This shift promotes financial literacy among participants [1] - It also benefits the business overall [1] Traditional 401(k) Shortcomings - Traditional 401(k) systems lacked transparency [1] - Participants were often unaware of the specific investments within funds [1] - Fee structures were unclear [1] - Performance data was not readily accessible [1] Industry Perspective - The industry views this evolution as a positive and overdue step [1]