401k written on an egg.

What Would Happen If Most Baby Boomers Liquidated Their 401k? Finance Buffs Weigh In

Lately, the path to retirement (and even being in the midst of it) has been rocky for many. To help afford one’s Golden Years, there’s a possibility that many baby boomers will have to liquidate a significant percentage of their 401Ks from the market within the decade. Finance buffs took to the internet to share what they think will happen if that’s true. 

Note: Some quotes in this piece have been lightly edited for grammar.

You Won’t Even Notice 

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One investor believes that the boomers will take their minimum withdrawals, and that’s it. Another person agrees. “No one would even notice,” they say, pointing to data that shows the real changemakers in the market are institutional investors that own about 80% of all stock in the S&P 500. 

Pass It On

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Even if boomers take their investments out of the stock market, “they won’t be buried with it, I don’t think,” ponders a realist. They think a more likely situation is boomers will pass away and give the money to their kids, who then invest it right back in the market. 

Small Impact 

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“Boomers have less money in the market than you think,” one person reminded the audience. They also urged people to remember that pensions and 401Ks weren’t a big deal when boomers started working. “Most of their money is in their homes, not in investment accounts.” 

Already There 

Stock market.
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No need to guess what happens; we’ve already been there for a while, according to someone with an eye for the stock market. “A significant portion has been retired for a long time already,” they said. “The market you see now is what happens when they are withdrawing their funds.” 

Not Happening 

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One person thinks there’s no way a large percentage of boomers will make their withdrawals at the same time for us to find out. “In a similar way that people generally don’t withdraw their savings all at the same time,” they said.

Can’t Fathom It

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One boomer spoke for themselves and said they’ve been taking small withdrawals each month, but nothing major. “Will probably double next year if my wife retires,” they said. “Pulling out a large amount of money from the market would be ridiculous.” 

Fixer Upper 

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Another person says they have a frugal boomer mother who’s holding on tight to their money and not letting go. She’s even let her home fall into disrepair to avoid spending. “I don’t know what the thought process is, but at this rate, her savings will probably just go back to the bank and help nobody, including herself.”

Extra Extra 

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One person thinks boomers’ retirement spending habits will lead to extra money floating around. “There may be so much extra money from all the social security checks that the Fed will have to keep rates high to slurp it up to prevent high inflation.” 

All in the Family 

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“Those that have enough money to make this an issue won’t spend enough money to make this an issue,” another person said. They agree with the sentiment that, most likely, boomers will pass their wealth down the family line.

Recycling Cash 

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An optimistic commenter observed that even if boomers take money out of the market, most likely, they’re withdrawing to spend it at publicly listed companies, putting the money back in rotation anyway. 

Bye Bye Buyers 

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Boomers are well known for their mass consumption, and more than taking their money out of the market, one person is concerned with what’ll happen when their spending stops. “Could cause shortages and limited real economic growth.” 

Tale as Old as Time 

Clock in sand.
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“Do you think that every year fewer people work and more people retire?” said one frustrated commenter, who’s tired of hearing the same argument. “Your ‘end of days’ situation happens every single year. And has since forever. It’s called ‘aging’.”

Social Networking 

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One person thinks that boomers don’t use the internet enough to coordinate a mass withdrawal. “Facebook disagrees,” another commenter replied. 

Too Bad, Kids

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Not everyone agrees with those who think boomers will be generous with their earnings, even to family. “They’re not giving these kids anything,” warns a Debbie Downer. “They’re going to spend it on cruises and long-term care.” 

Out of Cash 

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One sardonic commenter thought it was bold of the original poster to assume boomers have the money to spare. “Half of them have ZERO,” they said. “They’ve screwed up everything else, why not screw up their retirement too?” 

Source: Reddit

The Poor Boomer

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Are you a younger baby boomer who feels financially behind where your older boomer peers were at your age? Statistically, that’s true. Here’s why. 

Why Younger Baby Boomers Are Poorer Than Their Older Boomer Peers

Most to Least Expensive States to Retire

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Are you looking to move state borders during retirement? From Medicare contributions to taxes and housing costs, these are the best (and worst) states to retire from a financial perspective.

Most to Least Expensive States to Retire Ranked From 1 to 50

Do People Regret Retiring Early?

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People who follow the FIRE (financial independence, retire early) path are seemingly lucky to quit the workforce early. But do they end up regretting it?

Do People Regret Retiring Early? 15 FIRE Retirees Weigh the Pros and Cons

Top 1% Earners by State

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Whether earning income in the top 1% of your state feels like a pipe dream or a plausible reality, one thing is certain: What constitutes a 1% earner varies wildly by state.

How Much Money It Takes To Be in the Top 1% By State

50 Best Cities for Retirement

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Your Golden Years should be your best years. But according to research by U.S. News & World Report, that may not be the case depending on where you choose to retire. 

50 Best Cities to Retire in America That Won’t Destroy Your Mood and 401(k)

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