As people transition from working to retirement, they also tend to move from investing money in their respective nest eggs to withdrawing funds on which to live. In this regard, America appears to have reached an interesting threshold: withdrawals from 401K plans are now exceeding new contributions to them as baby boomers age. As reported by the Wall Street Journal, this shift could have profound implications for the U.S. retirement industry.
According to an analysis of government data conducted by BrightScope, investors pulled a net eleven point four billion dollars from tax deferred savings plans in twenty thirteen, ending decades of 401K expansion. Complete industry information for twenty fourteen in not yet available.
The movement of money out of 401K plans is expected to accelerate over the decade to come as growing numbers of baby boomers retire, which among other things, will squeeze the revenues of large money management firms that rely on feeds charged to employers and investors as a chief engine of profit. To replace that revenue, a growing number of asset managers are marketing financial products to millennials such as individual retirement accounts.
