It's awfully hard to have any sort of trust in a system that allows this to happen.
Each individual case is different, but en masse household net worth (house value and stock market investments) dropped 17%. Four years later, it was back to where it was pre-recession. 17% is a hell of a haircut, but not what I would categorize as "ruined". Unless, and here's my most likely theory, they panicked and made a poor timing choice in selling the house or selling stocks at the worst possible time, and then had to buy back in at higher prices (because they missed most of the upswing while sitting out).
My parents, OTOH, sat it out just fine, and are so far from ruined that Mom bought herself a new C7 Corvette a few years ago. Anecdata all around, but if you can't sit tight for four more years, you're doing something wrong.
So, being "negative" means someone is owed money. How does one do that with >1MM net worth? You sold everything, and still owe people money? You either weren't really a millionaire to begin with, or you were over-leveraged (which means you probably weren't really much of a millionaire to begin with).
Nonetheless, it did, and does, give me pause.
This in my opinion is the biggest problem with the move from a defined benefit to a defined contribution retirement scheme. It took the investing out of the hands of the people that knew what they were doing.
Along those lines it really grinds my gears how the financial industry is ripping off people who are saving for retirement. Most 401k plans I've seen have incredibly high fees with a few investments that charge equally as high of fee. Especially those at small companies.
This is why I largely avoid investing (I do have some money in index funds, though). I know that I don't know what I'm doing in that world, and I also lack the time or interest required to become competent in it.
How’s that for “coddling and preventing them from making poor decisions”
The yield curve has already inverted so we’re looking down the barrel of “Recession The Sequel.”
But yeah, keep blaming GenX (and presumably GenY and GenZ) for someone else’s problem. Many of them aren’t even earning a wage to save, avocado toast aside.
Also, keep in mind that even supposedly-safe types of investments got hit pretty hard in that downturn. Top-rated funds were actually far riskier than anyone knew because of the ratings shenanigans that were part of the MBS/CDO/etc. mess. Home values also declined sharply. Many lost their jobs, so they had to draw from already low and declining retirement funds.
I was fortunate. Many of my friends were not. While I'm proud of having made choices that preserved my ability to provide for my family, I wouldn't be so quick to criticize others whose rationally-equivalent choices turned out much worse.
The more volatile assets, if sensibly diversified, were not "wiped out" in 2008. The paper value dropped but then rebounded. As a GenX worry wort, I watched my own retirement account do this dance. I also watched my cash accounts slowly deteriorate against inflation. I am too risk averse to have gone all-in on the stock market even in my younger years, so had a portfolio mix more like someone 15-20 years older. If I'd been forced to live off my multi-year cache equivalent reserves, my 401K equivalent investments had mostly bounced back before I had to think about tapping any.
What was the worst in 2008 were those who had gone all-in on the housing market and turned out upside-down. And, those who still counted on a pension as a large part of their retirement plan and saw their pension providers going bankrupt. Those were really wiped out.