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Comment by take_a_breath | Hacker News Reader

Your data does not say what you are claiming it says. It is possible (or even probable) for the ultra-wealthy to have retirement accounts. Once we admit that, then the obvious question becomes: Who do you think owns most of the money in those retirement accounts, the rich or the poor?

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Retirement accounts are limited by the amount one might deposit annually. The most perhaps one can make is 19k in 401k and perhaps somehow max out SEP IRA - $56k (which I find quite tough to max out). Regular IRAs are out of questions, since at the income level dealing with 401k and SEP IRA, one does not get any benefits of funding regular IRA afaik.

So... The best-case scenario is $75k per year someone might be able to stash away in a retirement account. Let's say someone is able to do it for 50 years - it leads to $3.75m. It is a decent amount for retirement in my opinion, but 1) it is unlikely to optimize it fully to get there, and 2) doesn't really look stratospheric to make a difference in retirement funds ownership categorizations (i.e. 0.1% owns large part of retirement investments).

Mitt Romney’s IRA was valued at over $100m. Hell, this was widely publicized during an election. https://www.google.com/amp/s/mobile.reuters.com/article/amp/...

There are lots of IRA accounts with far more money in them. We have the data (from 2011) which shows it.

==As of 2011, 314 multi-millionaires had more than $25 million saved in their IRA, with average holdings of $258 million, the GAO reported. About 9,000 taxpayers had at least $5 million in their IRA, with average holdings of $16 million.==

==All told, 630,000 millionaires — about 1% of all IRA savers — cumulatively had more than $1 trillion in IRA accounts, accounting for 22% of all IRA assets.

Meanwhile, the other 99% — the 42 million taxpayers whose IRAs held less than $1 million — had average savings of just under $100,000.==

https://www.marketwatch.com/story/how-to-shelter-hundreds-of...

Thank you for sharing this link. Not sure what to think about it tho...

"In essence, Bain would value the special, riskier shares at pennies on the dollar. In one deal, employees invested about $23,000 in their IRAs. When the takeover target went public, those shares were worth about $14 million, and were worth about $23 million they finally sold the shares. That’s a 100,000% return."

Meaning, someone was risking their $23k in IRA. And looks like that investment opportunity was given to regular employees as well, meaning it wasn't a rigged up illegal trade based on some kind of insider information?

One legal (AFAIK) method: The company had low/no valuation, and it was private. Those shares were sold to the employees (likely of the vehicle containing the company) at the stated valuation. Once they went public, there was a valuation event. Roughly, they snuck through the 409a before it had to be reported.

Something doesn't line up...

So if shares had a low valuation, employees buying these risked that they will worth nothing in the future. I.e. not really different from buying AMZN shares in IRA.

Unless, shares were valued low on purpose, and were offered to buy at that price as another form of compensation (so compensation was difference between "as valued" and "real value"). In that scenario, it appears that these employees had ordinary income, which was not declared as such... And of course, that smells "fraud"...

So the question is - was the original investment truly at risk?

$75k per year is a pretty insane amount of disposable income for most Americans, where median household income is 63k[1], per capita disposable income is 45k[2], and 78% of people report living paycheck-to-paycheck[3]. Anecdotally the only people I know who are funding their retirement well in there 20’s are generationally wealthy and got a house from mom and dad. Many, even those with some disposable income, live paycheck to paycheck.

Also, as my sister comment points out, rich people can still have ridiculous retirement accounts. Saying that “everyone gets a piece in retirement” ignores a large portion of our society.

[1]https://fred.stlouisfed.org/series/MEHOINUSA646N [2]https://fred.stlouisfed.org/series/A229RX0 [3]http://press.careerbuilder.com/2017-08-24-Living-Paycheck-to...

Err...$75k/year over 50 years with 4% real rate of return (pretty modest) gives me over $11m.[1]

1. https://www.buyupside.com/calculators/recurringinvestmentcal...

> 4% real rate of return (pretty modest)

Citation needed. My savings account has been paying 0.1% for about a decade now. They just introduced a new 0.0% rate on deposits over CHF 250'000 :)

My Vanguard account is showing 11.2% yearly return over the past 10 years. You need to take some risk.

That's the wrong type of investment for a retirement account with a 50-year horizon. An account like that is (should) be invested in a diversified portfolio of stocks and bonds, such as one composed of low-cost index funds.

US retirement accounts are usually invested in stocks and bonds, not savings accounts.

By definition not the rich, since retirement accounts are capped by law to relatively low yearly contributions.

Sure the ultra-wealthy can have their retirement accounts too (if they even bother), but they can't be any larger than anyone else's. Just a tiny tiny tiny sliver for them, really.

Unless there might be loopholes in those annual caps that the wealthy use to their tax advantage. Found one:

==The GAO report shows that the top 1% have saved $1 trillion in their IRAs, 22% of the total.==

https://www.marketwatch.com/story/how-to-shelter-hundreds-of...

Since the ultra-wealthy are by definition a small portion of the population, and retirement contributions are capped at a low annual rate, it does in fact make the point that the parent commenter is trying to.

==All told, 630,000 millionaires — about 1% of all IRA savers — cumulatively had more than $1 trillion in IRA accounts, accounting for 22% of all IRA assets.==

https://www.marketwatch.com/story/how-to-shelter-hundreds-of...

So what a $millionaire is not in the super rich or even the rich class - well of middle class yes.

1 million dollars in a 401k is not the same as a 1 million dollars in a house. When the median american makes 65k per year and has 45k in disposable income it takes a lot of luck to put a million dollars into a 401K. There are 300 million+ americans, of which only 650k have a million or more in the 401k. How can we call the top 650K middle class?

You can not just count 401k which has stingy limits, I bet that are more than 650k with >1$m if you count other assets as well as the 401k

(excluding your home)

We can assume that the 650k people with $1 million in just their IRAs also have significant other assets. I’m not really sure what you are arguing here.

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