Login

Posting 401k Balances To Social Media?

The psychology of large account balances.

Marketwatch had an article about people posting their (large) 401k balances on Reddit and sharing how they got there. The article included a couple of examples and there were some political biases as well.

At varying points you cross milestones in your savings. Maybe the first big mile stone is $100,000, at some point $1 million if you get there would be viewed as a big achievement by most people. I think anything that makes saving money and otherwise succeeding with your financial plan a positive experience is productive. It can enhance the motivation to save more to get to an even bigger balance. Having a good sized balance is empowering along the lines of what we've talked about recently in terms of being resilient, robust or antifragile.

The downside to this is the potential to get out over your skis in terms of confusing luck with skill. If the stock market is up close to 300% in the last nine years, someone who has been invested all the way up should have a much larger balance than they once did. That doesn't necessarily require real skill, it requires one big decision, the decision to invest in the first place.

Large gains can also make people to get complacent in terms of taking more risk than they actually should and seeing their life changing account balance take a drastic hit. I think this was more prevalent in the tech wreck than the financial crisis at least where the stock market was concerned as people were daytrading internet stocks that were going up hundreds of percent while the times were good.

The crucial concept here is respecting whatever it took for you accumulate what you have. In the case of a couple of the Reddit posters, they are talking about 401k balances more than 20 years in the making. I think this applies to inheritances as well as somehow getting very lucky like maybe finding a Bitcoin account balance that you'd forgotten about.

One cautionary note to someone who believes they have game over money is that they may not have as much as they think. Having $1 million is absolutely a large account balance for more of a traditional retirement age but it might not be so easy to make $1 million last for 50 years as opposed to 30-35 years. Maybe someone who is 45 and has that much doesn't need to save that aggressively but that is a whole lot different than profanely burning every bridge as you walk out the office door forever.