Trump distorts gains in retirement accounts

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President Donald Trump is telling a skewed story when he boasts about workers who’ve seen their personal retirement savings nearly double under his administration. Gains in the overall stock market are only half of what he implied.

Trump made the assertion at his New Hampshire rally Monday, where he also tried to snatch victory from defeat by claiming a shutout victory in the House impeachment vote, which he actually lost.

TRUMP, on workers’ 401(k) investments: “Up 90%, up 104%. Is there anybody doing badly with the 401(k)? … Don’t put up your hand, I don’t believe you. The 401(k)s, they’re up 90%, 95%.”

THE FACTS: That’s misleading at best.

There have indeed been 401(k) increases of 100% or more since 2017, but those were largely among workers with fewer than four years at their job, according to the Employee Benefits Research Institute. The increases are big for recent and younger employees because they generally start with meager savings. The gains come in part from workers setting aside money from their own paychecks and contributions from their employers, not just market returns.

In that circumstance, it’s unremarkable to see a $1,000 401(k) account double in a year, for example, when a young worker and perhaps the employer is paying into it.

Older workers with more than 20 years on the job have seen gains of roughly 50% over three years in their retirement accounts, thanks both to contributions from paychecks and market gains.

Moreover, the S&P 500 — the broadest measure of the U.S. stock market — was up 47.6% from Trump’s inauguration through Monday’s close.

Some 401(k) averages are problematic for Trump’s claims to be generating prosperity because many workers lack the savings for a comfortable retirement. The median account balance was $22,217 in 2018 in 401(k) and similar plans for which investment giant Vanguard was the recordkeeper. That’s down from $26,331 in 2017.

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