This Is Your Father's Stock MarketIssue 12-04-17 |
U.S. Tax Code provides several vehicles for deferring tax on savings that are placed in special accounts. Such accounts generally tied to an employer-supported plan are called 401(k) plans. Those individuals creating their own tax-deferred savings plans may do so through an account known as an individual retirement account (IRA). These plans came into vogue about 40 years ago, and many older savers have been utilizing them ever since.
It is no wonder, then, that a growing proportion of stock investments are held by older people. The article, "This Is Your Father's Stock Market (Bloomberg Businessweek, Dec. 4, 2017)," provides an interesting opportunity to demonstrate the benefits of tax-deferred savings. It is also interesting to consider other contributing factors to the shift, including lack of alternative investment options, income disparities, risk aversion, and the like.