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Has anyone read Robert T. Kiyosaki's "Rich Dad" books - Specifically, "Rich Dad's Prophesy"?

In it, Kiyosaki predicts that around 2016, one of the biggest stock market crashes in history will wipe out the retirement savings of millions of employees.

The cause? The first baby-boomers will hit 70.5 years old and, by law (ERISA), begin to withdraw from their 401k plans. the demographic "drain" from the stock-market will create a market with more sellers that buyers and trigger a panic and perhaps the largest crash in history.

Is anyone familiar with this theory?
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I don't think you can have more sellers than buyers...

Naj
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I don't think you can have more sellers than buyers...

There can be more sellers competing for the existing number of buyers.

Demand and supply. More goods are being offered while the supply is constant, which in turn pushes the prices downwards.

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<<<The cause? The first baby-boomers will hit 70.5 years old and, by law (ERISA), begin to withdraw from their 401k plans. the demographic "drain" from the stock-market will create a market with more sellers that buyers and trigger a panic and perhaps the largest crash in history.>>>

I am curious as to just how much money the average retiree has in 401k plans.

I work for the Federal Government. The people who are older than I am are under the old retirement system which is a large pension plan. These workers have had the option of putting a small percentage of their gross in the TSP (which is the Federal Government's 401k). IIRC, 12 years ago when I started with the Feds the old retirement plan allowed for 6% contribution without a match. It takes a long time to build much of a nest egg on a 6% contribution. Many of the older coworkers I have spoken to do not have much put away in the TSP.

Also, until very recently, the IRA annual limit was a mere $2,000.

-helen
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An article in today's business section of the Washington Post says the median balance fro 401k participants in something like $27,000. Something like a third of workers have no retirement account at all.

I am 58. For many of us older folks, there were no 401ks or IRAs permitted for much of our working lives.
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I am 58. For many of us older folks, there were no 401ks or IRAs permitted for much of our working lives.


1980 or so they IRS ruled they were okay?

That's 25 years ago, old man! :) That's most of your working life...isn't it?

Naj
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Dude, I started working in 1962. That's 18 years before 1980. Folks in my highschool class that were working as welders full time in factories were full time bread winners by 1964. That's 16 years.

Most of them were peeing away their first 90 paychecks on a GTO, but that's beside the point ;)
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Dude, I was gently questionning your use of the word 'most.' 18 years is not most of 43...
:)

And I bet alot of that money went to GTOs, trips to Tijuana, Lafite-Rothschild...

Naj
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Naj,

For years the rules and mis-information on who could have an IRA kept government employees out of them. At first it was only self employed workers who could have an IRA and there were complex income calculations.

In the mid 80's rules changed again and state employees were given the right to have a work related deferred account and 403 accounts. While the rules changed to allow them, it often took large employers a while to implement the changes for employees.

I didn't understand that I could qualify for a IRA until the Roth came along in 1997 when I opened my first one. Perhaps I could have qualified before but I am just an ordinary Joe.

There is an interesting history :

http://www.ici.org/home/05_ici_ira_research.html

Sally
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Naj,

For years the rules and mis-information on who could have an IRA kept government employees out of them. At first it was only self employed workers who could have an IRA and there were complex income calculations.


That's okay Sally, I was really just teasing Teddy about 401k's. I don't know nuthin' bout IRA rules. I'm sure almost everyone was ignorant at first.

Naj
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Am I right, most of you guys think Rick Dad's prediction will not happen?
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Who's Rick?

Doesn't he own a bar?
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I have some idea of the theory that Mr. Kiyosaki has written about. However, I have only skimmed portions of the book "Rich Dad Prophecy". Mr. Kiyosaki seems like a sort of "Chicken Little" to me. He says that the "sky is falling" (stock market is in trouble). I would disagree with him and say that it is more likely that the overheated real estate market, which Mr. Kiyosaki used to make his riches, is more likely to have a fallout than the stock market will in the next decade.

And even if the stock market falls some because of more people cashing in their 401k plans, it will be a great opportunity to buy in at historically low p/e ratios until equilibrium between sellers and buyers occurs.

Just my two cents.

Eric
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