Trump administration officials made the rounds this weekend to try to answer the nearly unanswerable: Why tank the stock market by starting a trade war? And are you subtracting trillions of dollars in unrealized losses out of people’s savings on purpose?
Treasury Secretary Scott Bessent’s appearance on NBC’s “Meet the Press” was particularly odd.
“Most Americans in a 401(k) have what’s called a 60/40 account,” he said, without explaining what he was talking about. These accounts, he added, “are down 5, 6 percent on the year.”
Most Americans in a 401(k) do not have a 60/40 account. By saying so, Mr. Bessent understates the risk in people’s portfolios, the fear they feel and how being frightened can affect their retirement security if they sell while scared.
Let’s take this apart a bit.
A 60/40 fund, for most people in workplace retirement accounts, is a mutual fund that contains 60 percent stocks and 40 percent bonds or other investments that tend not to be as volatile as stocks. Often, funds like these have a target date for a year close to when a person intends to retire.
That 60 percent in stocks may not be all U.S. equities, which is important because many markets outside the United States have done much better this year. And Mr. Bessent is right that these funds are doing better than the overall U.S. stock market this year, which is down around 13 percent.
But while many 401(k) investors do put money in funds with a mix of asset types, this is not the correct way to take the temperature of the nation’s retirement investments.
