Simple 401(k) Investment Guide
In this issue:
- Latest in Retirement Savings & Personal Finance: College Education Affordability Declined, Rising Debt Puts Your 401(k) Retirement Savings in a Pickle
- Simple 401(k) Investment Guide
- Tools & Tips: 401(k) Investment Assistant
- Market Overview
Latest in Retirement Savings & Personal Finance: College Education Affordability Declined, Rising Debt Put Your 401(k) Retirement Savings in a Pickle
College Education Affordability Declined
Here is the scoop: In 1978, a student earning minimum wage during summer could afford to pay a full year’s in-state tuition at a four-year public university without going into debt.
Well it turns out like this: From 1978 to 2025, public four-year college tuition rose 1,587.5%, from $688 to $11,610, far outpacing inflation at 394.3% (CPI: 65.2 to 322.3). The federal minimum wage increased 173.6%, from $2.65 to $7.25, lagging inflation; $2.65 in 1978 equals $13.10 in 2025 dollars, showing a real wage decline. Tuition’s growth exceeds both inflation and wages, making college less affordable. In 1978, summer minimum wage earnings ($1,272) covered tuition; in 2025, earnings ($3,480) fall short of $11,610. Financial aid may offset costs, but the gap remains stark for minimum wage workers.
Median household income rose from $67,834 in 1978 to $80,020 in 2024, a real increase of ~18% (2024 dollars). Minimum wage grew from $2.65 to $7.25 by 2025, but its 1978 value equals $13.10 in 2025 dollars, showing a real decline. Tuition surged 1,587.5%, from $688 to $11,610. Median income growth lagged tuition, and minimum wage fell behind both, making college less affordable for all, especially low-wage earners.
Your 401(k) Might Be in a Pickle — Thanks to Rising National Debt
Rising U.S. national debt probably feels distant, even abstract. But it’s becoming a more visible risk to your retirement accounts, especially 401(k)s.
Here’s the basic idea: as debt grows, markets start worrying. That worry shows up in volatility — big swings in stock prices, especially during debt ceiling standoffs or when fiscal policies seem uncertain. For anyone holding long-term stock positions through their retirement accounts, those swings can translate to sudden and painful drops in account values.
And that’s just one side of it. If the government is eventually forced to rein in spending to control the debt, it might not just be a theoretical conversation. Programs like Social Security or Medicare could face cuts. That would mean some people need to save more on their own, or delay retirement, or both.
Retirement Savings for Americans Act (RSAA)
On a somewhat brighter note, the RSAA got reintroduced in Congress again. It’s not new, but still worth watching. Basically, it’s a proposal to create a government-backed retirement account for people who don’t have access to an employer plan — like gig workers, part-timers, or folks working at smaller businesses.
It’s supposed to be portable and tax-advantaged, with automatic enrollment at 3% of income. There’s also a federal match for lower and moderate income workers, which sounds good on paper. Investment-wise, the options are meant to be simple — modeled after the Thrift Savings Plan used by federal employees.
Will it go anywhere this time? Hard to say. But the idea isn’t crazy. And if it passes, it could help fill a real gap.
401(k) Investment Guide
Our latest simple 401(k) investment guide could help investors of all experience. Here is the gist for those who are inpatient:
For Beginners or Those Who Prefer Simple Solutions
For those who are just starting out in 401(k) investing, a plan with a dozen of fund choices can be overwhelming. In fact, many beginners have no ideas what these funds are, let alone know how to choose them to invest.
The simple options are
- Use target date funds based on the expected year of your retirement
- Or if no target date funds in your plan, try a 60% stock 40% bond balanced fund (sometime 70/30 is fine too)
Either way, the key is this: consistency beats cleverness in the beginning. Simplicity is often best.
For Those Who Are Experienced or Just Want to Have More Custom Solutions
If you have some experience in investment or you want to further customize your investment portfolio, you can use template portfolios for some ideas after you have figured out how much should be allocated to stocks and bonds ( Asset Allocation Calculator). At any rate, three fund or four fund portfolios are good enough.
For Those Who Are Concerned About Investment Risk and Volatility or Want to Improve Returns with Lower Risk
Now for those who want to reduce your investment (interim) loss and also improve returns, you might want to consider to adopt a so called Tactical Asset Allocation or TAA strategy (see the white paper). It utilizes a combination of economic indicators, asset price trends and relative asset momentum to decide what to invest. Of course, as such a strategy might not in sync with a broad base stock market and bond market trends, it can zig and zag and that can test your patience.
Tools & Tips: 401(k) Investment Assistant
The 401(k) Investment Assistant is an easy-to-use tool to help your to go through steps in the above. By answering a few simple questions about your age, retirement plans, and investment preferences, the assistant will guide you step-by-step and provide personalized suggestions for your 401(k) investments. Whether you’re new to 401(k) investing or looking to fine-tune your portfolio, this assistant offers clear suggestions to help you build a retirement plan that fits your needs and goals. It’s for education only. For personal related advice, please consult a financial advisor.
It asks you a few questions including:
- The assistant will guide you through a series of questions:
- How old are you?
- When do you expect to retire?
- Are you a beginner in 401(k) investing?
- Depending on your answers, you may be asked about target date funds, balanced funds, or your desired stock allocation
The assistant will then review your answers and
- After answering the questions, the assistant will provide tailored investment suggestions, such as:
- Recommended target date or balanced funds
- Custom portfolio allocations (e.g., two fund or three fund portfolios)
It’s a simple to use tool to help you to get started.
Market Overview
Well, last week was marked by a broad market pullback, with US stocks and REITs (VNQ) experiencing the largest declines. Vanguard REIT ETF VNQ’s -3.24% return was notably weaker than other asset classes, possibly due to REITs’ vulnerability to rising interest rate expectations and concerns about commercial real estate stability. This of course was under the backdrop of 5% 10-year U.S. Treasury yield.
The following table shows the major asset price returns and their trend scores, as of last Friday:
| Asset Class | 1 Weeks | 4 Weeks | 13 Weeks | 26 Weeks | 52 Weeks | Trend Score |
|---|---|---|---|---|---|---|
| US Stocks | -2.6% | 5.1% | -3.2% | -2.2% | 10.7% | 1.6% |
| Foreign Stocks | 0.6% | 5.4% | 6.4% | 9.6% | 9.7% | 6.3% |
| US REITs | -3.6% | 0.1% | -5.0% | -9.5% | 8.6% | -1.9% |
| Emerging Market Stocks | -0.2% | 6.4% | 3.1% | 4.9% | 8.4% | 4.6% |
| Bonds | -0.5% | -1.4% | -0.8% | -0.3% | 2.9% | 0.0% |
More detailed returns and trend scores can be found on MyPlanIQ.com Market Overview.
Try to Find Your Old Retirement Accounts?
Find Tools and Calculators That Provide Quick Help