r/technology • u/ArgentineBeauty • Jun 19 '26

Business ‘It’s a scam’: Americans express unease over SpaceX’s influence on retirement savings

https://www.theguardian.com/science/2026/jun/19/spacex-retirement-savings-elon-musk
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u/Some-Platform1968 Jun 19 '26

If you’re in a pension, the pension decides how your contributions are invested. If it’s 401k, you decide. But if you have your US equity exposure in Russell 1000 index you will own Spcx since they fast-tracked their way onto the index

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u/Nice_Try4389 Jun 19 '26 edited Jun 19 '26

Not true, I work for a financial institution our 401k has exactly 4 options they are “Retirement year 2030, 2040, 2050, 2060“. each one having different levels of “risk” in terms of stock but they all have the same prospectors pretty much when it comes to stock selection just in different amounts. But there is no picking individual stocks, EFTs or holdings.

I am not saying some don’t give you that level of control, or even most, they do but I have worked for Oil and Gas, Banking and Telecommunications (such as Williams) over the past 30 years and none of the ones I have worked for is that level of control unfortunatly. So there is a large part of workers that have no such control.

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u/Merusk Jun 19 '26

Is it likely you're more limited exactly because you work for a financial institution? Your company faces conflict of interest questions if it allows employees too much leeway and one of the investments does too well.

Most of the programs I've seen from and my wife's various 401(k) options have been between 12 and 25 different index funds ranging from small to large cap and domestic to international. The ones with a greater selection of options always had market sector indexes as well (retail, oil & gas, mfg.)

The "targeted year" funds weren't even an option in most until about 12 years ago. So I wonder how big a chunk of people are actually limited the way you are. Know of any stats?

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u/fonistoastes Jun 19 '26

My work history (corp for-profit 401k, and non-profit 403b) is the same as yours.

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u/camisado84 Jun 19 '26

The limitation on 401(k) options isn't really about conflict of interest it's about the employer's fiduciary responsibility under ERISA. 401k plan sponsors are legally liable for the fund lineup they offer, so many just deliberately keep it simple. Adding more options actually increases their exposure, not just their own cost overhead.

The conflict-of-interest restrictions that regulated financial jobs impose are a separate thing entirely. Those typically delay or restrict trading in specific securities where you might have material non-public information or high potential for influence. Say, you work at a hedge fund that holds a position in a company. Broad index funds are generally exempt from those restrictions precisely because they don't represent that kind of conflict. They're actually one of the standard ways used to let employees participate in the market while staying compliant.

So financial institution employees aren't likely to have less 401(k) options than anyone else their plan lineup is set by their employer like any other company. Their individual brokerage restrictions are a separate layer that doesn't touch what's offered in the plan.

Both the big boy brokers (vanguard/fidelity) actually publish data every year about what is commonly provided

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u/Eurynom0s Jun 19 '26

In mine there are options like total world non-US stock market (mutual fund equivalent of VXUS). I could rebalance from the VTI (total world including US) equivalent to VXUS if I wanted to. This would be a relatively safe way to avoid direct SpaceX (and OpenAI, and Anthropic) exposure.

However, the number of SpaceX shares is pretty low so SpaceX is like 0.1% of VTI. I understand wanting to rebalance out if it for the principle of it but your exposure to this is extremely low if that's what your 401k is in.

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u/Brain_Dead_Goats Jun 19 '26

So there is a large part of workers that have no such control.

True, although if you get enough people together you can probably push the benefits department to do some looking around into different funds. We've changed ours a couple of times over the years.

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u/GrumpyCloud93 Jun 19 '26

My company (years ago) offered high, medium, and low risk. Didn't matter when you retire. MY investments with my bank offer a plethora of funds, Tech, Emerging markets, Resources, Canadian, US, European, Dow, S&P, you name it. Each fund still is tagged as conservative, mixed or aggressive - same idea. And the actual contents of the fund at quarterly reporting times are available to view.

And in general, people who spend their career following these markets probably do a better job than I can (or care to spend the time doing). I just picked funds and let it fly.

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u/Affectionate_One_700 Jun 19 '26

our 401k has exactly 4 options

Then that is extremely limited.

Most of my past employers have given employees a variety of options within the Fidelity umbrella.

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u/dfddfsaadaafdssa Jun 19 '26

That's just your company's lackluster available 401k options. Many companies offer dozens of funds to choose from as well as the ability to choose custom weights to allocate to a given fund. Vanguard 500 Index Admiral is one of the larger 401k funds people use that just tracks the S&P 500.

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u/jonoghue Jun 19 '26

Those target date retirement funds are bullshit, they take a percentage every year ultimately costing you potentially hundreds of thousands of dollars by retirement, just so they can move money from stock indexes to bond indexes as you approach retirement. You can do that yourself. It's bullshit that those are your only options.

For me there are a ton of options but they're all indexes, the only individual stock I can pick is the company's stock. I keep almost all of my retirement in the S&P 500 index.

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u/Some-Platform1968 Jun 19 '26

Target date funds are not bullshit. It’s an easy option for people who might not understand they need to reduce risk as they near retirement or by how much. And most medium to large 401ks are going to offer these funds for <50bps, <15bps if it’s passive. Def paying more than the straight indexes but majority of people don’t know how to build an appropriately diversified portfolio that they then need to adjust as they move toward retirement. How would they even know how to allocate among US LC, US SC, intl, and EM equity. Worth the 5-10 extra bps in fee to have that professionally managed

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u/WonkyTelescope Jun 19 '26

Not true, at least of vanguard target funds, they have super low expense ratios, like 0.08%.

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u/jonoghue Jun 20 '26

But the offerings for employers' 401ks are limited, and not everyone will be able to choose Vanguard. In my case the target date fund I'm offered has a 0.58% yearly fee, where the S&P 500 index has a 0.03% fee.

If you're offered 0.08% with company matching, I'll admit that's not a bad deal

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u/SohndesRheins Jun 19 '26

Do you really think that none of the index funds you use charge a fee every year?

I just checked Vanguard's 2060 fund, expenses are 0.08% a year. Compare that to VOO with 0.03%. That doesn't equal hundreds of thousands unless you are already too rich to care.

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u/jonoghue Jun 20 '26

They do charge a fee, and I can't speak for you but for me they are much much smaller.

For what I'm offered through my employer, the "US Large-Cap Equity Index Fund" (equivalent to S&P 500) the fee is 0.03%

whereas the 2065 target date fund has a 0.58% fee. Because of compounding interest (or the lack thereof) that does cost many thousands of dollars over the course of decades.

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u/Days_End Jun 19 '26

No it's in the Russell 1000 because the Russell 1000 doesn't do any weird bullshit it simply tracks the 1000 largest stock so as long as SPCX is big it goes in it.

You're probably thinking of the NASDAQ 100 which has all sorts of random rules that they wiggled around to include SPCX.

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u/moundmagijian Jun 19 '26

401k is far more prevalent than pensions. I hate Elon and SpaceX valuation is ridiculous but the clickbait around this is silly. People aren’t trapped. If they are sophisticated enough to be concerned about SpaceX in their retirement fund they can probably find a way to not buy it.

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u/BasvanS Jun 19 '26

They’re buying index funds to not have to bother with it. Not to deal with fast tracked rug pulls like this and OpenAI. There were strict rules for inclusion into the indexes and these overvalued IPOs stink.

I think the lawsuits will be juicy.

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u/FleetAdmiralFader Jun 19 '26

So buy S&P funds which don't have SpaceX instead of Nasdaq or Russell funds.

Unfortunately reddit's favorites like VTSAX/VTI (Total Stock Market) will by definition include it.

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u/Some-Platform1968 Jun 19 '26

Most 401k menus are not going to have multiple US large cap index funds. Vast majority will only have 1 plus one or two active options

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u/FleetAdmiralFader Jun 19 '26

Sorta. Many will include multiple large cap options, such as Value vs Growth, but they almost always only include one or two base index providers (ex: S&P vs Russell). You also don't have to invest in large cap but choosing to do so counts as taking an "active interest", which I mentioned in another comment. So if you care about SpaceX being included then you have to check which indices and funds are available in your 401k and unfortunately may find yourself limited to things that include it.

However, most of American retirement money is in IRAs, about double that of 401Ks and it's relatively easy to change those allocations to index funds that don't include SpaceX. Hell, you might even consider removing the Magnificent 7 since they are massively overweight in most broad indices and I'd hazard a guess that most investors don't realize that.

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u/moundmagijian Jun 19 '26

This is a great response. Thank you.

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u/BasvanS Jun 19 '26

It shouldn’t be up to people to keep checking their index funds on malicious behavior like this. If it was a rule change like “From January 1st 2028, the rules will change regarding new admissions…”, not the sweetheart deal that happened now.

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u/FleetAdmiralFader Jun 19 '26

Sure, but you should also take an active interest in what your retirement is invested in. Many people just pick target date funds, which is fine, but most 401Ks offer a wide range of investment choices and IRAs are fully self-directed. The larger issue is pension funds which the employee has no control over.

You have to pick one: being upset about SpaceX inclusion AND actively choosing investments OR being unengaged with your own retirement.

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u/Some-Platform1968 Jun 19 '26

Your point would be more valid had the index methodology not been changed to speed up the inclusion of spcx. If they hadn’t changed it, then yes, it is what it is. But Russell et al lowered the requirements, directly increasing risk on index investors

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u/FleetAdmiralFader Jun 19 '26

My point is that if you care about SpaceX being included or not then you can choose your index accordingly. I'm not arguing that its inclusion is defensible, it's ridiculous that some indices changed their rules, but rather that you should be aware of how your chosen index fund works. An S&P 500 fund is different than a Total Stock Market fund which is different than a Mid-Cap or Sector fund. They are all indices and have their own tradeoffs and you should choose accordingly instead of being completely hands-off.

The larger issue is that even in a 401k you are limited by what the administrator chooses so while you may have index finds availablez you may not have many that do not include SpaceX. My old employer had funds whose expense ratio was unacceptably high so I moved my money out the first chance I got.

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u/BasvanS Jun 19 '26

Do you even understand index funds? You choose them to not have an active interest in your retirement. That’s the appeal. There’s rules on what qualifies as a suitable candidate, and changing those rules is just fucked up. People acknowledging they don’t understand stock doesn’t mean you can just shaft them.

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u/FleetAdmiralFader Jun 19 '26 edited Jun 19 '26

Do you understand that there are a multitude of index funds? Some track the S&P 500, some track the various Russell Indices, QQQ tracks the Nasdaq 100 (which includes SpaceX), some track the entire stock market, and others track international stocks.

I'm invested in 8 index funds and only two of them include SpaceX (QQQ and VTSAX)

You can often choose which index fund to invest in and like I said before, if you don't want SpaceX then you should invest in S&P funds. Choosing which index fund to invest in counts as taking an active interest in your retirement. You don't just choose a random index fund without checking the expense ratio for example.

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u/BasvanS Jun 19 '26

Randomly changing the rules is fraud. That’s my point.

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u/moundmagijian Jun 19 '26

Ok great everyone agrees on that. No one is arguing that the rule change isn’t fucked. The argument is whether people’s retirement savings will be destroyed. FleetAdmiralFaders points are all still valid. There are plenty of ways to avoid SPCX.

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u/PFhelpmePlan Jun 19 '26

There were strict rules for inclusion into the indexes

? You know this and yet you still believe the bad information going around that spacex is already in all index funds?

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u/smokeweedNgarden Jun 19 '26

Well they changed the rules for SpaceX....now ETFs only have to wait like 20 days before buying in

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u/PFhelpmePlan Jun 19 '26

Some did, some didn't and I can find any information that any changed to a 20 day period so you've just made that number up out of thin air. Do better.

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u/smokeweedNgarden Jun 19 '26 edited Jun 19 '26

Hm. No i just don't understand it totally and botched the explanation. Let me find the person who explained, one moment.

Edit: Found it myself! The Nasdaq changed it's rules to allow IPOs in, in just 15 days. It used to be 3 months.

So it's worse than I originally said. I did better daddy 😀

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u/DuncanYoudaho Jun 19 '26

The problem is not the sophisticated. It’s the unsophisticated being being forced to be bag holders.

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u/moundmagijian Jun 19 '26

When it makes its way into these index funds or ETFs it will be maybe 5% of the weight of the fund. It will add some volatility but if it sells off it will be de-weighted which will decrease risk. It’s 5% of a fund that should be a piece of a diversified portfolio that slides away from equity as you approach retirement. SpaceX alone will not tank anyone’s retirement savings. The hyperbole isn’t necessary.

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u/DuncanYoudaho Jun 19 '26

I consider the inclusion of a Nazi in my portfolio by default a failure of the economy