If banks are certified and backed by the government, then why during financial crisis do people lose out on their retirement investments?
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When the government backs a bank via the FDIC, they are saying “If you have $50,000 in your account, we will make sure you are able to get your $50,000 even if the bank goes bankrupt. You will get exactly what you own, no more, no less.”
When you have a 401K, the account may have an equivalent value in dollars listed, but what you actually own are shares in companies. During a crisis, there is a risk that a company will go bankrupt or lose significant value. The government will also make sure you have access to exactly what you own, even if what you own is ten thousand shares of a bankrupt company.
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