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  • raisindotraisindot Posts: 1,294 ✭✭✭
    Trust me, Congress won't change anything with 401k plans. Considering that most Americans are completely ignorant regarding saving for retirement, it makes no sense to take away one of the biggest incentives for people to save for retirement by making employer contributions taxable or removing the tax benefits of saving. What's more likely to happen--and something I would support--is getting rid of the Traditional IRA, which allows people to deduct annual contributions (and pay taxes upon withdrawals), and make the Roth IRA, which can only be funded through after-tax contributions (and whose distributions are tax-free if taken at retirement). I'd also support dramatically raising tax rates on short-term capital gains while keeping long-term rates as they are. That would effectively remove the benefits of day trading, encourage long-term investing in companies rather than harvesting of short term gains, and put the hedge funds and other market gamblers out of business.
  • GoldyGoldy Posts: 1,638 ✭✭
    Very interesting. I dont think I would have a problem with it changing from a no tax to a low tax if it would help solve the issues. But would it really help solve the issues?
  • phobicsquirrelphobicsquirrel Posts: 7,347 ✭✭✭
    raisindot:
    Trust me, Congress won't change anything with 401k plans. Considering that most Americans are completely ignorant regarding saving for retirement, it makes no sense to take away one of the biggest incentives for people to save for retirement by making employer contributions taxable or removing the tax benefits of saving. What's more likely to happen--and something I would support--is getting rid of the Traditional IRA, which allows people to deduct annual contributions (and pay taxes upon withdrawals), and make the Roth IRA, which can only be funded through after-tax contributions (and whose distributions are tax-free if taken at retirement). I'd also support dramatically raising tax rates on short-term capital gains while keeping long-term rates as they are. That would effectively remove the benefits of day trading, encourage long-term investing in companies rather than harvesting of short term gains, and put the hedge funds and other market gamblers out of business.
    401k's are popular no doubt. But if the company you work for goes broke you are SCREWED! Happened to my dad and one of my ex co-workers who had to get another job after he lost almost half of his 401k and my dad lost a little more than half. Both times it was because of their companies going broke and the top execs making out like bandits while the workers got it in the butt. I think the best way would be for the government to offer a type of 401k (like SS) couldn't be mucked with by congress. That way it would be secure.

    I do agree that capital gains should be taxed more though I think it should be progressively done and not short term. I use to have to work a lot of overtime to get decent checks though I got taxed more. So it makes sense to me that people getting thousands of dollars a day or an hour due to their capital gains but not really working for it should be taxed higher than "income".
  • phobicsquirrelphobicsquirrel Posts: 7,347 ✭✭✭
    btw, I don't have a 401k, my wife does but her company does a great match per dollar. I thought about it but I decided against it.
  • raisindotraisindot Posts: 1,294 ✭✭✭
    phobicsquirrel:
    401k's are popular no doubt. But if the company you work for goes broke you are SCREWED! Happened to my dad and one of my ex co-workers who had to get another job after he lost almost half of his 401k and my dad lost a little more than half. Both times it was because of their companies going broke and the top execs making out like bandits while the workers got it in the butt. I think the best way would be for the government to offer a type of 401k (like SS) couldn't be mucked with by congress. That way it would be secure.

    I do agree that capital gains should be taxed more though I think it should be progressively done and not short term. I use to have to work a lot of overtime to get decent checks though I got taxed more. So it makes sense to me that people getting thousands of dollars a day or an hour due to their capital gains but not really working for it should be taxed higher than "income".
    Ummm, a few points, Most likely your father and his co-workers lost money in their defined benefit plans, which are funded solely by companies, not employees. This can happen and often does when companies go belly up because the company can no longer fund the future obligations.

    401k plans are completely different. Some employers do contribute, but the assets in a 401k plan are no considered to be part of the company's assets--those assets belong to the employees who funded them with their own contributions. Now, since many plans have vesting schedules, it is possible for a company to contribute to the plan but when the employee may not be vested in the employer's contributions if the plan fails. But all of the money employees contribute it completely safe, since it is custodied with a trustee that prevents it from being stolen by a company. Now, if your dad had invested a lot of money in his company's stock plan, and the stock went belly up, then, yes, he would have lost a lot of money. Which is why a lot of attention is being paid to the way participants participate in a plan to make sure they don't invest too much in company stock.

    I'm not a huge fan of a government-created and run 401(k) plan option, since, overall, the private sector does a pretty good job of offering good 401k plan options, partly because 401k plans are governed pretty tightly by Department of Labor regulations. Unlike DB plans, you never hear about 401k plans failing--you only hear about participants losing money because of the market crashes. But that has nothing to do with the plan--that has to do with the way the markets work and investors invest.
  • raisindotraisindot Posts: 1,294 ✭✭✭
    phobicsquirrel:
    btw, I don't have a 401k, my wife does but her company does a great match per dollar. I thought about it but I decided against it.
    Do you mean that your company offers a 401k but you decided not to participate? Is there a particular reason, if you don't mind me asking? I'm in the investment business (not an advisor, and I don't sell plans), and I'm always interesting in knowing why people do or don't participate in a plan.
  • GoldyGoldy Posts: 1,638 ✭✭
    raisindot:
    phobicsquirrel:
    401k's are popular no doubt. But if the company you work for goes broke you are SCREWED! Happened to my dad and one of my ex co-workers who had to get another job after he lost almost half of his 401k and my dad lost a little more than half. Both times it was because of their companies going broke and the top execs making out like bandits while the workers got it in the butt. I think the best way would be for the government to offer a type of 401k (like SS) couldn't be mucked with by congress. That way it would be secure.

    I do agree that capital gains should be taxed more though I think it should be progressively done and not short term. I use to have to work a lot of overtime to get decent checks though I got taxed more. So it makes sense to me that people getting thousands of dollars a day or an hour due to their capital gains but not really working for it should be taxed higher than "income".
    Ummm, a few points, Most likely your father and his co-workers lost money in their defined benefit plans, which are funded solely by companies, not employees. This can happen and often does when companies go belly up because the company can no longer fund the future obligations.

    401k plans are completely different. Some employers do contribute, but the assets in a 401k plan are no considered to be part of the company's assets--those assets belong to the employees who funded them with their own contributions. Now, since many plans have vesting schedules, it is possible for a company to contribute to the plan but when the employee may not be vested in the employer's contributions if the plan fails. But all of the money employees contribute it completely safe, since it is custodied with a trustee that prevents it from being stolen by a company. Now, if your dad had invested a lot of money in his company's stock plan, and the stock went belly up, then, yes, he would have lost a lot of money. Which is why a lot of attention is being paid to the way participants participate in a plan to make sure they don't invest too much in company stock.

    I'm not a huge fan of a government-created and run 401(k) plan option, since, overall, the private sector does a pretty good job of offering good 401k plan options, partly because 401k plans are governed pretty tightly by Department of Labor regulations. Unlike DB plans, you never hear about 401k plans failing--you only hear about participants losing money because of the market crashes. But that has nothing to do with the plan--that has to do with the way the markets work and investors invest.
    I agree. The only way I could see your father losing value in the 401k is if he had a portion of it invested in company stock. Some companies require that a portion be kept in company stock.
  • raisindotraisindot Posts: 1,294 ✭✭✭
    Goldy:
    Some companies require that a portion be kept in company stock.
    Actually, that's not true. In fact, no plan can legally require employees to invest in anything (other than a default choice for participants who don't decide on their own), because not every investment is suitable for every kind of investor. Company stock, for example, may be too risky for retirees, and plans are required to act in the best interests of employees, which means they must offer a variety of investment options at affordable prices that represent a range of risk/return characteristics. Company stock may be one of the options, but it's never the only option. Any company that either requires or pressures participants to invest in company stock is acting in a way that could subject them to participant lawsuits for violating their fiduciary responsibilities.
  • I think there is nothing wrong with ending the tax exemption for 401ks, anyone with the luxury of a 401k is a moderately high income earner compared to everyone else. Democrats want to make everyone dependent on social security for retirement, because that forces higher income earners to bare a bigger tax burden for providing retirement money to everyone else.
  • beatnicbeatnic Posts: 4,133
    roxannedetierro:
    I think there is nothing wrong with ending the tax exemption for 401ks, anyone with the luxury of a 401k is a moderately high income earner compared to everyone else. Democrats want to make everyone dependent on social security for retirement, because that forces higher income earners to bare a bigger tax burden for providing retirement money to everyone else.
    Welcome to the forum. Your first post on the board is political? Not cigar-centric?
  • kuzi16kuzi16 Posts: 14,633 ✭✭✭✭
    roxannedetierro:
    I think there is nothing wrong with ending the tax exemption for 401ks, anyone with the luxury of a 401k is a moderately high income earner compared to everyone else. Democrats want to make everyone dependent on social security for retirement, because that forces higher income earners to bare a bigger tax burden for providing retirement money to everyone else.
    it is very easy to say that it is ok to raise taxes on someone when that someone is not you.
  • 0patience0patience Posts: 10,665 ✭✭✭✭✭
    roxannedetierro:
    I think there is nothing wrong with ending the tax exemption for 401ks, anyone with the luxury of a 401k is a moderately high income earner compared to everyone else. Democrats want to make everyone dependent on social security for retirement, because that forces higher income earners to bare a bigger tax burden for providing retirement money to everyone else.
    Uhm..............What??
    Anyone with the luxury of a 401k???
    I'm sorry, but are you freakin serious?

    How close are you to retirement? A young pup?
    When you're in your 50s, your attitude about that will change.
    People who have 401k, IRAs or other retirement accounts are NOT high income earners compared to everyone else, they are responsible, frugal and probably going without, so that they may have something in their retirement.

    This type of post is exactly what is wrong with the mentality of this country. Because someone has something more than someone else, those people want everyone to be as bad off as them, because they aren't getting their "fair share".

    When you've worked 35 years and still have 15 years before you may be financially sound enough with your retirement to retire with barely enough to get by with, then let us know what you think of having a 401k or IRA. And how much you think the govt should be taxing your retirement.

    Oh and I'm curious where you think the money comes from for social security?
    WE and our employers pay into social security. So where a lot of you get the idea that it's welfare is beyond me.
    I and my employers have paid into social security for 36 years. By the time I can collect social security, I will have paid into it for at least 50 years. Do I think I am entitled to some of that money??
    Damn right I am.
    Do you ever look at your Social security statement that they send you every year?
    You should. It is very enlightening.

    Oh yeah, you do realize that people are already taxed on 401k & IRAs when they start collecting on that money when they retire??
    So you think it is necessary to double tax? Tax them when they put in and tax them when they take the money out.

    Awesome!
    In Fumo Pax
    Money can't buy happiness, but it can buy cigars and that's close enough.

    Wylaff said:
    Atmospheric pressure and crap.
  • kaspera79kaspera79 Posts: 7,257 ✭✭✭
    Opatience, thank you for responding in almost the same way I would have. I would add that I choose to contribute to a retirement plan at the expense of Not taking vacations, driving my cars for 10+ years, as well as living in a rather frugal manner. My life is far from one of luxury.
  • Bobbo2009Bobbo2009 Posts: 915 ✭✭✭
    0patience:
    roxannedetierro:
    I think there is nothing wrong with ending the tax exemption for 401ks, anyone with the luxury of a 401k is a moderately high income earner compared to everyone else. Democrats want to make everyone dependent on social security for retirement, because that forces higher income earners to bare a bigger tax burden for providing retirement money to everyone else.
    Uhm..............What??
    Anyone with the luxury of a 401k???
    I'm sorry, but are you freakin serious?

    How close are you to retirement? A young pup?
    When you're in your 50s, your attitude about that will change.
    People who have 401k, IRAs or other retirement accounts are NOT high income earners compared to everyone else, they are responsible, frugal and probably going without, so that they may have something in their retirement.

    This type of post is exactly what is wrong with the mentality of this country. Because someone has something more than someone else, those people want everyone to be as bad off as them, because they aren't getting their "fair share".

    When you've worked 35 years and still have 15 years before you may be financially sound enough with your retirement to retire with barely enough to get by with, then let us know what you think of having a 401k or IRA. And how much you think the govt should be taxing your retirement.

    Oh and I'm curious where you think the money comes from for social security?
    WE and out employers pay into social security. So were a lot of you get the idea that it's welfare is beyond me.
    I and my employers have paid into social security for 36 years. By the time I can collect social security, I will have paid into it for at least 50 years. Do I think I am entitled to some of that money??
    Damn right I am.
    Do you ever look at your Social security statement that they send you every year?
    You should. It is very enlightening.

    Oh yeah, you do realize that people are already taxed on 401k & IRAs when they start collecting on that money when they retire??
    So you think it is necessary to double tax? Tax them when they put in and tax them when they take the money out.

    Awesome!
    What O said!!!
  • Roberto99Roberto99 Posts: 1,077
    +1000
  • Roberto99Roberto99 Posts: 1,077
    phobicsquirrel:
    I think the best way would be for the government to offer a type of 401k (like SS) couldn't be mucked with by congress. That way it would be secure.
    Unfortunately congress has a terrible track record mucking around with SS.
  • raisindotraisindot Posts: 1,294 ✭✭✭
    roxannedetierro:
    I think there is nothing wrong with ending the tax exemption for 401ks, anyone with the luxury of a 401k is a moderately high income earner compared to everyone else. Democrats want to make everyone dependent on social security for retirement, because that forces higher income earners to bare a bigger tax burden for providing retirement money to everyone else.
    On the contrary. The 401(k) plan is absolutely the best retirement saving options for even the lowest paid workers it offers a way for them to automatically contribute to their own retirement (and lower their current overall tax rate) through payroll deductions that they'll likely never notice. These works also benefit from companies that much deductions and from the tax-deferred status of 401ks, so they don't get hit with capital gains taxes every year. In reality, the highest paid workers tend to glean the fewest tax benefits from a 401k because their annual contributions are capped, and if they're in a higher tax bracket when they retire they'll pay a higher tax rate when they start taking mandatory distributions. Also, the highest paid employees tend to receive other kinds of benefits that the 'rank and file' don't, such as deferred compensation plans that end up being worth far more than their 401k plan assets. There's not a single Democrat or Republican who believes that Social Security alone can fund Americans' retirement needs, and Democrats traditionally have been the more vocal advocates of tougher regulations on companies to make sure that 401k plans are protected against the kind of "pension robbing" that many companies did to their traditional defined benefit plans.
  • Roberto99Roberto99 Posts: 1,077
    raisindot:
    roxannedetierro:
    I think there is nothing wrong with ending the tax exemption for 401ks, anyone with the luxury of a 401k is a moderately high income earner compared to everyone else. Democrats want to make everyone dependent on social security for retirement, because that forces higher income earners to bare a bigger tax burden for providing retirement money to everyone else.
    On the contrary. The 401(k) plan is absolutely the best retirement saving options for even the lowest paid workers it offers a way for them to automatically contribute to their own retirement (and lower their current overall tax rate) through payroll deductions that they'll likely never notice. These works also benefit from companies that much deductions and from the tax-deferred status of 401ks, so they don't get hit with capital gains taxes every year. In reality, the highest paid workers tend to glean the fewest tax benefits from a 401k because their annual contributions are capped, and if they're in a higher tax bracket when they retire they'll pay a higher tax rate when they start taking mandatory distributions. Also, the highest paid employees tend to receive other kinds of benefits that the 'rank and file' don't, such as deferred compensation plans that end up being worth far more than their 401k plan assets. There's not a single Democrat or Republican who believes that Social Security alone can fund Americans' retirement needs, and Democrats traditionally have been the more vocal advocates of tougher regulations on companies to make sure that 401k plans are protected against the kind of "pension robbing" that many companies did to their traditional defined benefit plans.
    A friend of mine and I had a conversation about this general topic several years ago. He was somewhat tongue in cheek but he said that the government will pay out less social security to those who have scrimped and saved with 401k plans and the like. I told him no way that can't possibly happen. He replied that the gov't can find a way to do just about anything it wants. Several years later I was speaking with an attorney about the same issue. He said that he would be more than willing to give up part of his social security if need be. I guess that must be ok for the uber rich, but for the rest of us schmoes... my opinion is that if he wants to give his social security up for someone else ok, but it scares the crap out of me that the gov't could legislate this type of scheme against people who planned for their retirement.
  • raisindotraisindot Posts: 1,294 ✭✭✭
    Roberto99:
    A friend of mine and I had a conversation about this general topic several years ago. He was somewhat tongue in cheek but he said that the government will pay out less social security to those who have scrimped and saved with 401k plans and the like. I told him no way that can't possibly happen. He replied that the gov't can find a way to do just about anything it wants. Several years later I was speaking with an attorney about the same issue. He said that he would be more than willing to give up part of his social security if need be. I guess that must be ok for the uber rich, but for the rest of us schmoes... my opinion is that if he wants to give his social security up for someone else ok, but it scares the crap out of me that the gov't could legislate this type of scheme against people who planned for their retirement.
    Your friend is absolutely wrong. There is no correlation at all between the Social Security benefits you earn through the SS taxes you pay over the years and how much you save in a 401k plan. If this were so, the government would have to calculate different individually 401k-adjusted SS payouts for tens of millions of Americans every year, which even this government doesn't have the capacity to do. What is true is that if you are receiving Social Security benefits and your total income (including part-time work and distributions from 401k plans and other retirement and non-retirement income sources) pushes you into a higher tax bracket, you may end up paying more taxes on this income. Another reason why the very rich benefit less from 401k plans than lower-income people whose annual income will probably be less when they retire. Congress may choose to adjust SS benefits by raising the retirement age or adjusting benefit increases to more realistic increases, but there's absolutely no correlation between the SS benefits you receive and how much your 401k is ultimately worth. Anyone who is working and doesn't participate in a 401k plan is seriously jeopardizing their future retirement security.
  • stephen_hannibalstephen_hannibal Posts: 4,317
    It depends on the individual workers place in life.

    Person making $9 an hour has a lot more to risk making minimum contribution than a person making say $40 an hour.

    The benefits are the same for both but the sacrifice is not.

    And this isn't even taking into account being vested with an employer.
    Liquidity and penalization for early withdrawal.
    The list can go on...
    There's a slew of reasons that it may not benefit someone to have a 401k

  • raisindotraisindot Posts: 1,294 ✭✭✭
    stephen_hannibal:
    It depends on the individual workers place in life.

    Person making $9 an hour has a lot more to risk making minimum contribution than a person making say $40 an hour.

    The benefits are the same for both but the sacrifice is not.

    And this isn't even taking into account being vested with an employer.
    Liquidity and penalization for early withdrawal.
    The list can go on...
    There's a slew of reasons that it may not benefit someone to have a 401k

    There's far more risk for a person making $9 an hour not to save for retirement. Let's say that person makes $360 a week (40 hours * 9). Taking 3% of the paycheck per week amounts to $11 per week--roughly the cost of 3 Starbucks coffees, a six pack of expensive beer, 3-4 fast food meals, a pack and a half of cigarettes, a handful of decent quality cigars, the cost of a movie. If the person sacrifices some of these nonessential expenses, they can invest $572 a year, and that money is taken out of his salary on a pre-tax basis, lowering his taxes, which may result in a higher refund of their payroll taxes. Admittedly, this isn't much, but if the company matches 50 cents for every dollar, then that's a total of $858 yer year. If it doesn't grow at all, it'd be worth $34,320 (in today's dollars) 40 years from now. But assuming a very modest rate of return, with a mix of very good years, bad years, and even years of growth, it could grow to $100,000 or more at retirement. That's certainly a lot better than not having this nest egg at all. Of course, there will always be some people who are stretched so thin that they can't afford to participate. But for most workers, sacrificing a few luxury items today to save for the future is the cheapest insurance you'll ever afford. I can say this from experience, because I was making $5 an hour at my first full-time job many years ago and I got into the 401k plan right away. As much as I thought it would hamper my lifestyle, it didn't--I adjusted my lifestyle around the lower payscale, as most people end up doing.
  • jthanatosjthanatos Posts: 1,571 ✭✭✭
    raisindot:
    stephen_hannibal:
    It depends on the individual workers place in life.

    Person making $9 an hour has a lot more to risk making minimum contribution than a person making say $40 an hour.

    The benefits are the same for both but the sacrifice is not.

    And this isn't even taking into account being vested with an employer.
    Liquidity and penalization for early withdrawal.
    The list can go on...
    There's a slew of reasons that it may not benefit someone to have a 401k

    There's far more risk for a person making $9 an hour not to save for retirement. Let's say that person makes $360 a week (40 hours * 9). Taking 3% of the paycheck per week amounts to $11 per week--roughly the cost of 3 Starbucks coffees, a six pack of expensive beer, 3-4 fast food meals, a pack and a half of cigarettes, a handful of decent quality cigars, the cost of a movie. If the person sacrifices some of these nonessential expenses, they can invest $572 a year, and that money is taken out of his salary on a pre-tax basis, lowering his taxes, which may result in a higher refund of their payroll taxes. Admittedly, this isn't much, but if the company matches 50 cents for every dollar, then that's a total of $858 yer year. If it doesn't grow at all, it'd be worth $34,320 (in today's dollars) 40 years from now. But assuming a very modest rate of return, with a mix of very good years, bad years, and even years of growth, it could grow to $100,000 or more at retirement. That's certainly a lot better than not having this nest egg at all. Of course, there will always be some people who are stretched so thin that they can't afford to participate. But for most workers, sacrificing a few luxury items today to save for the future is the cheapest insurance you'll ever afford. I can say this from experience, because I was making $5 an hour at my first full-time job many years ago and I got into the 401k plan right away. As much as I thought it would hamper my lifestyle, it didn't--I adjusted my lifestyle around the lower payscale, as most people end up doing.
    +1

    If you aren't at the very least getting all the match money your employer will give on a 401k, you are essentially taxing yourself out of free money. Almost no one spends their money only on essentials, and with it being removed before a person even cashs their check, very few will even notice the pittance that is taken.
  • fla-gypsyfla-gypsy Posts: 3,023 ✭✭
    My company is only matching .10 on the dollar but that is an automatic 10% return and I get to direct all the investments from a wide choice of funds. I contribute the max they will match without fail and the govt. needs to keep their filthy hands off of it!
  • Roberto99Roberto99 Posts: 1,077
    raisindot:
    Roberto99:
    A friend of mine and I had a conversation about this general topic several years ago. He was somewhat tongue in cheek but he said that the government will pay out less social security to those who have scrimped and saved with 401k plans and the like. I told him no way that can't possibly happen. He replied that the gov't can find a way to do just about anything it wants. Several years later I was speaking with an attorney about the same issue. He said that he would be more than willing to give up part of his social security if need be. I guess that must be ok for the uber rich, but for the rest of us schmoes... my opinion is that if he wants to give his social security up for someone else ok, but it scares the crap out of me that the gov't could legislate this type of scheme against people who planned for their retirement.
    Your friend is absolutely wrong. There is no correlation at all between the Social Security benefits you earn through the SS taxes you pay over the years and how much you save in a 401k plan. If this were so, the government would have to calculate different individually 401k-adjusted SS payouts for tens of millions of Americans every year, which even this government doesn't have the capacity to do. What is true is that if you are receiving Social Security benefits and your total income (including part-time work and distributions from 401k plans and other retirement and non-retirement income sources) pushes you into a higher tax bracket, you may end up paying more taxes on this income. Another reason why the very rich benefit less from 401k plans than lower-income people whose annual income will probably be less when they retire. Congress may choose to adjust SS benefits by raising the retirement age or adjusting benefit increases to more realistic increases, but there's absolutely no correlation between the SS benefits you receive and how much your 401k is ultimately worth. Anyone who is working and doesn't participate in a 401k plan is seriously jeopardizing their future retirement security.
    My friend was commenting on a possible future not the current situation.
  • ENFIDLENFIDL Posts: 5,836
    Matt Damon!!!
  • raisindotraisindot Posts: 1,294 ✭✭✭
    Roberto99:
    My friend was commenting on a possible future not the current situation.
    Speculations of the uninformed should never be used as the basis for making critical decisions today. I could predict that in the future a meteor will hit Earth and thus saving for a 401k isn't worth the time. I could predict that the government is someday going to tax the rich at 100% and use that money to give everyone a secure retirement so we won't need 401k plans. I could predict that the Chinese will invade the US at some point, enslaving all of us and taking away our retirement money. Any of these scenarios are far more likely to happen than the government creating customized SS payouts for people based on what they've saved on their own.
  • Roberto99Roberto99 Posts: 1,077
    ENFIDL:
    Matt Damon!!!
    Ha,Ha!! Hey brother haven't seen you around here lately. No, it's not Matt, though he does look a little like him
  • Roberto99Roberto99 Posts: 1,077
    raisindot:
    Roberto99:
    My friend was commenting on a possible future not the current situation.
    Speculations of the uninformed should never be used as the basis for making critical decisions today. I could predict that in the future a meteor will hit Earth and thus saving for a 401k isn't worth the time. I could predict that the government is someday going to tax the rich at 100% and use that money to give everyone a secure retirement so we won't need 401k plans. I could predict that the Chinese will invade the US at some point, enslaving all of us and taking away our retirement money. Any of these scenarios are far more likely to happen than the government creating customized SS payouts for people based on what they've saved on their own.
    I'm not sure if you are just on a soapbox about 401k savings or you are directing your comments at me. If it is the latter, it's unnecessary because I am a small business employer and the plan sponsor of a sIRA. I've been putting my money into retirement accounts for over 20 years. At a minimum I believe that if such a plan is available at work, employees should at least take advantage of the employer matching. It's like getting a raise the way I look at it.

    I sure hope your crystal ball is right that the govt won't likely adjust SS payments based on wealth but it's not uninformed speculation to suggest such a thing could happen, especially when the SS benefit fund goes to zero. For example I would have never imagined that drug addiction patients, some who have never paid a penny into ss, get social security benefits. I don't believe that was in the original plan for ss.
  • raisindotraisindot Posts: 1,294 ✭✭✭
    My comment wasn't directed at you, but more in general at the dangers of basing important life decisions on speculations of what might or might not happen someday. I personally do not believe that the SS fund will ever go to zero. There is such a high level of expectation among Americans that eventually both parties will agree on a plan to keep it solvent. This will probably involve either raising the retirement age, raising SS taxes, adjusting increases to index to something other than inflation, or reducing or eliminating or putting a time limit on certain kinds of benefits (such as disability or survivorship benefits). BTW, if it makes you feel better, you cannot get social security disability benefits of any kind unless you have paid something into the system, as measured by SS credits. For example, if you're under age 24, you must have earned at least six SS credits (each credit is valued at $1,130 of earnings) over the past three years to qualify; the minimum number of credits rises over time. But, yes, there is plenty of abuse of this system. The wife of someone I know is currently receiving SS disability benefits due to chronic pain related to a so-called neurological disorder. This same woman now teaches spinning classes and gets paid under the table. It would be nice if there were a way to 'drop a dime' on such people.
  • jthanatosjthanatos Posts: 1,571 ✭✭✭
    raisindot:
    But, yes, there is plenty of abuse of this system. The wife of someone I know is currently receiving SS disability benefits due to chronic pain related to a so-called neurological disorder. This same woman now teaches spinning classes and gets paid under the table. It would be nice if there were a way to 'drop a dime' on such people.
    SSA fraud reporting
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