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The Champions of the 401(k) Lament the Revolution They Started (Teresa Ghilarducci, again)
http://www.wsj.com/articles/the-champions-of-the-401-k-lament-the-revolution-they-started-1483382348 ^ | January 2, 2017 | Timothy W. Martin

Posted on 01/02/2017 11:45:22 AM PST by abb

snip

Economist Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis, says she offered assurances at union board meetings and congressional hearings that employees would have enough to retire if they set aside just 3% of their paychecks in a 401(k). That assumed investments would rise by 7% a year.

snip

Ms. Ghilarducci wants to ditch the 401(k) altogether. She and Blackstone Group President Tony James are recommending a mandated, government-run savings system that would be administered by the Social Security Administration and managed by investment professionals. While both are Democrats, they believe their solution has bipartisan appeal.

She says she has already reached out to President-elect Donald Trump’s advisers to float the plan.

snip

(Excerpt) Read more at wsj.com ...


TOPICS: Business/Economy; Extended News; Government; News/Current Events
KEYWORDS: 401k; ira; socialsecurity; teresaghilarducci
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To: antidisestablishment

Oh, is your account tax deferred income? Thanks for sharing.


61 posted on 01/02/2017 1:33:31 PM PST by Neoliberalnot (Marxism works well only with the uneducated and the unarmed)
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To: abb

CalPERS on steroids. Hell no!!!


62 posted on 01/02/2017 1:33:57 PM PST by Paine in the Neck ( Socialism consumes EVERYTHING!)
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To: abb

Duck these fidiots.


63 posted on 01/02/2017 1:33:59 PM PST by Constitutional Patriot (Socialism is the cancer of humanity.)
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To: abb

One of the biggest problems I’ve seen is the tendency of some to see their 401k/IRA as a Christmas/Vacation Club. Every year they would remove all the vested funds to buy Christmas presents or fund their vacation plans.


64 posted on 01/02/2017 1:34:27 PM PST by DugwayDuke ("A man hears what he wants to hear and disregards the rest")
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To: antidisestablishment

Look it up. The accrued profits are tax deferred until retirement when income usually drops.


65 posted on 01/02/2017 1:35:07 PM PST by Neoliberalnot (Marxism works well only with the uneducated and the unarmed)
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To: dgbrown

Just be patient and weather the squalls (which I can never do!)

66 posted on 01/02/2017 1:42:36 PM PST by ProtectOurFreedom
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To: freedumb2003

“are recommending a mandated, government-run savings system that would be administered by the Social Security Administration and managed by investment professionals.”


It already exists: Social Security.

We are forced to contribute, and if we die the money goes to others, not our families.

Unfortunately the government at any time can decide to withdraw all your savings, IRA’s, Tax Deferred Annuities, etc. and leave a government I.O.U. in its place. This was done in Greece, and hopefully will not become the norm when our debt as a nation comes due.


67 posted on 01/02/2017 1:54:22 PM PST by Yulee (Village of Albion)
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To: Political Junkie Too

Companies love not having defined pension plans. Becoming vested usually only takes 5 years. I had a couple of jobs going thru college and grad school at places w/ defined pensions. I couldn’t believe it when they started sending me what my portion of pension would be at 65. I had no clue ... none ... that I had monies coming from these companies.

My current employer had a defined pension plan for the first 12 years I worked w/ the company and you could contribute into 401k. I’ve put money into 401k since I was around 25. I will be sorely displeased to have this money taken away ... I’ve been frugal my entire working career so I could put 15-18% aside every year ... along w the emergency savings account ... etc.

If we still have SS when I retire, I will be surprised. Pleased, but surprised. It will mean I will be able to leave money to kids and grandkids. Although ...they all actually :::knock on wood::: are doing very well on their own behalf.

I raised a bunch of frugal, smart and hard working children.


68 posted on 01/02/2017 1:57:38 PM PST by conservaKate
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To: dgbrown

Most people get significantly better than 7% return when adding employee match and usually saving 31% for every dollar you contribute (25% marginal fed rate + 6% marginal state rate vs usually 5-15% rate in retirement) plus the stock market with dividends has historically grown over 8%. Just diversify and don’t have all your money in 401k but at least get the company match.


69 posted on 01/02/2017 1:59:21 PM PST by rb22982
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To: antidisestablishment

Most larger companies have 401k options with low fees like Vanguard ETFs. Smaller and medium companies could have those options but many don’t. Adding company match + huge tax savings immediately (and if you make < 30k/yr, a tax credit), make the 401k hard to beat for most investors even with crappier plans.


70 posted on 01/02/2017 2:03:07 PM PST by rb22982
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To: Neoliberalnot
Roth vs Traditional IRA or 401k on your marginal tax rate now and expected marginal rate in retirement. For me and most people, a 401k/IRA is a better deal.

My marginal federal rate today is 33% and my marginal state rate is 6% meaning I can put $9,016 into a 401k and/or IRA for the same $5,500 out of pocket into a Roth IRA (9k * (1-.39) = $5,500). If you grow $9k at 6% for 40 years, you'll have $92.5k. If your marginal fed bracket in retirement is 15% (high as most people get) and you move to a state like FL with no state income tax, your net after taxes on that $92.5k is $78.7k. Meanwhile, if you get 6% on that 5,500 for a Roth for 40 years you have $56.6k, ergo you end up with 39% more with a 401k contribution than a Roth net of taxes.

71 posted on 01/02/2017 2:08:05 PM PST by rb22982
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To: abb

The government did this once. It was called social security. They then raided the trust fund. They stole the money. They would do the same with a new mandated 401k scheme.


72 posted on 01/02/2017 2:08:24 PM PST by cpdiii (Deckhand, Roughneck, Mud Man, Geologist, Pilot, Pharmacist, THE CONSTITUTION IS WORTH DYING FOR.)
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To: abb

Assumptions are everything


73 posted on 01/02/2017 2:14:21 PM PST by Nifster (I see puppy dogs in the clouds)
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To: rb22982

True. Either way, anything beats social insecurity and the options are up to the individual.


74 posted on 01/02/2017 2:25:48 PM PST by antidisestablishment ( We few, we happy few, we basket of deplorables)
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To: abb

We tried this once. It was called Social Security. The government spend every dime that was invested. What makes anyone think that this time it will be different?


75 posted on 01/02/2017 2:34:21 PM PST by norwaypinesavage (The stone age didn't end because we ran out of stones.)
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To: abb

Depends on what you consider a small number. The article I read examined people with more than $5 million in their 401K, particularly if they had made relatively modest salaries. There were a couple of thousand people in the country like that.


76 posted on 01/02/2017 2:45:00 PM PST by proxy_user
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To: abb

“[W]ouldn’t it be best...to try and teach people how to save and invest, instead of punishing those who were indeed thrifty...”

Yes. Personal Finance should be a required course in high school in every state. No only would the average student be better off personally, but I theorize that the average student would grow up to vote financially conservative . . .as they would reject the government welfare state as an antithesis of good government, personal freedom and responsibility.


77 posted on 01/02/2017 2:49:26 PM PST by Susquehanna Patriot (Do Leftist/Liberals Really Believe That Dissent = Highest Form of Patriotism?)
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To: abb

She is an evil woman.


78 posted on 01/02/2017 3:09:10 PM PST by Rusty0604
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To: freedumb2003

Isn’t that what social security is, Theresa? Rhetorical question.


79 posted on 01/02/2017 3:10:52 PM PST by Rusty0604
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To: LostInBayport

They are already raiding other funds to pay $170 million a month for the illegals coming over in droves. They even raided aids and cancer research.


80 posted on 01/02/2017 3:15:25 PM PST by Rusty0604
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