Posted on 02/29/2024 5:31:44 AM PST by Red Badger
Your 401(k) Will Be Gone Within a Decade
Please consider Your 401(k) Will Be Gone Within a Decade
If you are among the 56% of US workers with a retirement plan, I have some bad news for you: Your 401(k) will be gone in 10 years, tops. Not the money, thank goodness, but the plans themselves.
There has been a brewing intellectual movement to get rid of the 401(k) for several years, with scholars on both the right and left questioning its value. And as the federal government gets increasingly desperate for new sources of revenue, the tax treatment of 401(k)s is a likely target. There are good policy reasons to end it, but the question remains: Will Americans still save for retirement?
All of this cost the government an estimated $185 billion in 2019, or 0.9% of GDP. That’s not nothing. And in theory it’s justifiable because it creates a powerful incentive to save for retirement. More retirement savings have a triple benefit: for the economy overall, since they fuel growth; for the government, since retirees with income are less likely to be a burden on the state; and, of course, for workers who might not save enough today and regret it later.
Then again, maybe not. The first rumblings that the benefits of the tax breaks may be overstated came in a 2014 study of Danish savers. Without tax-advantaged accounts, it found, people just put their money in another kind of account. People did save more in retirement accounts, but that’s mostly because of automatic paycheck deduction. Subsequent research in other countries found similar results. Not only did the tax incentive fail to encourage more saving; the biggest beneficiaries tended to be the wealthy.
To review: Neither conservatives nor liberals are particular fans of tax-advantaged retirement accounts, and savers appear to be indifferent to them. So what’s the point of a 401(k)?
What’s the Point?
The point is obvious. People are overly dependent on Social Security, food stamps, Medicaid and other government handouts.
The Bloomberg writer links to the New York Times article, Employers Can Now Enroll Workers in Some Emergency Savings Accounts
Starting this year, a federal law allows employers to enroll workers in emergency savings accounts that are linked to their retirement accounts. But some companies, put off by the law’s complex rules, have begun offering rainy day benefits outside workplace retirement plans.
But while the law, known as Secure 2.0, has helped draw attention to the need for rainy day savings, its rules for setting up emergency accounts within retirement plans are “clunky.”
For instance, only workers making under a certain income limit ($155,000 for 2024) may participate, and their emergency savings are limited to $2,500, though employers can set lower ceilings. And though employers can help with contributions, they must deposit any match into the worker’s retirement account — not the emergency savings account.
Should we really be basing decisions made in the US to those of Danish savers in 2014?
However you save, government ought to be encouraging more savings not less.
Nearly half of American Households Have No Retirement Savings
USAFacts reports Nearly half of American Households Have No Retirement Savings
In 2022, almost half of American households had no savings in retirement accounts, according to the Survey of Consumer Finances (SCF). These accounts include individual retirement accounts; Keogh accounts; certain employer-sponsored accounts, such as 401(k), 403(b), thrift savings accounts; and pensions.
Personal saving has grown more important as employers have shifted away from defined benefit plans, or pensions, putting more of the responsibility on workers to plan for retirement. In 1989, half of working households ages 50 to 60 had a defined benefit plan. In 2022, only a quarter did.
The lead image is from the previous link. The article has an interactive age slider to see what people stand.
Saving is Unfair to the Poor
President Biden, along with Senators Elizabeth Warren and Bernie Sanders, all believe government should take care of you, not that you should try to take care of yourself.
Rather than encourage more saving, the ultra-Left proposal is to call saving unfair to the poor and eliminate 401Ks for everyone.
At the Federal level, instead of putting Social Security receipts into trust funds that get spent, how about putting at least a portion of that money into individual accounts that government can’t touch?
I am a big fan of Roth IRAs. You are taxed upfront but withdrawals are tax free. Regardless, do something!
The best place to start is get out of credit card debt.
“Buy Now, Pay Later” Plans
If you are Addicted to “Buy Now, Pay Later” Plans please get off the treadmill.
Buy Now Pay Later, BNPL, plans are increasingly popular. It’s another sign of consumer credit stress.
Credit Card and Auto Delinquencies Soar, Especially Age Group 18 to 39
Credit card debt surged to a record high in the fourth quarter. Even more troubling is a steep climb in 90 day or longer delinquencies.
Age group 18-39 are most impacted by the Rise in Credit Card and Auto Delinquencies.
If you are in the delinquent group, you are spending too much money. Your savings is negative. Find a way to get out of the trap.
At age 60, the median person only has $10,000 in retirement accounts. Median total financial assets of those age 60 is only $53,000.
$50,000 is not enough to retire on yet and have much of a life. But age 60 is too old to do much of anything about it.
Taking away 401Ks would not help.
“You know what they want? They want obedient workers. Obedient workers. People who are just smart enough to run the machines and do the paperwork, and just dumb enough to passively accept all these increasingly sh____er jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it, and now they’re coming for your Social Security money. They want your retirement money. They want it back so they can give it to their criminal friends on Wall Street, and you know something? They’ll get it. They’ll get it all from you, sooner or later, ‘cause they own this f______g place. It’s a big club, and you ain’t in it.”
-George Carlin
Maybe trading in scalps will replace it?
They’re telegraphing the next moves.
L
I have a better idea. Abolish 401(k)’s AND abolish the income tax. Deal?
Well, it could be argued that the Federal Government should have been limited to taxing income, in the first place.
The People and States should have fought tirelessly to limit the definition of “income” to the minimum possible.
Argentina took all the 401ks from their citizens and then spent the dough..............
The accounts are not “tax free” - they are tax deferred. They collect taxes on the payouts...which should be larger. Would they be ending the taxes on the payouts if they end the tax exemption on the deposits? Or is this going to be a case of double taxation?
He certainly got that right..................
This has been talked about since the Clinton Administration. Some broad at some NY think tank came right out and advocated for complete confiscation of 401k plans.
You know, for “safety”.
L
They want the Roth IRA’s too, which is money that is already taxed................
just a bunch of idiots talking about something that will never happen. Similar to those who claim social security will not be there when we retire.
The younger generations that want “free healthcare” are going to get it, at the cost of retirement and savings plans.
Who wants free healthcare that is staffed by DEI applicants?................
It will be free, and worth every penny.
But for decades democrats have been salivating at the thought of there being trillions of dollars sitting out there in 401k's that they could use to fund their social boondoggles.
> Median total financial assets of those age 60 is only $53,000.
Barely enough to buy a lower end pickup truck.
They want Revolution II? Just try that, Obamaholes, try it.
But the seed was planted, and it takes 2 or 3 generations for it to bear fruit. Children have been indoctrinated to support socialism, and once they reach critical mass in the electorate, it’s Katy bar the door!
They don’t care about the tax money, they care about destroying the middle class and the American way of life....The money is the excuse, confiscation is their goal.
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