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.
Metzenbaum was a real piece of work. He was also a rabid anti-gun zealot.
All of this cost the government an estimated $185 billion in 2019, or 0.9% of GDP.
No, it doesn't.
Not taxing citizens cost the government nothing.
“taxing unrealized gains”
That is going to be fun to watch.
Wealthy folks in those states should move out of there now—why take a chance?
There’s an old cartoon I remember about republicans screwing over the poor people.
The republicans finally took control over Ohio by eliminating the “Echeck” program (auto tail pipe emissions testing) and it’s results. If you had any kind of vehicle that could tow a boat or trailer you failed. It was hilarious to watch, I’ve never seen so many pissed off people. I had a guy standing next to me with a clipboard. The guy testing failed my van, but ran it through again because of the guy with the clipboard. It passed the second try.
I imagine the current EPA talks are making Ohioans nervous again, lol.
I have a clipboard next to my front door now, lol.
Let’s hear it for Fear Porn!
Sometimes I wonder ... should we call this website FearPornBlick?
Good morning, FearPers! What can we FRet about today?
The savings are tax deferred. They will be taxed later. Likely at higher tax rates with the passing of time.
It was always coming. Way back under Hillary’s Healthcare Panel, Teresa Ghilarducci was promoting a one-off assessment of 401Ks to fund HillaryCare.
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.
Ever notice it’s always about transferring wealth to the government, and never about the government spending problem?
If the Federal Government were to shrink by about 40% a lot of America’s big problems would either shrink drastically and/or disappear all together. That’s good for America, but bad for Washington and the parasite class which means it will only be accomplished by extreme measures. The dems are 100% against anything that even slows down the growth of government, and far too many Republicans evidently feel the same way. America needs REAL leadership, and there is a dearth of that in Washington.
Personally, I expect the government to steal everything. They really are evil in every way. Bastards.
Sounds like they had it in for anything with a V8 engine.
There are some states that are strongly considering taxing unrealized gains.
“..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....”
^THIS^
“..You’ll own NOTHING and be happy.....”
Work your sorry arse off all your life trying to raise a family and make ends meet, all the time paying their thieving vile taxes, while trying to do the “right thing”, and maybe save a little for your old age years. Then, have some puke, socialist/communist greedy SOB come in and steal it all? To give to some undeserving lazy POS? All in “fairness” to the poor?
They can ALL go F themselves and ESAD.
Let’s make a deal: Go ahead and confiscate my retirement plan and, in return, give me back ALL the money that I, and my employer, paid in over the years...with interest based on the going interest rate for each year that it was paid in, we’ll call it “fair” and walk away never to be seen or heard from again.
Whadda bunch of greedy POSs......
No, it was pretty much anything. I was driving a 6 cylinder. Even brand new cars were failing. What was funny was my sister’s car back axle must have been offset somewhat and it tried to climb the rollers sideways, lol. All kinds of stuff liked that happened. Echeck put the republicans in power. Lack of E-Verify for illegals is going to boot them out.
Shedlock wrote a very disjointed and incoherent piece.
Normally he’s better than that.
And damn you autocorrect.
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