Just be patient and weather the squalls (which I can never do!)
Posted on 01/02/2017 11:45:22 AM PST by abb
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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.
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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.
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(Excerpt) Read more at wsj.com ...
Oh, is your account tax deferred income? Thanks for sharing.
CalPERS on steroids. Hell no!!!
Duck these fidiots.
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.
Look it up. The accrued profits are tax deferred until retirement when income usually drops.
Just be patient and weather the squalls (which I can never do!)
“are recommending a mandated, government-run savings system that would be administered by the Social Security Administration and managed by investment professionals.”
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.
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.
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.
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.
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.
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.
Assumptions are everything
True. Either way, anything beats social insecurity and the options are up to the individual.
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?
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.
“[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.
She is an evil woman.
Isn’t that what social security is, Theresa? Rhetorical question.
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.
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