The 401K Drives Inequality: NY Times article.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Switzerland is pretty cool when it comes to pensions. Companies MUST offer pensions, but the payout is based on how much the employee has contributed toward the pension and the principal + investments are managed by financial institutions/insurers/pension companies to ensure solvency. Essentially, the management of the pension is farmed out to 3rd parties who take on liability of ensuring pension payouts, rather than the employing company.

Good explanation here on the pension "pillars" in Switzerland: https://www.ch.ch/en/retirement/retirement-income/#further-information-and-useful-contacts

1st Pillar (state pension, akin to Social Security in the US): employee pays 4.35% of salary, employer pays 4.35%. Must pay into every year from age 20 to age 65 to get unreduced pension.

2nd Pillar (defined contribution & benefit company-provided pension): pension is based on amount contributed by employee and employer (split equally) during employment. Pension is paid annually at age 65 at minimum rate of 6.8% of final contribution balance until death. Spouse fully inherits pension, assuming conditions are met.

3rd pillar (optional supplementary pensions akin to 401K, Roth IRA, etc): two types of pensions available - 3.A. pension (max contribution of 7K per year, contributions are tax deductible, taxed upon withdrawal) and 3.B pension (no max contribution, no tax deduction, but no taxes levied when withdrawn near retirement).

All of this is managed by professional pension providers, so generally it's idiot-proof and in high-quality investments. The issue with 401Ks is that it relies on the employee to take actions and make smart investments. People lose money all the time by buying inflated stocks, chasing returns, selling at market bottom & locking in losses, etc. Private pensions should be much more prevalent in the U.S.

And this is why the Swiss hardly ever invent anything. Try working for a global corporation with sites in Europe. Europe overall is an absolute laughing stock of productivity. They take half the year off and are constantly a PITA to work with because they can never attend meetings since they're always on vacation and barely meet quality standards for output. That's why salaries in Europe are trash and their economy barely grows. Europe is a de facto nanny state where nobody works and yet they all expect some other entity to provide.

Swiss productivity has historically been higher than US productivity. Since COVID, the US has been slightly more productivity:
https://tradingeconomics.com/switzerland/productivity

Switzerland has long led the patents per capita ranking, taking the #1 spot in 2024 and 2023:
https://www.swissinfo.ch/eng/science/switzerland-tops-global-table-for-patents-per-capita/73890507

Switzerland also has a GDP per capita 22% higher than the US.

So yeah, maybe we should learn a thing or two about retirement savings from them.

Swiss pop 8.8 million, US pop 341 million Every statistic you state per capita is meaningless, the populations are so dissimilar.

[Anonymous]

The big problem w/401K is the limit, 22.5K is a joke. It should be triple that to fund a decent retirement, at still low rates. (I am old enough to remember 9% money market in 1987, I saved like mad w/out 401k.)

[Anonymous]

Anonymous wrote:The big problem w/401K is the limit, 22.5K is a joke. It should be triple that to fund a decent retirement, at still low rates. (I am old enough to remember 9% money market in 1987, I saved like mad w/out 401k.)

$22.5k is plenty. The problem is the investment choices and fees. In s and p 500 etf this money would be ca 2.3 million in 25 years.
Roth had a low maximum.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The trouble with 401k are the limits are too high. A married 50 year old couple can put in 60k a year. If they have a high income and a really good match it could equal 120k a year!!

But a middle class 50 year old man with stay at home wife and kids at best can afford 6 percent. And maybe a crappy match 50 cents on a dollar. If he makes 100k his total contribution is 7.5k a year.

Over time it is millions of dollars in difference

They still get taxed on it. It’s not some massive give away.

Yup---just taxed on it when withdrawn.

Also, nobody is getting a 60K match from their company.

And anyone putting in 60K/year is likely high enough income that they will still be very high tax rate during retirement. So not really that great of a deal, more of a deferred tax so to speak.

[Anonymous]

Anonymous wrote:My biggest problem with 401k’s is that they allow spouses to drain those accounts in the event of a long, drawn-out, messy divorce. Pensions are attached to a person and cannot be raided. That’s a real benefit for some whose non-working spouses incur huge lawyer costs for years and refuse to mediate.

Married 30+ years. Been SAHP for 20+. I'm fully entitled to half of the retirement investments should a divorce occur. I quit a high paying job to be SAHP and contributed to the household without any "actual Pay" or retirement plan beyond an IRA (gee, 6-7K/year vs 25-30 for the other spouse)

[Anonymous]

Anonymous wrote:

Anonymous wrote:Some of us are lucky period! I started my career in big tech and within 10 years I honestly save for retirement far more than most Americans would ever dream to have for retirement after a 40 years career. Our system rewards luck but we keep telling those who are not lucky to work harder and if you deviate from thai logic you are a socialist so ridiculous. And don't get me started with the so called self made people. Statistically they are a very small minority. America is a great success model if you make it. And both parties are very good at hiding those who didn't make it behind closed doors so we don't see them don't hear about them and just forget about them. Call me a socialist if you wish whatever. All I know is I was lucky to be born in the right family with the right wealth and afforded me the chance to attend a great college. Yeah I am sure that's the case for every American lol

Worked hard in high school, go into a good college, worked hard, got a good job, worked hard and saved for retirement - how is any of this "luck"?

+1

Also, chose a career path they knew had potential for good/higher pay.

I'm all for choosing whatever path you want, I encourage it. But if you want to be a Social worker, you need to choose a lifestyle you can support. And that might be different than a doctor or STEM major

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'd rather not read what progressive think since they always want to abolish a system because the MC/UMC use it. Recently (before Biden) they tried to do away with PSLF student loan forgiveness because of doctors and lawyers apparently using it.

Anyways, I think the only options would be to up the scale of social security or create one of those sovereign funds like some Gulf countries have to supplement retirements.

Yes, shares of a sovereign wealth fund for all from birth is a MUCH better idea than all of this communist crap of taxing more in the name of equity. Hell, even Alaska has a sovereign wealth fund for its residents. Norway has a sovereign wealth fund for its citizens. A sovereign wealth fund that pays out regularly would give ALL an equal and vested interest in the economy of the country. Much, much better idea.

Better idea for who?? The US? With our $34 Trillion in national debt and with our current annual deficit spending?? We live in capitalist society with a diverse population that is going to result in uneven outcomes. That is the reality. You have options for saving for retirement in addition to Govt sponsored Social Security. Can not rely on any one instrument to provide ample income when retire. Once pensions went way in the 1980s, it was clear that the burden was on the individual. I got the message while in my 20s, and took action to save/invest for retirement. I don't know what you do for those people who are unable to save or make poor choices throughout their lifetimes. I'm sure they drove better cars and took many more vacations than I ever did.

THis^^^ Life is all about choices. Plenty of MC/LMC work hard and live a frugal life in order to save. Others spend more on "luxuries" and vacations/etc. Ultimately, you can choose how to live your life, but don't expect others to help you because you made stupid choices (not to save in your 20/30s when it's easiest)

[Anonymous]

Anonymous wrote:My biggest problem with 401k’s is that they allow spouses to drain those accounts in the event of a long, drawn-out, messy divorce. Pensions are attached to a person and cannot be raided. That’s a real benefit for some whose non-working spouses incur huge lawyer costs for years and refuse to mediate.

You are completely utterly wrong on thiss. They are marital assets.

[Anonymous]

Anonymous wrote:

Anonymous wrote:401k allows people to be mobile. The problem is that 401ks aren’t a great deal. They’re an ok deal but not a great one. But it’s probably the best option that is feasible politically…

smh....401ks are not a great deal? That is an ignorant comment from some one who lacks perspective. I know many people that by age 60 have $1 million+ or nearly that amount in their 401k. And some will also have a paid off house by 60. And Roth 401ks are an even better deal. The 401-k is just one of the spigots you utilize in retirement. Hopefully you have three streams of income. 401-k, SS, taxable investment accts, some people will have pensions and/or rental income. The more spigots the better.

You’re the ignorant one who lacks perspective if you think the 401k is such a great deal.

And, I already have 1M in my 401k and I’m well shy of 60.

401k is just not that great of a deal.

It’s good, but not great.

[Anonymous]

Anonymous wrote:The big problem w/401K is the limit, 22.5K is a joke. It should be triple that to fund a decent retirement, at still low rates. (I am old enough to remember 9% money market in 1987, I saved like mad w/out 401k.)

It is way more than that. It is $30k over 50 and if dial income wife can do $30k and then there is match.

And I have a 401k plus 457b at work so I can do 52k a year. Plus I get a 24k match. So I can do $76k a year with match

[Anonymous]

I’m a moderate Democrat. I am so sick of the increasingly liberal media crapping on any tool that was created to help the middle class and that the population actually uses to successfully to amass average wealth. 401ks replaced pensions. Now that the UMC and -gasp- upper class are tilizing them, it’s suddenly another tool in the woke lefts “oppressed be oppressor” narrative. I am so fed up. The UMC will never be taxed enough until they’ve given away all their income to be on par with someone in a career earning a quarter of what they do.

[Anonymous]

My wife has not contributed to a 401k since 2000. She only contributed 25k to it. They matched 25k. She is a SAH Mom last 24 years.

She has one million in it. Mainly because her 25k match was in company stock of a company that has done great.

When she retires she can pull it all out in one shot and tax laws state she is taxed at long term capital gain rate on the stock.

She turned 25k into one million.

Not a good deal?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:401k allows people to be mobile. The problem is that 401ks aren’t a great deal. They’re an ok deal but not a great one. But it’s probably the best option that is feasible politically…

smh....401ks are not a great deal? That is an ignorant comment from some one who lacks perspective. I know many people that by age 60 have $1 million+ or nearly that amount in their 401k. And some will also have a paid off house by 60. And Roth 401ks are an even better deal. The 401-k is just one of the spigots you utilize in retirement. Hopefully you have three streams of income. 401-k, SS, taxable investment accts, some people will have pensions and/or rental income. The more spigots the better.

You’re the ignorant one who lacks perspective if you think the 401k is such a great deal.

And, I already have 1M in my 401k and I’m well shy of 60.

401k is just not that great of a deal.

It’s good, but not great.

When you are in top tax brackets, it's an excellent way to minimize taxes in your 20/30/40/50s. Then it grows tax free as well. So deferring taxes until we retire is always a huge benefit.

[Anonymous]

Anonymous wrote:I’m a moderate Democrat. I am so sick of the increasingly liberal media crapping on any tool that was created to help the middle class and that the population actually uses to successfully to amass average wealth. 401ks replaced pensions. Now that the UMC and -gasp- upper class are tilizing them, it’s suddenly another tool in the woke lefts “oppressed be oppressor” narrative. I am so fed up. The UMC will never be taxed enough until they’ve given away all their income to be on par with someone in a career earning a quarter of what they do.

Same. It's annoying the "pay your fair share". Well we are HHI (800K-1M most years)and all income is W2 income in a typical year. We have no way to hide/protect any of this, so we pay full taxes at both state and federal level. I think We definately pay our full share. And yes, we definately take advantage of all 401K/IRA/saving tools available to us. It's one of the few "tax breaks"we get

[Anonymous]

Anonymous wrote:I’m a moderate Democrat. I am so sick of the increasingly liberal media crapping on any tool that was created to help the middle class and that the population actually uses to successfully to amass average wealth. 401ks replaced pensions. Now that the UMC and -gasp- upper class are tilizing them, it’s suddenly another tool in the woke lefts “oppressed be oppressor” narrative. I am so fed up. The UMC will never be taxed enough until they’ve given away all their income to be on par with someone in a career earning a quarter of what they do.

I don't think most people realized just how much the rich could abuse them until reports about Romney's $100 million retirement account came out