Should 401ks be phased out?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would rather see the social security cap eliminated first.

You can't do that, because then you turn SS into even more of a welfare program unless you're willing to also proportionally increase benefits to retirees. And then moment you turn it into a welfare program, any semblance of bipartisan support for SS dies an ugly death.

Disagree that you can’t do that. I haven’t made only the cap in at least 25 years and I still would be okay with that as opposed to a wealth tax. I realize I would get out much less than I put in but to fund the system, I would be okay. Maybe at half the % after the cap to no max. Something to keep the program more solvent. But the real tax change needs to be all private equity returns taxed at ordinary income instead of capital gains. Insane the money flowing they’re making people rich with low tax rates. Such a no brained IMO. Boo hoo you’re taxed 37% on that $10 million you made flipping the company in 5 years. Those funds should have automatic OI tax on gains.

[Anonymous]

Back on topic it’s pretty clear that retirement most accounts vastly reward those with extra disposable income. It’s is clearly increasing inequality. The authors (on two opposite ends of the general political spectrum) are arguing it is better to remove some of those tax benefits to shore up social security. I kinda agree with them. I am DCM poor, and don’t find any benefit in increasing inequality more than what we already have to deal with. It is leading to so many of our current economic and social issues at the moment. So many I know talk about how the American dream is dead. As a teacher many kids have this look of hopelessness thinking they will never get ahead because of the experiences of their parents.

[Anonymous]

Anonymous wrote:You pro 401k people I have a question. A married person with a stay at home spouse only gets to contribute 1/2 as much as dual income couple to a 401k.

How is that fair?

The stay at home person can contribute to an IRA and backdoor it to a Roth IRA.

[Anonymous]

Anonymous wrote:Back on topic it’s pretty clear that retirement most accounts vastly reward those with extra disposable income. It’s is clearly increasing inequality. The authors (on two opposite ends of the general political spectrum) are arguing it is better to remove some of those tax benefits to shore up social security. I kinda agree with them. I am DCM poor, and don’t find any benefit in increasing inequality more than what we already have to deal with. It is leading to so many of our current economic and social issues at the moment. So many I know talk about how the American dream is dead. As a teacher many kids have this look of hopelessness thinking they will never get ahead because of the experiences of their parents.

I agree with you in principle, but the authors are bypassing the extremely obvious solution (raise the income tax cap) in favor of one that will discourage retirement savings among the middle class. I mean....

[Anonymous]

Anonymous wrote:You pro 401k people I have a question. A married person with a stay at home spouse only gets to contribute 1/2 as much as dual income couple to a 401k.

How is that fair?

You are saying "isn't it unfair that people who work earn and get to save more money than people who don't?" I mean, maybe, but we don't live in a society where we aim to use tax benefits to give people who choose not to work the same standard of living as people who have to. If we did, SAH spouse 401ks would not be the place to start.

[Anonymous]

I would rather get make of social security options and save me 12% of my salary by requiring the employer to give that 6% to the employee

[Anonymous]

Social security steals 12% of your first 168k and it's not a good program for younger people , it's setup for old people. I would opt out and have a better use of that 12% now like a house, stocks etc.

[Anonymous]

Anonymous wrote:I would rather see the social security cap eliminated first.

Or at least start raising it a bit each year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would rather see the social security cap eliminated first.

Or at least start raising it a bit each year.

They do…

[Anonymous]

I've heard/read of younger people doing this because they feel like they by the time they retire, the Earth will be burning and it won't matter. I'm on the border of Gen X and Millennial and I feel like that sometimes but still save.

[Anonymous]

I’m certainly very happy the Roth IRA/401K was created. Through 25 years of steady Roth IRA and Roth 401K contributions (both direct and now Backdoor Roth contributions as my income is now too high) and smart investing I’ve amassed over $8M in my Roth accounts. If I assume present safe interest rates, I could earn $400K a year completely tax free on withdrawals in 16 years (when I reach the age of 59 1/2) assuming no additional Roth growth.

[Anonymous]

Anonymous wrote:I've heard/read of younger people doing this because they feel like they by the time they retire, the Earth will be burning and it won't matter. I'm on the border of Gen X and Millennial and I feel like that sometimes but still save.

Millennials are a very confused generation.

[Anonymous]

Anonymous wrote:I would rather get make of social security options and save me 12% of my salary by requiring the employer to give that 6% to the employee

+1

I could definately have invested and have much more than I will get from SS. However this wouldn't work, because 50% of the US citizens would still not save that money and then you have even more destitute people at 65 who cannot afford to live
Unfortunately, as a whole, our citizens are not capable of managing their own finances.

Just look at all the people with a college degree who cannot figure out that if I don't pay more than interest my student loan debt will never get smaller and if I don't even pay the full interest, my loan will balloon quickly.

So unfortunately we need the safety net that is Social Security.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would rather see the social security cap eliminated first.

Or at least start raising it a bit each year.

But those who make more than the cap only collect the same as people who make the cap. If you eliminate the cap then you will be paying out $50K/month to some wealthy people, not $4K. So it wouldn't solve the problem.

[Anonymous]

Just as a mortgage is a form of forced savings, the 401k is a form of forced savings for retirement. Although optional, it provides great incentives for people to save for their future. Without 401ks, many more people would struggle to remember to save. It's easy to get distracted and the concept of 40 years down the road is too abstract for many to comprehend until it's too late.

401k incomes are still taxed in the future. So I don't see any inequity involved.