Reply to 401k savings limit to increase in 2023

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Reply to "401k savings limit to increase in 2023"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Most people cannot afford to do this[/quote]

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. [b]LMC and MC families don’t know how lucky they are![/quote][/b]

Really? I'd rather have twice as much money even if I couldn't put away as high a proportion in taxed advantaged accounts....wouldn't you?[/quote]

Yes, but nothing prevents someone from making twice as much money. It is a personal choice. Get a second job. Become a physician instead of a teacher. Become an engineer instead of an bus driver. If you don’t have the skills, get them. Reading books is free. Financial Aid is available for those in need. You get the idea.

On the other hand, when it comes to tax-advantaged savings, there are very limited personal choices. There are literally laws that prevent high income individuals from saving the same percentage of their income pre-tax as their lower income counterparts. This is on top of a progressive tax bracketing structure and on top of many tax deductions that phase out with income and on top of many tax credits that phase out with income.

A person with an HHI of $500K paying taxes on 80% of their income is still paying taxes on $400K as compared to someone with an HHI of $160K who ends up paying taxes on only $128K. The high income individual is still paying [b]a lot more[/b] in taxes, despite the more equitable savings structure. Do we really need to keep piling on countless nonlinear penalties for earned income?!? No one is calling for anything as radical as a flat income tax here. [/quote]

This is such a rude post. I’m a teacher with a Master’s degree and 2 kids. I already coach and sponsors as many after school activities as I can and still barely making ends meet. When exactly would I work a second job? Just the childcare funds alone would eat up the income. [/quote]

Here’s a novel concept: stop trying to live a physician’s lifestyle on a teacher’s salary![/quote]

I think you're in the wrong thread, this one is about the physicians whining that the teacher gets to put a higher % of her income in a 401k. Even though they both can put in the exact same dollar amount - literally, the "problem" is that they have more money than the teacher. [/quote]

No, this is typical cherry picking of rules for taxation. When it comes to taking taxes, it is done as a percentage of income (and progressively at that)…but, when it comes to proving a tax-sheltered deduction, it is implemented as a fixed dollar amount. This is illogical, as it nonlinearly benefits those in lower income brackets, thereby incentivizing people to remain in low income tax brackets. Is this all some sort of extravagant ploy to reward low-paying careers that provide inherent public benefit? If so, maybe this is somewhat sensible after all. If it is just a welfare system, however, it really needs to be eliminated and overhauled with a better plan. [/quote]

You are truly a financial retard[/quote]

Thank you for disclosing both your IQ and your age on this anonymous forum: [b]67[/b]. Your response lacks sophistication as well as any sign of thoughtful research or investigative skill. Moreover, your rapacious inability to grasp the most fundamental of financial principles suggests you’re a prototypical member of a more elderly ilk, looking for senior discounts and welfare grants to subsidize your now-permanent commitment to indolence. Wonderfully played![/quote]

:roll: 
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