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First of all, I have never trusted politicians ability to resist stealing our money. That said, I see nothing especially objectionable with the proposal.
The real problem is that most Americans do not have the financial brains or education to develop a properly diversified income stream for their old age. A 401K has a place in that portfolio as do annuities. Personally, I have always been careful to maintain a balance between physical assets, non-liquid assets (RBAP, 401K) and liquid assets (savings accounts, stocks, etc.).
As a result, most Americans look to the government both to create vehicles such as social security and 401Ks as well as to protect them from the vagaries of the financial services industry or the markets. In that context, and given the recent crash, it isn't unreasonable for government to be looking at different ways of structuring retirement income.
Then perhaps educating people is the obvious solution?
Personally, I think a 401(K) is a damn good way to prepare for retirement. I have been using one since the mid 90s and have done quite well with it. Granted I have an MBA in Finance and that might help me, but at the same time I have not done anything magical. And I also employ a competent financial planner as well. If you cannot repair your car, bring it to someone who can.
I read a great deal about people who have used 401(K)s and yet have little when the time comes to retire. The common element is that they do not save enough. Even casual discussions with my work colleagues here reveal most of them only put in something like 5%. That's fine if the language of your retirement includes, "Want fries with that?"
Pensions were great things. But they are going the way of the dodo bird. Why? People are living longer. Same issue with Social Security and other entitlements. When will people wake up, ditch the paranoia, and realize this simple truth?
Annuities have their pros and cons. Anyone who thinks they will solve the problem is not paying attention. If the government could create the perfect vehicle for us to save, they would have done so already.
Annuities have their pros and cons like any financial instrument. If there was a perfect way to save, we would be doing it already.
the fact is buisiness is business....if a business is not selling, it will close.....if an employee is not performing, they need to be let go, and someone else given the chance......
sometimes layoffs have to go deeper than the nonperformers though
I am so tired of this reasoning being used to justify a over zealous government.
They are not over zealous. they are reacting to the expectations of the average American who expects them to provide tax efficient vehicles such as the 401k and to protect them from losing the money they have saved.
I am so tired of this reasoning being used to justify a over zealous government.
Except that in this case the government is merely suggested that individuals employ a financial strategy already available. How is that "over-zealous"?
Obviously, but in many cases, the number of positions needed to continue the re-scaled operations is fewer than the number of quality employees. You're naive to think that a lot of hard working people haven't been affected by RIFs.
Ultimately, though, the question is this -- who do you want controlling your retirement money? Your employer, or you? If you prefer to control it yourself, then the 401K is the way to go. Employers can still contribute, and most do. Admittedly, I'm one of the lucky ones who still gets a dollar-for-dollar match on the first 5% of salary I defer. But I control how my retirement money is invested. If my employer goes under, I'm not at the will of the PBGC.
Totally agree with that statement. I'm lucky enough to have both right now and cherish my 401K more and consider it more important for the very statement I bolded in your post. It's yours to take where ever you want once you leave/retire.
Obviously, but in many cases, the number of positions needed to continue the re-scaled operations is fewer than the number of quality employees. You're naive to think that a lot of hard working people haven't been affected by RIFs.
Ultimately, though, the question is this -- who do you want controlling your retirement money? Your employer, or you? If you prefer to control it yourself, then the 401K is the way to go. Employers can still contribute, and most do. Admittedly, I'm one of the lucky ones who still gets a dollar-for-dollar match on the first 5% of salary I defer. But I control how my retirement money is invested. If my employer goes under, I'm not at the will of the PBGC.
I agree, and many of the RIDd people were/are good people. but if the business cant support the amount of employees then they are going to have to cut or close
as far as the pension/401k.....I like both and also a 'profit sharing' if the company offers it
me I have 1 pension, working on a 2nd pension WITH 401k that the employeer matches upto 5%. plus I have an IRA from an old 401k.
and yes 401k can be controlled by the person. I lost very little in this resession, In fact with the market falling down to 6000 I was able to buy extra, which is why my 401k is now worth twice as much as it was in 07
*No saving limits. Save as much as you want. If you can put 75% of your earnings in there, so be it.
*Draconian premature withdrawal penalites- only in the case of medical catastrophe.
*Reduce or eliminate taxes on it once you retire. Negotiable of course.
I hesitate, but they may want to make partcipation compulsory.
*No saving limits. Save as much as you want. If you can put 75% of your earnings in there, so be it.
*Draconian premature withdrawal penalites- only in the case of medical catastrophe.
*Reduce or eliminate taxes on it once you retire. Negotiable of course.
I hesitate, but they may want to make partcipation compulsory.
As to your suggestions:
1. Obviously, the government cannot and will not allow folks to defer taxes on that much income. Like it or not, the government needs revenue. However, we should consider raising the income and contribution limits on Roth IRAs.
2. You don't think that paying at the marginal rate + 10% is draconian enough?
3. In many cases an individuals marginal tax rate will be lower at retirement than when working, certainly during peak years. So, in that sense, taxes will be lower. Eliminate altogether? Again, the government has to get its share at some point. Note that Roth IRA distributions are already tax-free as contributions are made post-tax.
They are not over zealous. they are reacting to the expectations of the average American who expects them to provide tax efficient vehicles such as the 401k and to protect them from losing the money they have saved.
Since when is that the governments, especially the feds, responsibility? Now we expect that the government protect them from investing in a market that they know is a gamble?
Even signing up for a 401K requires that you understand the risk of investing. People put money in there anyway, and when they lose, government is supposed to have ways to rescue them?
This has nothing to do with govenrment protecting peoples money, and everything with the government using those funds as they see fit under the guise of caring.
Government is a disease masquerading as its own cure.
This has nothing to do with govenrment protecting peoples money, and everything with the government using those funds as they see fit under the guise of caring.
No, it doesn't. It's the government encouraging workers to employ a financial strategy that's already available. The government doesn't touch the money.
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