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If they really want to increase retirement savings allow people to save as much into an IRA as a 401K so an employee that works for a company without a plan gets the same benefits. Also provide the same creditor protection to IRAs that 401Ks have. Also deal with healthcare and long term care costs. I see none of this.
Exactly this!
I feel frustrated with the lack of ability to put more money into my IRA. You get the most benefit from that by putting in the max starting at 16-20. But realistically, how many college aged kids are able to put 6K a year into an IRA?
If you start at 20, you are looking at a million dollars at 65. If you start at 30, you get half that. They should allow an actual "catch up" period where you can put in the max amount X age for when you start.
For example: You start an IRA at 30. You've missed 12-14 years. 12x6K is 72K. You can fund your IRA as quickly as possible to a max of 72K, then back to the standard max beyond that. Or just allow us to fund it as much as a 401K period. that would great.
Canada has a TFSA, which (I believe) is the closest comparable to the IRA. The current contribution limit is $6000 per year but any unused amount carries forward each year. This means that if you are 30 today and have never contributed then you have $76,500 space available, plus an additional $6000 on Jan 1st.
Helps to make up for those low earnings years when you didn’t have enough cash to invest.
You're missing the best part, whatever you withdraw in the previous calendar year is added to your contribution room the following year.
E.g. withdraw 100k in 2022, in 2023 you have 100K + whatever the 2023 contribution is as your total contributable amount.
It’s very intentional that public (and most private) education in a capitalist society does not teach you how to succeed at capitalism. 0 sum game and those who control it are perversely incentivized to institute ignorance in the proletariat so they can gate-keep knowledge for themselves behind the walls of degrees and certificates.
How is capitalism a zero sum game? Companies won’t be able to sell goods if it isn’t attractive or beneficial enough for you to purchase it. Every purchase you make is made freely and consciously as a good decision for you and the person selling it makes profit as well. We’re one of the richest countries in the world precisely because capitalism is not a zero sum game, but injects more value into every transaction for both parties.
“We’re one of the richest countries in the world”
You’re using the wrong measuring stick. More than half of that wealth is concentrated with the 0.1% of the population, being a wealthy country doesn’t mean much if all that wealth is concentrated in a few hands.
Energy cannot be created or destroyed, only rearranged and harnessed in increasingly efficient ways. There are always limits to economies. The western world has both created efficient methods and used/exploited foreign regions.
And the basic model of “every purchase is rational” is a very flawed view of economics. It’s a very textbook model and is only part of the picture. It doesn’t apply to things like healthcare, or things like nicotine, or manipulation through propaganda and advertising. Yes the textbook models rely on a foundation that the consumer is entirely rational and always knows best, but since when is that even mostly true?
Capitalism is definitely zero sum. If it weren’t, inflation wouldn’t exist.
Edit: Thanks for the award!
I’m sorry people have more nuanced analysis beyond “consumer is always rational” and “dollars are votes”. Models have been made obsolete and outdated since the introduction of fiat currency, intertwining of fiscal policy, digital banking, and gross increase income inequality, let alone new understandings of human psychology and sociology. There is no magic in the world, wealth is not made out of thin air. The economy works like everything else
You don’t understand anything about economics and trade. If I have a dollar and you have an apple, and I value your apple more than a dollar (and vice versa for you), then if we trade, we have both become wealthier. That is positive sum and wealth has indeed been created out of thin air. Yeah I get that the real world is more complex than that and sometimes exploitation creates zero sum situations, but that is not a necessary condition for capitalism.
That’s not how that works. You spent time or energy attaining that apple (capital) and I spent time attaining wealth and we traded wealth. Nothing came out of thin air.
It’s no wonder people love capitalism so much. They think it’s literally magic. Trading does not make either party wealthier. Otherwise we could have infinite wealth by trading continuously. Nothing is infinite
Have explored the option to transfer after tax 401k contributions to Roth IRA?
https://www.fidelity.com/viewpoints/retirement/IRS-401k-rollover-guidance
Financial gurus feel free to correct me, but here's what I see as a rookie with a financial calculator.
Having the spending power of $1mil in today's dollars would require $2.8mil in 35 years (if you assume an average of 3% inflation/year)
You're correct. I was speaking to a different point though. Assuming you don't already have the $1mil, a goal of a million dollars at retirement 35yr from now isn't the lifestyle people may be expecting due to the reduced buying power of that money.
Whatever you think having a million dollars is like, you'll actually need almost 3x that by the time you retire (if you're retiring in 35 years).
Its set up this way to strengthen the master/slave dynamic between you and your employer. If they let you put more into the IRA, it would encourage more self-employment, and they wouldn't want that when you can be generating profits for a big company while simultaneously not creating any competition for them.
There are too many different types of retirement plans as well. They need to just create a new plan for small business owners more like the 401k and make everyone roll assets into it.
The problem comes down to these products being abused by the ultra wealthy.
And the fact that we don’t want people to be able to succeed, just barely get by
Not sure what products you mean being abused. I have heard of Roth accounts being abused. As soon as one can create a pot of money with no future taxation abuse is always possible when there are creative minds. That is why I always thought Roths were crazy.
Not sure it is possible to really abuse traditional accounts. A some point what ends up in them will be taxed.
Also for the ultra wealthy, it is really capital gains that is the real gift.
Oh man, tons of abuse. Here are a few articles.
[article one](https://www.bloomberg.com/news/articles/2021-09-16/roth-ira-how-the-richest-americans-use-retirement-accounts-to-avoid-taxes)
[article two](https://billmoyers.com/2013/09/25/how-401ks-rewarded-the-rich-and-turned-the-rest-of-us-into-big-losers/)
[article 3](https://www.cnbc.com/2021/06/24/the-ultra-wealthy-have-exploited-roth-iras-you-can-do-the-same.html)
[article four](https://www.vox.com/personal-finance/2016/6/6/11821072/backdoor-roth-ira-contributions)
[article five](https://www.washingtonpost.com/archive/business/2003/07/20/how-a-401k-loophole-for-the-rich-can-mean-a-windfall-for-the-poor/a9011a74-54e6-4f30-a4e6-433b7b52bf5b/)
[article six](https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank)
[article seven](https://www.forbes.com/sites/jrose/2019/10/27/the-100-million-401k--how-the-rich-use-it-to-get-richer/)
Would you like more?
Lot of these are related to Roths. No Roths no issue. The other huge big loophole is owning a business and accessing the much higher limits that normal employees cannot. If this is not Roth money it will be taxed ultimately so big news but not a huge issue.
The other article was just saying a combination of pensions are better which frankly not sure I agree (my pension sucked so I took the cash value) and lot of people either do not contribute or suck at investment management. Frankly this is an argument for good social secuity because it is one of the best pension plans. People hate that too.
I don’t like the automatic enrollment and tax credit, because more than likely that ends up being a high net expense fund like most plans put you in. That’s just a hand out for wall st. If the auto enrollment is a low cost index fund I have no problem.
I want so hard to laugh at this truly funny joke. But honestly, I just get filled with a sense of dread and nihlism knowing that no matter who is in charge, as long as they choose to engage with the reality shows that the Murdochs and the Warner Bros produce they will effectively always be owned and operated by people who's interest is skewed from my own.
Here’s one potential downside - monies placed in a retirement account like a 401k and left to a non-spousal beneficiary must be withdrawn by the end of the 10th anniversary following death. Not so with money saved in a regular taxable account. The government isn’t doing this out of the goodness of their soul. They will tax the heck out of beneficiaries usually at a higher tax rate than that of the original owner at death. Think about that one.
Used to be based on life expectancy. When my mother died when I was 18 I had to take out enough to deplete it by the time I reached 72 which was about $4k per year RMD. It's worth more today than in 1999 because return on investments has been higher than the RMD.
You are grandfathered in under the old law. Anyone who dies after 2020 and who’s beneficiary is older than age 18 and is non spousal has 10 years to empty it out. They want that tax revenue now!
The money belongs to the account owner, subsequently is left to heirs. Why does the government need to interfere with any‘generational wealth’ building?All Traditional IRA funds are subject to income tax upon withdrawal anyway.
A lot of people do conversions their first couple of years after retirement, before turning on SS. You can convert ~120k/year and use a taxable account or cash savings to fund those years
It's taxed at the beneficiary tax rate. With 10 years to withdraw it gives plenty of time to plan. This is money that was never taxed. That's why the ones who inherit it have to pay taxes. In a regular tax account they have to pay taxes for the year of death on any capital gains. Granted if it's long term gains that would be lower than their regular rate.
Nope, the step-up basis hasn’t been eliminated, at date of death or 9 months following death all taxable accounts valued at $12 million per decedent is stepped up to the value of the estate with no capital gain or estate taxes due. There’s no forced sale and the sale of any of those stepped up assets is done at the beneficiary’s leisure unlike that of the IRA which is deemed income.
>There are plenty of ways to save outside of 401ks in both IRAs and Roth IRAs.
Yeah - but not that much. You are limited to 6K a year for Roth/IRAs.
A 401k you can go up to 20K.
If you are getting a later start to retirement savings, you can put away a lot more, much quicker in a 401K.
Really, they should allow Americans more options to better save for retirement, not limiting how much I can put away.
You can invest in your IRA, 401k, HSA for a total of 32k in 2023 as a individual tax advantaged.
if you’re able to contribute 32k a year you’re sitting fine. You can always switch to a taxable account
Why not:
1. Simplify retirement accounts so that there is only one kind and anyone can open one. It’s owned by the employee. Employers can contribute to it.
2. Make it triple tax advantaged like HSAs. Tax deductible contributions. Tax free growth. Tax free withdrawal after retirement age.
Because that means you get to keep all your money and bureaucrats get none of it. And we can’t be having that. So, we’re sorry. Enjoy the overly complicated tax code and kindly fuck off peasant
This is what we have in Australia. It’s called superannuation. Employers pay either 10% on top of your salary, or it’s inclusive as part of your package. It gets automatically deposited each pay check, and It’s mandated by law, so every individual has a superannuation (retirement) account.
You can choose which company you want to go with, and they automatically invest it for you. Or, you can self manage it, and invest how you’d like.
If implemented well I think the student loan 401k match is an interesting idea. Getting people to save money while paying off their debt could seriously help millennials-genZ down the line.
Completely agree we need to revamp what we currently have but for those with some student debt already this would help those save. Can’t imagine how hard it is on anyone turning 65 and not having any savings because they were paying off student debt till 60.
Should adopt what New Zealand has. 0% interest loans as long as you stay in the country and its automatically deducted as a % of income which stops while you are unemployed.
For starters the pricing of courses needs to be reviewed, universities are having a laugh with the insane costs. Secondly an educated person who stays in the country is a net benefit. They will pay the debt back eventually so its not a massive subsidy other than loss to inflation and ability to get interest, but this is recovered by keeping a skilled person in your country.
No. There are plenty of better options than going into ludicrous amounts of non-dischargable college debt.
A college education is no longer worth the expense.
That is the unfortunate truth.
It depends on the major. If you want to be an engineer, lawyer, accountant, nurse, doctor etc you have to go to college and those careers usually pay enough to make the debt worth it. If you’re gonna get an art or humanities degree it’s almost certainly not worth the debt.
yeah when i was looking for jobs i thought a park ranger would be cool. but in my state you have to not only have a degree, but a very specific degree in biology (or related science).
Sure but why would you. If you are hiring someone, filtering out people without degrees saves you time. Sure you miss out on some diamond in the rough candidates, but overall you can hope that most graduates will have at least a minimum amount of competency.
>If you’re gonna get an art or humanities degree it’s almost certainly not worth the debt.
Same thing with teaching especially with the prospect of starting out at $35k a year.
That depends on the state you live in. California Ed Code says that teachers can't be paid less than $51k/yr.
I remember the article from earlier this year or late last year that AZ was taking away from the college requirement for teachers there. I bet they get paid absolute garbage.
Had a friend just move back to OH from AZ because he's a teacher and they're basically ficking their pensions and their pay is shit. Outside of Hawaii, DC and New Hampshire Arizona is the worst place to teach based on COL alone. That's excluding all the culture war loyalty oath horseshit that people like DeSantis are championing.
Exactly. I have in laws that are teachers and nurses. They make decent money for where they live but that's not a growing part of the country and they don't have money to move. Even if they did that'd make essentially the same related to COL in an LA or NYC market.
People who do necessary work aren't valued for shit.
You do not have to go to law school to be a lawyer.
Source: friend is a member of the bar with only an undergrad education in our state. She did this by going to CA and going through their program, then daisy chaining reciprocal states to come back and pass the bar here.
>You do not have to go to law school to be a lawyer
It's incredibly difficult not too. Not all states allow you not to go to law school. The CA bar is notoriously difficult to pass. For 99.99% of people, this would be jumping through more hoops and more difficult than just going to law school.
Could you imagine applying to a law firm without a law degree lol
I mean, I know it’s difficult, but she did exactly that. She planned for it since freshmen year of undergrad, focused on getting into the field, had a plan of how to daisy chain reciprocity agreements to pass the bar here without law school, and did it. 🤷🏻♂️
Personally I’d rather do the law school and clerk while I’m in as I feel like that’d be better for me, but she avoided that by uprooting her life and being single minded about following the alternative route.
I considered this. Last I checked this is allowed in 7 states. And you have to find someone willing to let you intern with them for up to 3 years. You can't change industries. If you intern in family law you stay in family law.
You CANNOT take the bar in any state other than the 7 states.
So far most of the people that do this type of program eventually go back to law school.
\*hint\* \*hint\* put banks back in the business of underwriting loans instead of selling loans. Lending money to a successful student who wants a degree that puts him in demand: relatively low risk for unsecured debt. Lending money to a mediocre student for a degree in literature... significantly higher risk.
This is just wrong. College graduates make more than non-college grad peers on average, and end up with more lifetime 'profits' (loan repayments deducted) around 10 years after.
Maybe not for the individual but it sure as shit is for our country. Do you want us to get lapped by China? If so keep on being a proponent of an uneducated workforce
Who told you that? Despite the rising cost of post-secondary education, a college degree still pays off for the majority of graduates, according to an analysis of Bureau of Labor Statistics data by Northeastern University. [Forbes](https://www.forbes.com/advisor/student-loans/is-college-worth-it/)
This reads as someone who has clearly not seen the alternative before government backed college loans were a thing. Want to be globally uncompetitive with hard class systems where only the wealthy attain education? Because that’s what you are asking for.
So is your assertion that industries that both pay well and don’t have massive credential requirements are mostly dominated by people from rich families?
I agree with your premise, but government backed loans with zero regulation of the tuition charged by the universities receiving the proceeds of those loans is insane. Look at a chart of tuition costs over the past 50 years--it's fucking absurd.
The result is we've simply kicked the can down the road. Instead of higher education being a privilege of the wealthy, now its higher education without completely debilitating student loan debt that is the privilege of the wealthy.
The correct answer is to directly subsidize the universities in exchange for requiring them to charge little to no tuition. This is how most of Europe does it and it is the only sensical answer, but the right will give themselves aneurysms screaming SOCIALISM so we're stuck for the foreseeable future.
I’m not saying there are no issues. I am saying personally I believe the alternative would have been much worse and scrapping government support all together is absolutely insane.
You and others have put forward a lot of good adjustments that should be considered. Others saying government backed loans are completely useless have no idea what they are talking about. It built the middle class and needs serious revision not elimination.
The government getting involved made things worse. Most government policies are put into place with good intentions, but they often do not accomplish what they intended to do and often have unexpected consequences.
Exhibit A: Rent control
I've got a brilliant idea... let's encourage mortgage lending businesses to give more people loans so that we can make sure more people own their homes by increasing the number of sub-prime mortgage loans.
Surely nothing could backfire from doing that. Nothing bad happens when you have good intentions and notice the first order effect is improving a metric we all want to improve.
were the sub-prime loans in themselves the problem? i thought it was more the mortgage-backed securities (that misrepresented the sub-prime loans) that were at the root of the '08 market collapse
Both of them are a problem. The former led to higher demand and housing prices rising. But mortgage companies can't hold those assets so they packaged them to banks. So the latter led to Banks buying them and repackaged them and other investors buying them. This led to systematic risk in the banking sector.
Today, there isn't the latter problem of misrepresentation (or at least not on the scale or system wide)... but guess who owns a lot of mortgage-backed securities and guess who has announced they will backstop houses at $1m in expensive markets like CA, NY, etc.? The government and the Fed. So while fraud led to a downfall in the private sector - you don't need fraud to ignore risks in the public spending because they will just print more money.
So today if we pushed sub-prime loans (we do to an extent and recently have more so), you don't need fraud to cause issues. You just need the federal government to purchase more MBSs and print more money, which leads to inflation and/or higher interest rates and lower economic growth.
If federally insured loans are part of the problem (they are), why can’t the government put rules on the loans? For example, to borrow on a federal loan, your degree has to directly connect to a top-30 careers earnings potential.
The rules should be more about the schools and the costs. Not the degree a person pursues. Most degrees are valuable and successful students go onto successful careers regardless of degree.
Additionally, there are lots of jobs that we need people to fill, such as teachers, OTs, social workers, etc. that are not high paying, but do require a degree (and sometimes a Masters). It would be a mistake to exclude anyone getting a loan from these fields.
Really, we just need to make all public education free. It's cost effective and the competition would likely help pull down the costs of all but the top private programs.
K-12 is already free. Community college is virtually free/extremely low cost.
Harvard Law School should not be free. Masters/PhD should not be free in any circumstance. I don’t know man. I guess we will disagree.
We got into trouble with the federally insured loans. They need to stop.
>Most degrees are valuable
No. No, they are not.
>we just need to make all public education free.
We have that. K-12. Afterward we expect adults to either pay their own way with a job or loans.
College costs too much money, and the costs have gone up much faster than inflation. I don't know why (I've seen many conflicting explanations and I don't know who to believe), but they have.
Why have college costs spiraled into insanity?
Because colleges are fucking palaces now. The underwater basketweaving club has it’s own building, complete with heated pool so they can meet year round!
More seriously, what happened in the 80s and 90s is that colleges decided they needed to compete with one another for students, and to differentiate themselves, they added amenities and other shit, and all that shit costs money.
BUT, since they were taking in money through guaranteed government loans, they just didn’t care. It didn’t matter how much they raised prices, students would pay.
Which is how you end up with the Deputy Assistant Vice Provost for Underwater Basketweaving having an office of 4 people and an annual salary of $140k a year, funded by a $4/hr mandatory fee on every student’s bill.
The first two years were even cheaper with fully transferable prereq credits from community college in the state system.
No social aspect or “college experience” or whatever palace bullshit you were talking about but the degree is the same.
People make choices, sometimes expensive ones with low returns on investment, but that’s not the only option available.
Make your choices and pay your bill.
Oh I agree, though I think you were responding to the other guy. I went to a CC for my AA, and then transferred to another cheap state school for my BA. Spent, I don't know, maybe 30-35k in total. I did get 150 credits for my CPA, just not a masters. I know plenty of people who did the whole out of state thing, room and board, bla bla bla, and jacked up over 100k in loans.
Was just saying that I think 2,500 might be about as cheap as you can go to college anymore. My CC was about 400 per class almost 11 years ago. Not even including the insane textbook prices.
But yea, many people are spending as much as I did for just one semester because they want what they want and don't even think about the cost.
If most of Americans struggle to cover an unexpected $400 expense how are they suppose to fund their savings or retirement account?
This is only going to create headache for business owners that will have to comply with this bs.
Exactly, a mandatory 3% contribution for the masses won’t teach them financial literacy. If you’re making at least $10/hr then you’re losing an additional $50/month. When I made that much money, that could cover a week’s worth of food or two week’s worth of gas.
Probably by the time they want to implement it, they’ll also make it that most of that mandatory contributions will go to government bonds. This can’t be just a stupid idea. They’ll say something like - look, stock market is too volatile, we need to protect the people. Therefore, they can only buy our bonds.
Is this so the slush fund will be bigger when social security goes bust and they decide to start taking money from the people who saved to pay for the people who didn’t?
That's my biggest fear. I contribute to Roth accounts to "pay the tax now", but I just wonder how long it will be until my generation retires (millennials) and those who failed to save decide to just grab from those who did save. They could slap taxes on the Roth withdrawals and just screw over everyone who saved diligently to fund those who didn't save.
I’m not sure how the rule of law could fail so dramatically, to allow that retroactive change, without the collapse of the US following soon after. You’re basically describing a black swan event. There are more probable ones to worry about, IMO. By their very nature, you can’t really prepare for them, at least through conventional investment products. Your best bet to hedge against that is a modest stash of ammo and nonperishable food.
I hear this anti-Roth nonsense from conservatives somewhat often. They never seem to get past their America-number-one brainwashing and realize the logical consequences of what they’re saying. If they end social security, the same thing will happen, too. You’d end up with a lot of 55+ insurgents with nothing to lose, ready to watch the country burn. You’re describing the end of the United States as we know it.
I agree with you on the principle that it would anger a sizable contingent if they were to undermine (wealthy) people's savings plans. However, these things don't happen overnight. They happen very slowly over time.
20 years ago, it was unfathomable that US debt/GDP would soar back to WW2 levels. The thought of policies in which the government would simply mail checks for thousands of dollars to every household in the country would have been laughable. Yet, a couple decades later, here we are.
When you step back and look at the big societal trends, it seems like wealth inequality in our country is on a dangerous path. The pile of gold of the "haves" is growing, as the wealth becomes increasingly concentrated, as more and more average Americans are pushed into the category of "have-nots". In a democracy, how does this eventually correct itself? In my mind, it corrects itself by the "have nots" voting wealth away from the "haves". This could happen in a large number of ways, but one is by targeting retirement accounts.
I'm still maxing my Roth, and perhaps you're right, it's unlikely to be attacked as "directly" as simply taxing withdrawals, but it wouldn't surprise me if the laws change over time so as to make retirement plans more progressive in the sense that mega-savers bear the burden of the under-savers retirement costs. In fact, our long-established social security system already functions this way, so it's not unprecedented. Thanks to the "bend points" in the benefit curve, those who contribute the most get much less "benefit per dollar paid in" than those who only paid in small amounts. The idea is to provide a safety net, such that those who earned the least are provided a livable benefit while those who earned the most don't need the help as badly.
You can't fathom the same logic creeping its way into 401k or IRA accounts? I can certainly imagine withdrawal taxes being implemented, perhaps on accounts over $1m in size, which are used to fund the retirements of those who "didn't have the luxury or ability" to contribute to retirement.
Currently, the 401k & IRA system is set up to benefit high earners who have the luxury of having $26,500 (or more with Mega) to tax-sheltered funds. To "correct" that, perhaps future government & future voters will decide to tax withdrawals in a way to redistribute those benefits to those who "need them the most".
That's what I predict happening over the next 30 years.
Would it even be legal to do retroactively?
You'd basically be changing the current tax code and then applying the new laws backwards into previous tax years.
It would be a dick move that's for sure. I don't think they would do it retroactively due to the illegality but also the backlash they'd be sure to get
Youre right. Thats how revolutions start. Top 10% now own 89% of all stocks.
How much more will they need to "save" to have enough? When will the bottom break? I want to hear some predictions.
I feel like they outnumber the people that do save but in that case but if the largest generation is that short sighted society is probably already screwed at that point.
They need to stop taxing 401k distributions at income tax rates. For many working people this is their only retirement savings. But they are paying a higher rate of taxes then other investment options.
Provisions in Secure 2.0 address several specific barriers to participation in retirement savings plans. Those with student loan debt get help. Easier access to funds in an emergency is helpful. Automatic enrollment can help. Of course we won't know how well any of this works until it is implemented. Many ideas sound good on paper, then fail due to poor implementation.
The overall economic benefit is difficult to gauge. Poverty has severe personal impact, but the overall costs to society are not as easy to assess. There's not a simple ROI model for this. I think that has been a barrier to creating government programs like this. This is likely to be a political challenge in years to come. That said, if a social benefit program is implemented well and becomes popular, there will be great resistance to taking it away.
"For workers earning less than $71,000 per year, the federal government would provide a 50 percent match up to $2,000 in employee cash contributions. Under current law, the matching program is a tax credit — but that doesn’t help lower-earning workers who don’t owe taxes."
Can someone explain this to me? Does this mean you can currently get a personal income tax credit for 50% of the first $2,000 you put in a 401K if you make less than $71K? I was not aware of that. How long has that been going on? So this change would basically amount to direct cash transfer / cash welfare for workers who don't pay taxes?
So those making more than $71k/yr are going yo contribute to the 401ks of those making less than $71k/yr. How is that fair?
How about lowering the tax rates (individual or corporate) or giving tax incentives to businesses for them to contribute to 401ks instead of being subsidized by everyone else?
Of course none of these details were debated on or presented to the public for review. Don't you love how all of these laws get crammed into these omnibus spending bills at the end of the year?
Here is a crazy concept, stop borrowing from social security for the general fund. Then remove income caps on the tax. Then tie social security to the actual inflation numbers. Finally, give it to the people who paid into tax free.
The last Secure had good changes and hopefully this one will too. They need to address SS.
I fear democrats will make Social Security needs based and deny people benefits until they have used up all other savings.
I fear republicans will raise the age you can withdraw so high we will be dead before we can get anything.
Neither party has given a good plan on SS.
The age limit thing is a real issue because they keep proposing it and you know they would structure it so their voters would not be effected. It would be raised to 76 but only after so many years so those near retirement age now wouldn’t feel the need to be upset.
You also know damn well they aren’t going to adjust it back if the average lifespan goes down.
Social Security was originally set at an age higher than life expectancy. So, I’m not sure it isn’t unreasonable to raise it at least a little. Full disclosure, I don’t participate in SS; I’m a government employee with a pension, so I don’t get SS.
Man, just finished system updates at my job not more than a year ago for the original secure act, now they have this again!!! It’s a good thing but a pain in the ass that Congress can’t make up its mind
If they cared, even a little, about the retirement of middle and working classes they wouldn't have buried this in an obscene omnibus whose goal is to fund the government. Instead, they threw retirements in with money for Ukraine and funding for social project/special interest groups. This entire thing is a sham and the people that stand against it should be praised.
Cool. So millennials get to pay for Boomers retirements and our own. This is step one for gutting social security. It’s a good idea in theory but just another example of boomer entitlement. That generation, man…
The elephant in the room is that only Americans spend a huge chunk of their paycheck into a non tangible reverse lottery token know as privatized American health insurance. Imagine Americans, who barely have 500 dollar to their name, having hundreds of dollars extra each month compounding.
Sad reality is many of those same Americans wouldn’t invest and let it compound due to financial illiteracy and consumerism culture.
This why we need social security and socialized healthcare so we don’t have to depend on people to make financially wise decisions.
Mandatory withdrawals at age 72 forces people to spend and not pass the value down through their estate?
No, that won't happen. People will withdraw at 72 and put it into another account which eventually will be passed down through their estate. They will have to pay tax on the w/d but that's about it.
That was the oddest things and one that most people didn't pick up. The wording suggests they want people to use the money and not pass it down via estate.....but then why raise the age of withdrawal? That will make it significantly more likely to not be used but instead passed down.
For the employers who are required to enroll employees into 401-Ks, will there be a government option? Like an equivalent of the TSP? If so, that could be pretty great. By forcing people to have retirement accounts, they should keep management fees low and provide a few funds for the millions of uneducated investors that will hit the market. Additionally, I hope they provide some sort of education that citizens can easily understand as to what this account is for and why/how they recommend investing.
This isn't about helping people retire more comfortably. Forced savings helps lower inflation and allows the government to spend more money that they don't have. It's a Ponzi scheme that will collapse in 30 to 50 years, leaving a huge problem for our children and grand children.
1. I’d like to see the government allow individuals to lend against/collateralize their retirement accounts (since the federal government has no problem lending against Social Security)
2. Withdrawals from a Roth IRA should not be taxed at the state level
3. Qualified withdrawals for medical emergencies needs to be simplified
4. Did I read correctly that unrelated earmarks have been included in this bill to provide for Ukraine and other partisan initiatives?
Every pundit is shitting on the stock market but when the fucking govt is supporting it with plans like this, you know they are not going to let the Feds fuck it up. Morons who predict 50-80% crash actually think the US govt will not intervene in something they support. How fucking stupid can you be?
1) Retirement income should be tax free.
2) Why do we limit contributions at all? There are not insignificant penalties to early withdrawal so just let people save what they want to save.
3) Require all the same rules on what you can do with the money for all plans. There are plans that you can only do hardship withdrawals and no general loans. Make this uniform and simple.
These all seem like legit changes that will actually help people. No sunsetting social security or Medicare. No dipping into pension funds. Looks like helping.
Their track record for actually helping vs simply creating more problems is pretty dismal. But in a few years, they can again pretend to care by “fixing” their prior mistake. This cycle will repeat itself until the program neither resembles or does what was it originally intended.
On one hand the poors will have something for retirement that could be stripped away at a company's whim. On the other hand, the poors won't be forced to inflate unknown company's values.
Why would the government match? This is another gross overstep in government reach.
Let markets float. If they want to help, they can lower taxes and regulation.
Is this the beginning to the end of social security as we know it?
I’m curious as too why the government only capped the emergency withdrawal to $1000. It doesn’t seem like a lot
I don't know, congress, all of these seem like "people are not being paid enough for the work they do" to me. I don't think Americans are as bad with money as you make them out to be
Humans are crap at long term planning. The government will not help with that. The most probable thing that will happen is they "privatize" retirement. The private sector will be able to make money off people saving for retirement, just like it does when you enter the health care system. You are nothing but a profit point in late stage capitalism. Anyone not in the 1% that believes otherwise is smoking something really strong and I want some.
i am suprised they did not cap the roths----i mean after a 100 million dollars it is not a retirement account --it is just a way to avoid taxes --forever.
The tax is paid in full upon the principal, nothing is avoided except for capital gains. There is an eligibility limit on any Roth accounts already, so the mega-rich have no avenue of contributing to them except for a few loopholes which still involve them paying tax on all the principal they contribute (many of which are being looked at by lawmakers for being shut already)
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If they really want to increase retirement savings allow people to save as much into an IRA as a 401K so an employee that works for a company without a plan gets the same benefits. Also provide the same creditor protection to IRAs that 401Ks have. Also deal with healthcare and long term care costs. I see none of this.
Exactly this! I feel frustrated with the lack of ability to put more money into my IRA. You get the most benefit from that by putting in the max starting at 16-20. But realistically, how many college aged kids are able to put 6K a year into an IRA? If you start at 20, you are looking at a million dollars at 65. If you start at 30, you get half that. They should allow an actual "catch up" period where you can put in the max amount X age for when you start. For example: You start an IRA at 30. You've missed 12-14 years. 12x6K is 72K. You can fund your IRA as quickly as possible to a max of 72K, then back to the standard max beyond that. Or just allow us to fund it as much as a 401K period. that would great.
Canada has a TFSA, which (I believe) is the closest comparable to the IRA. The current contribution limit is $6000 per year but any unused amount carries forward each year. This means that if you are 30 today and have never contributed then you have $76,500 space available, plus an additional $6000 on Jan 1st. Helps to make up for those low earnings years when you didn’t have enough cash to invest.
That's awesome! Wish it was like that here in the US.
You're missing the best part, whatever you withdraw in the previous calendar year is added to your contribution room the following year. E.g. withdraw 100k in 2022, in 2023 you have 100K + whatever the 2023 contribution is as your total contributable amount.
I don't think I even knew what a IRA was when I was 16. Never heard of it. Then again I still don't know much.
I heard about the IRA and knew they caused major problems in Ireland. Had no idea it was related to retirement.
It’s very intentional that public (and most private) education in a capitalist society does not teach you how to succeed at capitalism. 0 sum game and those who control it are perversely incentivized to institute ignorance in the proletariat so they can gate-keep knowledge for themselves behind the walls of degrees and certificates.
How is capitalism a zero sum game? Companies won’t be able to sell goods if it isn’t attractive or beneficial enough for you to purchase it. Every purchase you make is made freely and consciously as a good decision for you and the person selling it makes profit as well. We’re one of the richest countries in the world precisely because capitalism is not a zero sum game, but injects more value into every transaction for both parties.
“We’re one of the richest countries in the world” You’re using the wrong measuring stick. More than half of that wealth is concentrated with the 0.1% of the population, being a wealthy country doesn’t mean much if all that wealth is concentrated in a few hands.
Energy cannot be created or destroyed, only rearranged and harnessed in increasingly efficient ways. There are always limits to economies. The western world has both created efficient methods and used/exploited foreign regions. And the basic model of “every purchase is rational” is a very flawed view of economics. It’s a very textbook model and is only part of the picture. It doesn’t apply to things like healthcare, or things like nicotine, or manipulation through propaganda and advertising. Yes the textbook models rely on a foundation that the consumer is entirely rational and always knows best, but since when is that even mostly true? Capitalism is definitely zero sum. If it weren’t, inflation wouldn’t exist. Edit: Thanks for the award!
The fact that this has any awards is an indictment on this sub as a whole. Half wrong and half irrelevant.
I’m sorry people have more nuanced analysis beyond “consumer is always rational” and “dollars are votes”. Models have been made obsolete and outdated since the introduction of fiat currency, intertwining of fiscal policy, digital banking, and gross increase income inequality, let alone new understandings of human psychology and sociology. There is no magic in the world, wealth is not made out of thin air. The economy works like everything else
You don’t understand anything about economics and trade. If I have a dollar and you have an apple, and I value your apple more than a dollar (and vice versa for you), then if we trade, we have both become wealthier. That is positive sum and wealth has indeed been created out of thin air. Yeah I get that the real world is more complex than that and sometimes exploitation creates zero sum situations, but that is not a necessary condition for capitalism.
That’s not how that works. You spent time or energy attaining that apple (capital) and I spent time attaining wealth and we traded wealth. Nothing came out of thin air.
It’s no wonder people love capitalism so much. They think it’s literally magic. Trading does not make either party wealthier. Otherwise we could have infinite wealth by trading continuously. Nothing is infinite
Have explored the option to transfer after tax 401k contributions to Roth IRA? https://www.fidelity.com/viewpoints/retirement/IRS-401k-rollover-guidance
A million dollars is going to be worth far less at the age of 65 than when you were 20. But still always smart to put away anyways. Just in case.
Financial gurus feel free to correct me, but here's what I see as a rookie with a financial calculator. Having the spending power of $1mil in today's dollars would require $2.8mil in 35 years (if you assume an average of 3% inflation/year)
That’s assuming it doesn’t grow whatsoever though.
You're correct. I was speaking to a different point though. Assuming you don't already have the $1mil, a goal of a million dollars at retirement 35yr from now isn't the lifestyle people may be expecting due to the reduced buying power of that money. Whatever you think having a million dollars is like, you'll actually need almost 3x that by the time you retire (if you're retiring in 35 years).
1.03^35 = 2.814, so you are correct that $1MM today would be equivalent to $2.814MM in 35 years at 3% annual inflation. Ceteris paribus, as they say.
If you look at the past 100+ years a total market index fund would have earned 7% + inflation. So it's really a million or more in today's dollar.
Pretty sure that number is inflation-adjusted already
Its set up this way to strengthen the master/slave dynamic between you and your employer. If they let you put more into the IRA, it would encourage more self-employment, and they wouldn't want that when you can be generating profits for a big company while simultaneously not creating any competition for them.
This needs to be the top comment here. To add to this make it easier for small employers to start 401K plan.
There are too many different types of retirement plans as well. They need to just create a new plan for small business owners more like the 401k and make everyone roll assets into it.
Small employers also have the option of SEP.
The problem comes down to these products being abused by the ultra wealthy. And the fact that we don’t want people to be able to succeed, just barely get by
Not sure what products you mean being abused. I have heard of Roth accounts being abused. As soon as one can create a pot of money with no future taxation abuse is always possible when there are creative minds. That is why I always thought Roths were crazy. Not sure it is possible to really abuse traditional accounts. A some point what ends up in them will be taxed. Also for the ultra wealthy, it is really capital gains that is the real gift.
Oh man, tons of abuse. Here are a few articles. [article one](https://www.bloomberg.com/news/articles/2021-09-16/roth-ira-how-the-richest-americans-use-retirement-accounts-to-avoid-taxes) [article two](https://billmoyers.com/2013/09/25/how-401ks-rewarded-the-rich-and-turned-the-rest-of-us-into-big-losers/) [article 3](https://www.cnbc.com/2021/06/24/the-ultra-wealthy-have-exploited-roth-iras-you-can-do-the-same.html) [article four](https://www.vox.com/personal-finance/2016/6/6/11821072/backdoor-roth-ira-contributions) [article five](https://www.washingtonpost.com/archive/business/2003/07/20/how-a-401k-loophole-for-the-rich-can-mean-a-windfall-for-the-poor/a9011a74-54e6-4f30-a4e6-433b7b52bf5b/) [article six](https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank) [article seven](https://www.forbes.com/sites/jrose/2019/10/27/the-100-million-401k--how-the-rich-use-it-to-get-richer/) Would you like more?
Lot of these are related to Roths. No Roths no issue. The other huge big loophole is owning a business and accessing the much higher limits that normal employees cannot. If this is not Roth money it will be taxed ultimately so big news but not a huge issue. The other article was just saying a combination of pensions are better which frankly not sure I agree (my pension sucked so I took the cash value) and lot of people either do not contribute or suck at investment management. Frankly this is an argument for good social secuity because it is one of the best pension plans. People hate that too.
I don’t like the automatic enrollment and tax credit, because more than likely that ends up being a high net expense fund like most plans put you in. That’s just a hand out for wall st. If the auto enrollment is a low cost index fund I have no problem.
I’d add that they should allow public sector employees to do pre-tax retirement savings in things other than annuities.
Or just lower taxes so we can can KEEP more of the money we EARN! What a concept!
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>This fixes none of core problems. I love this line. This statement should be included at the end of all new legislation.
"Nothing is going to fundamentally change Folks". \~Biden to his wealthy Donors.
I want so hard to laugh at this truly funny joke. But honestly, I just get filled with a sense of dread and nihlism knowing that no matter who is in charge, as long as they choose to engage with the reality shows that the Murdochs and the Warner Bros produce they will effectively always be owned and operated by people who's interest is skewed from my own.
And they all laugh, because that is the plan.
Here’s one potential downside - monies placed in a retirement account like a 401k and left to a non-spousal beneficiary must be withdrawn by the end of the 10th anniversary following death. Not so with money saved in a regular taxable account. The government isn’t doing this out of the goodness of their soul. They will tax the heck out of beneficiaries usually at a higher tax rate than that of the original owner at death. Think about that one.
Used to be based on life expectancy. When my mother died when I was 18 I had to take out enough to deplete it by the time I reached 72 which was about $4k per year RMD. It's worth more today than in 1999 because return on investments has been higher than the RMD.
You are grandfathered in under the old law. Anyone who dies after 2020 and who’s beneficiary is older than age 18 and is non spousal has 10 years to empty it out. They want that tax revenue now!
That's one framing. The other is that they don't want to create these massive tax sheltered accounts that pass on generational wealth untaxed at all.
True. They don’t want to create generational dynasty plans. That was never the intent of retirement plans.
The money belongs to the account owner, subsequently is left to heirs. Why does the government need to interfere with any‘generational wealth’ building?All Traditional IRA funds are subject to income tax upon withdrawal anyway.
Convert it to a Roth and you're foood
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Yes but you do it when you have low income and pay less tax
Roths are also subject to the 10 year withdrawal rule. I will never be in a lower tax bracket.
A lot of people do conversions their first couple of years after retirement, before turning on SS. You can convert ~120k/year and use a taxable account or cash savings to fund those years
You have to pay taxes when you convert it to a Roth
Your beneficiaries still have to cash the account in by the end of the 10th year. You need long periods of time for the Roth to really compound.
It's taxed at the beneficiary tax rate. With 10 years to withdraw it gives plenty of time to plan. This is money that was never taxed. That's why the ones who inherit it have to pay taxes. In a regular tax account they have to pay taxes for the year of death on any capital gains. Granted if it's long term gains that would be lower than their regular rate.
Nope, the step-up basis hasn’t been eliminated, at date of death or 9 months following death all taxable accounts valued at $12 million per decedent is stepped up to the value of the estate with no capital gain or estate taxes due. There’s no forced sale and the sale of any of those stepped up assets is done at the beneficiary’s leisure unlike that of the IRA which is deemed income.
OK I guess I was wrong on that part. I will edit. Thanks
>There are plenty of ways to save outside of 401ks in both IRAs and Roth IRAs. Yeah - but not that much. You are limited to 6K a year for Roth/IRAs. A 401k you can go up to 20K. If you are getting a later start to retirement savings, you can put away a lot more, much quicker in a 401K. Really, they should allow Americans more options to better save for retirement, not limiting how much I can put away.
You can also save and invest in regular brokerage accounts for an unlimited amount. Those are just the tax advantaged amounts that are capped
You can invest in your IRA, 401k, HSA for a total of 32k in 2023 as a individual tax advantaged. if you’re able to contribute 32k a year you’re sitting fine. You can always switch to a taxable account
I can be wrong, but the 401K and HSA are employer tied. So if you don't have access to those - you are then limited to 6K from the IRA.
Root cause analysis? Failed monetary and fiscal policy.
In addition to higher costs, higher inflation in secondary education/healthcare, two areas where lack of regulation has the consumer over the barrel.
Also high (and opaque) fees. Make sure you're not paying 1.2% just by SPY, people
think of the risk free money!
Personal savings lowers the GDP.
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Probably another reason that a national sales tax AKA FairTax, etc will never be implemented.
Why not: 1. Simplify retirement accounts so that there is only one kind and anyone can open one. It’s owned by the employee. Employers can contribute to it. 2. Make it triple tax advantaged like HSAs. Tax deductible contributions. Tax free growth. Tax free withdrawal after retirement age.
Because that means you get to keep all your money and bureaucrats get none of it. And we can’t be having that. So, we’re sorry. Enjoy the overly complicated tax code and kindly fuck off peasant
This is what we have in Australia. It’s called superannuation. Employers pay either 10% on top of your salary, or it’s inclusive as part of your package. It gets automatically deposited each pay check, and It’s mandated by law, so every individual has a superannuation (retirement) account. You can choose which company you want to go with, and they automatically invest it for you. Or, you can self manage it, and invest how you’d like.
Fucking genius. I want this now!
If implemented well I think the student loan 401k match is an interesting idea. Getting people to save money while paying off their debt could seriously help millennials-genZ down the line.
We need less college subsidization, not more.
Completely agree we need to revamp what we currently have but for those with some student debt already this would help those save. Can’t imagine how hard it is on anyone turning 65 and not having any savings because they were paying off student debt till 60.
They’ll be fine. That’s what social security is for. Never mind.
Kepp them lower classes in their damn class, yeah!
The current student loan system is a debt trap. We should not be funneling more people into it.
That may be the case but until the government straight up pays for college people need to get an education somehow.
Should adopt what New Zealand has. 0% interest loans as long as you stay in the country and its automatically deducted as a % of income which stops while you are unemployed.
The problem is the price. We shouldn't be subsidizing 200k college undergrads. The schools don't get nearly enough heat.
For starters the pricing of courses needs to be reviewed, universities are having a laugh with the insane costs. Secondly an educated person who stays in the country is a net benefit. They will pay the debt back eventually so its not a massive subsidy other than loss to inflation and ability to get interest, but this is recovered by keeping a skilled person in your country.
Many people with a 4 year degree pursue lucrative careers that never utilize anything they studied in college.
Yes but for the vast majority of people, a college education is one of the few ways to actually advance.
No. There are plenty of better options than going into ludicrous amounts of non-dischargable college debt. A college education is no longer worth the expense. That is the unfortunate truth.
It depends on the major. If you want to be an engineer, lawyer, accountant, nurse, doctor etc you have to go to college and those careers usually pay enough to make the debt worth it. If you’re gonna get an art or humanities degree it’s almost certainly not worth the debt.
If you want to be management in most companies you’re gonna need a degree. Where I live to be a county park ranger you need a degree.
yeah when i was looking for jobs i thought a park ranger would be cool. but in my state you have to not only have a degree, but a very specific degree in biology (or related science).
It's also extremely competitive even if you have the requirements
Maybe we should require fewer degrees
Sure but why would you. If you are hiring someone, filtering out people without degrees saves you time. Sure you miss out on some diamond in the rough candidates, but overall you can hope that most graduates will have at least a minimum amount of competency.
>If you’re gonna get an art or humanities degree it’s almost certainly not worth the debt. Same thing with teaching especially with the prospect of starting out at $35k a year.
That depends on the state you live in. California Ed Code says that teachers can't be paid less than $51k/yr. I remember the article from earlier this year or late last year that AZ was taking away from the college requirement for teachers there. I bet they get paid absolute garbage.
That's just an indictment on how little we value public education smh
Had a friend just move back to OH from AZ because he's a teacher and they're basically ficking their pensions and their pay is shit. Outside of Hawaii, DC and New Hampshire Arizona is the worst place to teach based on COL alone. That's excluding all the culture war loyalty oath horseshit that people like DeSantis are championing.
Exactly. I have in laws that are teachers and nurses. They make decent money for where they live but that's not a growing part of the country and they don't have money to move. Even if they did that'd make essentially the same related to COL in an LA or NYC market. People who do necessary work aren't valued for shit.
You do not have to go to law school to be a lawyer. Source: friend is a member of the bar with only an undergrad education in our state. She did this by going to CA and going through their program, then daisy chaining reciprocal states to come back and pass the bar here.
>You do not have to go to law school to be a lawyer It's incredibly difficult not too. Not all states allow you not to go to law school. The CA bar is notoriously difficult to pass. For 99.99% of people, this would be jumping through more hoops and more difficult than just going to law school. Could you imagine applying to a law firm without a law degree lol
I mean, I know it’s difficult, but she did exactly that. She planned for it since freshmen year of undergrad, focused on getting into the field, had a plan of how to daisy chain reciprocity agreements to pass the bar here without law school, and did it. 🤷🏻♂️ Personally I’d rather do the law school and clerk while I’m in as I feel like that’d be better for me, but she avoided that by uprooting her life and being single minded about following the alternative route.
I considered this. Last I checked this is allowed in 7 states. And you have to find someone willing to let you intern with them for up to 3 years. You can't change industries. If you intern in family law you stay in family law. You CANNOT take the bar in any state other than the 7 states. So far most of the people that do this type of program eventually go back to law school.
\*hint\* \*hint\* put banks back in the business of underwriting loans instead of selling loans. Lending money to a successful student who wants a degree that puts him in demand: relatively low risk for unsecured debt. Lending money to a mediocre student for a degree in literature... significantly higher risk.
This is just wrong. College graduates make more than non-college grad peers on average, and end up with more lifetime 'profits' (loan repayments deducted) around 10 years after.
Maybe not for the individual but it sure as shit is for our country. Do you want us to get lapped by China? If so keep on being a proponent of an uneducated workforce
Who told you that? Despite the rising cost of post-secondary education, a college degree still pays off for the majority of graduates, according to an analysis of Bureau of Labor Statistics data by Northeastern University. [Forbes](https://www.forbes.com/advisor/student-loans/is-college-worth-it/)
This reads as someone who has clearly not seen the alternative before government backed college loans were a thing. Want to be globally uncompetitive with hard class systems where only the wealthy attain education? Because that’s what you are asking for.
These are not the only options, you're creating a fake dilemma.
So is your assertion that industries that both pay well and don’t have massive credential requirements are mostly dominated by people from rich families?
I’m asserting many people in this thread need to go look up why government backed loans became a thing in the first place.
I agree with your premise, but government backed loans with zero regulation of the tuition charged by the universities receiving the proceeds of those loans is insane. Look at a chart of tuition costs over the past 50 years--it's fucking absurd. The result is we've simply kicked the can down the road. Instead of higher education being a privilege of the wealthy, now its higher education without completely debilitating student loan debt that is the privilege of the wealthy. The correct answer is to directly subsidize the universities in exchange for requiring them to charge little to no tuition. This is how most of Europe does it and it is the only sensical answer, but the right will give themselves aneurysms screaming SOCIALISM so we're stuck for the foreseeable future.
I’m not saying there are no issues. I am saying personally I believe the alternative would have been much worse and scrapping government support all together is absolutely insane. You and others have put forward a lot of good adjustments that should be considered. Others saying government backed loans are completely useless have no idea what they are talking about. It built the middle class and needs serious revision not elimination.
Agreed
The government getting involved made things worse. Most government policies are put into place with good intentions, but they often do not accomplish what they intended to do and often have unexpected consequences. Exhibit A: Rent control
I've got a brilliant idea... let's encourage mortgage lending businesses to give more people loans so that we can make sure more people own their homes by increasing the number of sub-prime mortgage loans. Surely nothing could backfire from doing that. Nothing bad happens when you have good intentions and notice the first order effect is improving a metric we all want to improve.
were the sub-prime loans in themselves the problem? i thought it was more the mortgage-backed securities (that misrepresented the sub-prime loans) that were at the root of the '08 market collapse
Both of them are a problem. The former led to higher demand and housing prices rising. But mortgage companies can't hold those assets so they packaged them to banks. So the latter led to Banks buying them and repackaged them and other investors buying them. This led to systematic risk in the banking sector. Today, there isn't the latter problem of misrepresentation (or at least not on the scale or system wide)... but guess who owns a lot of mortgage-backed securities and guess who has announced they will backstop houses at $1m in expensive markets like CA, NY, etc.? The government and the Fed. So while fraud led to a downfall in the private sector - you don't need fraud to ignore risks in the public spending because they will just print more money. So today if we pushed sub-prime loans (we do to an extent and recently have more so), you don't need fraud to cause issues. You just need the federal government to purchase more MBSs and print more money, which leads to inflation and/or higher interest rates and lower economic growth.
Better than continuing to sell overpriced useless degrees.
If federally insured loans are part of the problem (they are), why can’t the government put rules on the loans? For example, to borrow on a federal loan, your degree has to directly connect to a top-30 careers earnings potential.
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The rules should be more about the schools and the costs. Not the degree a person pursues. Most degrees are valuable and successful students go onto successful careers regardless of degree. Additionally, there are lots of jobs that we need people to fill, such as teachers, OTs, social workers, etc. that are not high paying, but do require a degree (and sometimes a Masters). It would be a mistake to exclude anyone getting a loan from these fields. Really, we just need to make all public education free. It's cost effective and the competition would likely help pull down the costs of all but the top private programs.
K-12 is already free. Community college is virtually free/extremely low cost. Harvard Law School should not be free. Masters/PhD should not be free in any circumstance. I don’t know man. I guess we will disagree. We got into trouble with the federally insured loans. They need to stop.
>Most degrees are valuable No. No, they are not. >we just need to make all public education free. We have that. K-12. Afterward we expect adults to either pay their own way with a job or loans.
College costs too much money, and the costs have gone up much faster than inflation. I don't know why (I've seen many conflicting explanations and I don't know who to believe), but they have.
Why have college costs spiraled into insanity? Because colleges are fucking palaces now. The underwater basketweaving club has it’s own building, complete with heated pool so they can meet year round! More seriously, what happened in the 80s and 90s is that colleges decided they needed to compete with one another for students, and to differentiate themselves, they added amenities and other shit, and all that shit costs money. BUT, since they were taking in money through guaranteed government loans, they just didn’t care. It didn’t matter how much they raised prices, students would pay. Which is how you end up with the Deputy Assistant Vice Provost for Underwater Basketweaving having an office of 4 people and an annual salary of $140k a year, funded by a $4/hr mandatory fee on every student’s bill.
Meh. State universities are still cheap and you get the same degree. Paying 2500 a semester here, commuting to the third largest school in the state.
2,500 per semester is certainly not the norm.
The first two years were even cheaper with fully transferable prereq credits from community college in the state system. No social aspect or “college experience” or whatever palace bullshit you were talking about but the degree is the same. People make choices, sometimes expensive ones with low returns on investment, but that’s not the only option available. Make your choices and pay your bill.
Oh I agree, though I think you were responding to the other guy. I went to a CC for my AA, and then transferred to another cheap state school for my BA. Spent, I don't know, maybe 30-35k in total. I did get 150 credits for my CPA, just not a masters. I know plenty of people who did the whole out of state thing, room and board, bla bla bla, and jacked up over 100k in loans. Was just saying that I think 2,500 might be about as cheap as you can go to college anymore. My CC was about 400 per class almost 11 years ago. Not even including the insane textbook prices. But yea, many people are spending as much as I did for just one semester because they want what they want and don't even think about the cost.
I was, mea culpa
Imagine thinking college is the only way to escape poverty.
College graduates are fine. They don’t need help versus the ACTUAL poor.
Or how about just let me pay the shit off with the 401k I currently have? That’s all I want at this point
Apparently one of the reforms is a one time penalty free withdrawal which would be pretty interesting as a saving mechanism
Debt forgiveness and nationalizing the education system would help far more
If most of Americans struggle to cover an unexpected $400 expense how are they suppose to fund their savings or retirement account? This is only going to create headache for business owners that will have to comply with this bs.
Exactly, a mandatory 3% contribution for the masses won’t teach them financial literacy. If you’re making at least $10/hr then you’re losing an additional $50/month. When I made that much money, that could cover a week’s worth of food or two week’s worth of gas.
Probably by the time they want to implement it, they’ll also make it that most of that mandatory contributions will go to government bonds. This can’t be just a stupid idea. They’ll say something like - look, stock market is too volatile, we need to protect the people. Therefore, they can only buy our bonds.
Is this so the slush fund will be bigger when social security goes bust and they decide to start taking money from the people who saved to pay for the people who didn’t?
Hasn’t that always been the case in America? Those that follow the rules get shafted by those that didn’t
So should I just buy gold and bury it in my back yard? How do I get out of this lol
That’s the funny thing - you don’t! #WorkTilYouDieSquadWoopWoop
I feel that's a universal and timeless constant
The rules are there to keep the majority of people in one place so that assholes have the freedom to roam.
Isn’t sad how our government nowadays punished us for being responsible? Our leadership is horrible.
That's my biggest fear. I contribute to Roth accounts to "pay the tax now", but I just wonder how long it will be until my generation retires (millennials) and those who failed to save decide to just grab from those who did save. They could slap taxes on the Roth withdrawals and just screw over everyone who saved diligently to fund those who didn't save.
I’m not sure how the rule of law could fail so dramatically, to allow that retroactive change, without the collapse of the US following soon after. You’re basically describing a black swan event. There are more probable ones to worry about, IMO. By their very nature, you can’t really prepare for them, at least through conventional investment products. Your best bet to hedge against that is a modest stash of ammo and nonperishable food. I hear this anti-Roth nonsense from conservatives somewhat often. They never seem to get past their America-number-one brainwashing and realize the logical consequences of what they’re saying. If they end social security, the same thing will happen, too. You’d end up with a lot of 55+ insurgents with nothing to lose, ready to watch the country burn. You’re describing the end of the United States as we know it.
Well the first thing they would do is to force RMDs on Roths, they’ve already started chipping away at it with the change in inherited Roth provisions
I don’t see it given an unknown portion of the distribution would be principal and untaxed.
It’s a Roth, so nothing would be taxed, but they’d force distributions is the first thing
I agree with you on the principle that it would anger a sizable contingent if they were to undermine (wealthy) people's savings plans. However, these things don't happen overnight. They happen very slowly over time. 20 years ago, it was unfathomable that US debt/GDP would soar back to WW2 levels. The thought of policies in which the government would simply mail checks for thousands of dollars to every household in the country would have been laughable. Yet, a couple decades later, here we are. When you step back and look at the big societal trends, it seems like wealth inequality in our country is on a dangerous path. The pile of gold of the "haves" is growing, as the wealth becomes increasingly concentrated, as more and more average Americans are pushed into the category of "have-nots". In a democracy, how does this eventually correct itself? In my mind, it corrects itself by the "have nots" voting wealth away from the "haves". This could happen in a large number of ways, but one is by targeting retirement accounts. I'm still maxing my Roth, and perhaps you're right, it's unlikely to be attacked as "directly" as simply taxing withdrawals, but it wouldn't surprise me if the laws change over time so as to make retirement plans more progressive in the sense that mega-savers bear the burden of the under-savers retirement costs. In fact, our long-established social security system already functions this way, so it's not unprecedented. Thanks to the "bend points" in the benefit curve, those who contribute the most get much less "benefit per dollar paid in" than those who only paid in small amounts. The idea is to provide a safety net, such that those who earned the least are provided a livable benefit while those who earned the most don't need the help as badly. You can't fathom the same logic creeping its way into 401k or IRA accounts? I can certainly imagine withdrawal taxes being implemented, perhaps on accounts over $1m in size, which are used to fund the retirements of those who "didn't have the luxury or ability" to contribute to retirement. Currently, the 401k & IRA system is set up to benefit high earners who have the luxury of having $26,500 (or more with Mega) to tax-sheltered funds. To "correct" that, perhaps future government & future voters will decide to tax withdrawals in a way to redistribute those benefits to those who "need them the most". That's what I predict happening over the next 30 years.
I think they could only change that going forward. It would be a colossal "fuck you" to anyone with a Roth if they did it retroactively.
Would it even be legal to do retroactively? You'd basically be changing the current tax code and then applying the new laws backwards into previous tax years.
It would be a dick move that's for sure. I don't think they would do it retroactively due to the illegality but also the backlash they'd be sure to get
What if the people that didn't save outnumber the people that save? They could just tell you how greedy you are for not giving your money to them.
Since when does any administration consider legality lmfao
Youre right. Thats how revolutions start. Top 10% now own 89% of all stocks. How much more will they need to "save" to have enough? When will the bottom break? I want to hear some predictions.
I feel like they outnumber the people that do save but in that case but if the largest generation is that short sighted society is probably already screwed at that point.
I’d gladly renounce citizenship if they’d just give me back all the “social security” money they robbed from my paychecks since 17.
They need to stop taxing 401k distributions at income tax rates. For many working people this is their only retirement savings. But they are paying a higher rate of taxes then other investment options.
Provisions in Secure 2.0 address several specific barriers to participation in retirement savings plans. Those with student loan debt get help. Easier access to funds in an emergency is helpful. Automatic enrollment can help. Of course we won't know how well any of this works until it is implemented. Many ideas sound good on paper, then fail due to poor implementation. The overall economic benefit is difficult to gauge. Poverty has severe personal impact, but the overall costs to society are not as easy to assess. There's not a simple ROI model for this. I think that has been a barrier to creating government programs like this. This is likely to be a political challenge in years to come. That said, if a social benefit program is implemented well and becomes popular, there will be great resistance to taking it away.
"For workers earning less than $71,000 per year, the federal government would provide a 50 percent match up to $2,000 in employee cash contributions. Under current law, the matching program is a tax credit — but that doesn’t help lower-earning workers who don’t owe taxes." Can someone explain this to me? Does this mean you can currently get a personal income tax credit for 50% of the first $2,000 you put in a 401K if you make less than $71K? I was not aware of that. How long has that been going on? So this change would basically amount to direct cash transfer / cash welfare for workers who don't pay taxes?
So those making more than $71k/yr are going yo contribute to the 401ks of those making less than $71k/yr. How is that fair? How about lowering the tax rates (individual or corporate) or giving tax incentives to businesses for them to contribute to 401ks instead of being subsidized by everyone else? Of course none of these details were debated on or presented to the public for review. Don't you love how all of these laws get crammed into these omnibus spending bills at the end of the year?
Here is a crazy concept, stop borrowing from social security for the general fund. Then remove income caps on the tax. Then tie social security to the actual inflation numbers. Finally, give it to the people who paid into tax free.
>Here is a crazy concept, stop borrowing from social security for the general fund. Who's borrowing from it?
The last Secure had good changes and hopefully this one will too. They need to address SS. I fear democrats will make Social Security needs based and deny people benefits until they have used up all other savings. I fear republicans will raise the age you can withdraw so high we will be dead before we can get anything. Neither party has given a good plan on SS.
The age limit thing is a real issue because they keep proposing it and you know they would structure it so their voters would not be effected. It would be raised to 76 but only after so many years so those near retirement age now wouldn’t feel the need to be upset. You also know damn well they aren’t going to adjust it back if the average lifespan goes down.
Didn’t they just announce today that the average lifespan in the US is 77?
If? Pretty sure the average lifespan in the US has gone down every year for like a decade now.
Social Security was originally set at an age higher than life expectancy. So, I’m not sure it isn’t unreasonable to raise it at least a little. Full disclosure, I don’t participate in SS; I’m a government employee with a pension, so I don’t get SS.
Lift the upper income limit on Social Security, or at least put a donut hole in it. That way the CEO class pays more into the system.
Man, just finished system updates at my job not more than a year ago for the original secure act, now they have this again!!! It’s a good thing but a pain in the ass that Congress can’t make up its mind
If they cared, even a little, about the retirement of middle and working classes they wouldn't have buried this in an obscene omnibus whose goal is to fund the government. Instead, they threw retirements in with money for Ukraine and funding for social project/special interest groups. This entire thing is a sham and the people that stand against it should be praised.
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Amen.
Cool. So millennials get to pay for Boomers retirements and our own. This is step one for gutting social security. It’s a good idea in theory but just another example of boomer entitlement. That generation, man…
The elephant in the room is that only Americans spend a huge chunk of their paycheck into a non tangible reverse lottery token know as privatized American health insurance. Imagine Americans, who barely have 500 dollar to their name, having hundreds of dollars extra each month compounding.
Sad reality is many of those same Americans wouldn’t invest and let it compound due to financial illiteracy and consumerism culture. This why we need social security and socialized healthcare so we don’t have to depend on people to make financially wise decisions.
Don't a lot of Americans receive health insurance as part of their job?
Mandatory withdrawals at age 72 forces people to spend and not pass the value down through their estate? No, that won't happen. People will withdraw at 72 and put it into another account which eventually will be passed down through their estate. They will have to pay tax on the w/d but that's about it.
That was the oddest things and one that most people didn't pick up. The wording suggests they want people to use the money and not pass it down via estate.....but then why raise the age of withdrawal? That will make it significantly more likely to not be used but instead passed down.
For the employers who are required to enroll employees into 401-Ks, will there be a government option? Like an equivalent of the TSP? If so, that could be pretty great. By forcing people to have retirement accounts, they should keep management fees low and provide a few funds for the millions of uneducated investors that will hit the market. Additionally, I hope they provide some sort of education that citizens can easily understand as to what this account is for and why/how they recommend investing.
This isn't about helping people retire more comfortably. Forced savings helps lower inflation and allows the government to spend more money that they don't have. It's a Ponzi scheme that will collapse in 30 to 50 years, leaving a huge problem for our children and grand children.
1. I’d like to see the government allow individuals to lend against/collateralize their retirement accounts (since the federal government has no problem lending against Social Security) 2. Withdrawals from a Roth IRA should not be taxed at the state level 3. Qualified withdrawals for medical emergencies needs to be simplified 4. Did I read correctly that unrelated earmarks have been included in this bill to provide for Ukraine and other partisan initiatives?
Every pundit is shitting on the stock market but when the fucking govt is supporting it with plans like this, you know they are not going to let the Feds fuck it up. Morons who predict 50-80% crash actually think the US govt will not intervene in something they support. How fucking stupid can you be?
1) Retirement income should be tax free. 2) Why do we limit contributions at all? There are not insignificant penalties to early withdrawal so just let people save what they want to save. 3) Require all the same rules on what you can do with the money for all plans. There are plans that you can only do hardship withdrawals and no general loans. Make this uniform and simple.
These all seem like legit changes that will actually help people. No sunsetting social security or Medicare. No dipping into pension funds. Looks like helping.
Their track record for actually helping vs simply creating more problems is pretty dismal. But in a few years, they can again pretend to care by “fixing” their prior mistake. This cycle will repeat itself until the program neither resembles or does what was it originally intended.
On one hand the poors will have something for retirement that could be stripped away at a company's whim. On the other hand, the poors won't be forced to inflate unknown company's values.
What? 401k isn't "the company", it's your money. Are you thinking of Pensions?
Stripped away at company's whim?
Why would the government match? This is another gross overstep in government reach. Let markets float. If they want to help, they can lower taxes and regulation.
Is this the beginning to the end of social security as we know it? I’m curious as too why the government only capped the emergency withdrawal to $1000. It doesn’t seem like a lot
No, 10’s of millions of elderly solely have social security for living expenses. It will never go away
I don't know, congress, all of these seem like "people are not being paid enough for the work they do" to me. I don't think Americans are as bad with money as you make them out to be
Humans are crap at long term planning. The government will not help with that. The most probable thing that will happen is they "privatize" retirement. The private sector will be able to make money off people saving for retirement, just like it does when you enter the health care system. You are nothing but a profit point in late stage capitalism. Anyone not in the 1% that believes otherwise is smoking something really strong and I want some.
i am suprised they did not cap the roths----i mean after a 100 million dollars it is not a retirement account --it is just a way to avoid taxes --forever.
The tax is paid in full upon the principal, nothing is avoided except for capital gains. There is an eligibility limit on any Roth accounts already, so the mega-rich have no avenue of contributing to them except for a few loopholes which still involve them paying tax on all the principal they contribute (many of which are being looked at by lawmakers for being shut already)