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Americans Are Putting Billions More Than Usual in Their 401(k)s

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Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#111

Post by mikeyouse »

justinph wrote: post #42
callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

I read this a lot. Why do you expect this to be the case? Social Security may become unable to pay the benefits that you're expecting at some point because the input from workers will not be enough to pay those benefits. But that doesn't mean it will pay nothing. It will just pay less. You'll still get some payments.

Agree wholeheartedly with this. The "Social Security is Failing" headlines are all ginned up to support political ends, they don't have much to do with the reality of the program.

Large adjustments were already made to accommodate the baby boomer generation. That's why we have a $2.8 trillion-dollar trust fund. With current demographics, we should be able to pay 100% of promised benefits until the late 2030's. Afterwards, with a pure pay-go system, we'd only be able to pay ~80% of benefits.

There are simple fixes that could dramatically extend the reserve depletion date to sometime in the 2050s. Not doing so is purely a political question.

Trust fund stats: https://www.ssa.gov/oact/STATS/table4a3.html

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#112

Post by fr0sty »

wang_li wrote: post #74
JumpCrisscross wrote: post #56

Earlier quoted context omitted.

> It is not an entitlement, it's your money That's not how social security works. Every dollar you pay in flies out to fund promises made in years past. "Your" social security money needs to be earned by our children.

The Social Security Trust fund generally runs a surplus (as recently as 2014 it added $25 billion.) However it's projected that around 2030-2034 the number of recipients will be drawing more than is being paid in. At that point your statement will become more correct than it currently is.

> as recently as 2014 it added $25 billion

Yes, but that is $25B out of total receipts of $884B[0]. For every $1.00 paid in over $.97 was paid back out to beneficiaries. In 2015 it was $.975 and 2016 will probably be higher still.

According to this page[1] the trust fund will be depleted by 2035. I know that is a projection and things can change, but to say there is no room for concern borders on hubris.

[0] https://www.ssa.gov/oact/STATS/table4a3.html [1] https://www.ssa.gov/oact/trsum/

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#113

Post by ryandrake »

leggomylibro wrote: post #23
callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

I'm in the same boat; I view my social security "contributions" as a lifestyle tax from the last generation, and I'd opt out of them in a second if I could. Instead, I'm planning my retirement around Roth IRAs and 401k savings. I think this is definitely a common sentiment amongst us youngsters.

SS is not a money transfer from today's young to tomorrow's old--it's a transfer from today's young to today's old. Don't think of it as "savings" you're "contributing" toward.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#114

Post by torpfactory »

callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

I truly believe that whatever people think about social security not being around when they retire, that it will be around at some level. We will almost certainly reduce benefits and/or increase retirement age. What is the alternative?

There are far too many people who really can't save for retirement due to low wages for a significant part of the population. We aren't going to let these people live in abject poverty, and they aren't going to have any money to cough up to support themselves.

It's the same for Medicare. Paul Ryan wants a premium support system where seniors receive part of the cost of their insurance premium from the government and pay the rest on their own. For many people, the will absolutely not have the money to spend on this. If they can't afford it, they will go to the emergency room and receive care (they legally can't turn you away) once their condition becomes severe enough. We can either force the hospitals to care for these people (and jack up the prices for the rest of us to compensate) or we can have a sane system where we all pay a reasonable price and split the burden over a larger population.

I'm not arguing for some European style social welfare system. I think we ought to have a system that comports with the laws and norms we have in place now (norms/laws I understand: people can go to the ER and get care regardless of their ability to pay, elderly folks do not live in poverty).

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#115

Post by athenot »

RobertoG wrote: post #48
callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

Maybe a little out of scope, but, is it not the important issue if the society we live when we retire is richer or poorer than the society today? I mean, if we live in a society, for instance, three times richer (per capita) than today, it would be very strange that old people will have a hard time. In the other hand, if it's a poorer society, even people with savings are probably to have a hard retirement.

It could be a problem if, using your example, society is 3 times richer but that comes from 10% being a lot richer and 90% being somewhat poorer.

Inequality, it seems, is rising over time.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#116

Post by jimmyk »

guelo wrote: post #95
JumpCrisscross wrote: post #56

Earlier quoted context omitted.

> It is not an entitlement, it's your money That's not how social security works. Every dollar you pay in flies out to fund promises made in years past. "Your" social security money needs to be earned by our children.

Note that Reagan increased the SS tax in order to pad the fund and prepare for Boomers retiring. That surplus of the last 30 years is invested in special government bonds gauranteed with the "full faith and credit" of the US government.

Who is going to be paying the taxes needed to pay off those bonds?

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#117

Post by adventured »

hillz wrote: post #102
ProAm wrote: post #92

> because most individuals have virtually no influence on national outcomes. How can you say this after Trump was elected?

I mean... He did lose the popular vote. So 'most' people didn't have an influence on the election. Or at least, the plurality of people.

Trump easily won the popular vote for the 48 states that aren't California and New York. Popular vote indeed. There's a very good reason the electoral college exists.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#118

Post by grzm »

ryandrake wrote: post #113
leggomylibro wrote: post #23

Earlier quoted context omitted.

I'm in the same boat; I view my social security "contributions" as a lifestyle tax from the last generation, and I'd opt out of them in a second if I could. Instead, I'm planning my retirement around Roth IRAs and 401k savings. I think this is definitely a common sentiment amongst us youngsters.

SS is not a money transfer from today's young to tomorrow's old--it's a transfer from today's young to today's old. Don't think of it as "savings" you're "contributing" toward.

Isn't this similar to investments or savings where you put in money expecting to receive something in the future? That money isn't static, it's actively being used in other ways. For example, money I deposit in my bank account today is going out into loans the bank is issuing today. I'm not taking a position on Social Security, just wondering if the analogy does much useful work.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#119

Post by mikestew »

DoodleBuggy wrote: post #47
callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

> "I'm not planning on Social Security being around by the time I'm old enough to tap into it" You need to change that attitude or your complacency will allow politicians to take it from you. The fact is you pay ~16% of your paycheck into social security and medicare, it is designed to be like a pension. It is not an entitlement, it's your money.

You need to change that attitude or your complacency will allow politicians to take it from you.

That's quite dismissive of his statement, and uncalled for. It's a pragmatic statement: politics aside, don't budget your retirement funds as if you'll still get the benefits promised to you as of today. Cram money in that 401K as if you won't be getting a dime of your money back from your SS contributions.

What you want to talk about is a different, and mostly unrelated, to what parent is talking about. Doesn't make it unimportant, just not relevant.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#120

Post by cgore »

tingletech wrote: post #80
JumpCrisscross wrote: post #56

Earlier quoted context omitted.

> It is not an entitlement, it's your money That's not how social security works. Every dollar you pay in flies out to fund promises made in years past. "Your" social security money needs to be earned by our children.

That's why we need immigration policies that let us keep enough working age people in the country

And at the same time give these new young immigrants a basic income so that they don't need to work.
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