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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

#231

Post by cloudkj »

sikim wrote: post #20

I wonder what percentage of 401k contributors has an IRA. General rule of thumb is to contribute enough to 401k to get maximum company matching and max out your Roth IRA contribution first. IRA is generally preferred because you can choose your own fund (e.g. Vanguard) and has more flexibility in certain situations. By having both pre-tax (401k) and post-tax (Roth IRA), you would be also diversifying your tax liabili…

That's a very interesting point about diversifying your tax liability. Is it a fairly common tactic to contribute evenly across pre-tax and post-tax buckets? I've mostly stuck to contributing to one bucket but spreading out contributions across buckets makes a lot of sense. If you have any sources about the pros/cons of diversifying tax liability in this way, I'd be very interested.

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

#232

Post by toomuchtodo »

eli_gottlieb wrote: post #209
toomuchtodo wrote: post #150

Earlier quoted context omitted.

> That we should ignore the votes of two of the largest states because they don't agree with you? Ahh, yeah. That's the point. So America isn't CaliforNewYork. The electoral college isn't a scam, it exists to bring balance, so your hipster javascript developer gets the same weight as a coal miner in rural Ohio.

The same weight is one human, one vote. Period. Your system has only ensured that a few swing states like Ohio exercise a tyranny of the minority over the rest of us[1]. You keep implying that the rest of us aren't Americans and don't deserve an equal voice, and don't be surprised if we start trying to secede or revolt violently against the tyrants ruling over America's urban majority against our will. [1] -- http://…

> The same weight is one human, one vote. Period.

You are entitled to your opinion! That's not how the system is currently designed.

> You keep implying that the rest of us aren't Americans and don't deserve an equal voice, and don't be surprised if we start trying to secede or revolt violently against the tyrants ruling over America's urban majority against our will.

Good luck with that. You want to bleed out in the street, go for it. Plenty of other first world countries for me to move my family to.

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

#233

Post by pc86 »

guelo wrote: post #144
jimmyk wrote: post #116

Earlier quoted context omitted.

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

Ideally the same people whose taxes Reagan lowered https://upload.wikimedia.org/wikipedia/commons/8/8c/Historic...

A little off topic but if you were well into that top marginal bracket at the time I bet that drop from 90% to 70% felt really good.

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

#234

Post by merpnderp »

jacalata wrote: post #78
fortytw2 wrote: post #54

Earlier quoted context omitted.

If it was actually your money, paying into it would be optional.

Not necessarily. The Australian superannuation program has compulsory contributions but the money goes into an account in your own name.

How does Australia deal with retirees with too little or nothing in this account, aka the poor who are past working age?

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

#235

Post by [deleted] »

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.

[deleted]

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

#236

Post by merpnderp »

avn2109 wrote: post #167
bogomipz wrote: post #123

Earlier quoted context omitted.

>" The fact is you pay ~16% of your paycheck into social security." Not quite. This is actually split between the employee and the employer. With each contributing 6.2%. https://www.ssa.gov/pubs/EN-05-10022.pdf Also why are you admonishing the OP? He has every right to pessimistic about this current state of social security.

But your employer is perfectly capable of doing accounting. So they pass through their 6.2% to you. In practice the mechanism is that every employer figures it in to their offers, such that every offer you ever receive is ~6.2% lower than it would be if SS didn't exist.

My employer also calculates health care and 401k matching, ie the full cost of employment to the department who will be bearing the cost. A salary of $100k is really a cost of ~$125k.

[EDIT] With health care costs being fixed at crazy high amounts (in the US at least.)

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

#237

Post by jeremy_k »

40acres wrote: post #76
jeremy_k wrote: post #63

Earlier quoted context omitted.

Everyone here is commenting on the Roth income limits. Look up what a backdoor Roth contribution is. Basically avoid having a tIRA by keeping all your pre-tax money in a 401k and then you can contribute to a Roth IRA every year. The only problem with this is if your 401k has horrible funds. I'm luckily in that my company recently added Vanguard funds to our 401k funds and I switched nearly all of my money to those.

How often would one need to use a backdoor Roth contribution? Seems like something you would need to execute every year.

I do it through Vanguard and it takes roughly 10 minutes. The process is nothing more than clicking buttons to put money into a tIRA, transfer to a Roth IRA, and purchase shares. Although it is suggested to leave the money in the tIRA for some amount of time (some say others, other weeks) before doing the transfer.

You have a yearly contribution limit of $5500 and you're correct in that you would do this process every year.

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

#238

Post by RUG3Y »

brewdad wrote: post #132
adventured wrote: post #117

Earlier quoted context omitted.

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.

CA would be the 7th largest economy in the world if it were its own country. NY would be 11th. But yes, let's just pretend like they don't matter when it comes to the US as a whole.

If California were to become it's own country tomorrow, Californians would learn how much they also depend on other states.

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

#239

Post by coredog64 »

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

Devil's advocate: High trust, homogeneous societies are more likely to have more comprehensive safety nets. As trust diminishes (i.e. partisan Red vs. Blue bickering) and the population fragments into large heterogeneous groups, what is there to keep the safety net in place? Why would a bunch of immigrants from Central America, doing the jobs that Americans don't want to do (and at very low wages) want to see a significant portion of their paychecks siphoned off to pay for the retirement of old white people they've never met, in states they've never visited, and with whom they have very little in common?

I think it is more likely that the attempt to try and cover Social Security shortfalls by importing labor will backfire, and that the new citizens will vote against paying more to cover retirement expenses for Boomers and Gen-X.

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

#240

Post by Kadin »

eli_gottlieb wrote: post #216
fr0sty wrote: post #112

Earlier quoted context omitted.

> 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://…

We could just eliminate the contribution cap. Then it keeps working in perpetuity, because we'd actually be taxing the people who have money .

That would eliminate even the thin handkerchief of SS being a sort of mandatory government-run savings program, and not a bald faced tax-and-redistribute system.

Which, as you can see from comments upthread, is -- even though I personally don't think it's true -- one of the arguments that people regularly make in favor of SS when they feel it's under threat ("it's your money", "you paid into it and you should get your money out", etc.). Positioning it in this way makes voters feel like they have a personal investment in the system that they need to protect, which is clever because people generally hate having something taken away, much more than they dislike not receiving something (even if the amounts are the same).

When it becomes a straightforward tax, then it'll be attacked like every other tax during the periodic political pendulum-swings in favor of lower taxes and fewer government programs in general. And by removing the contribution cap, it'll suddenly have a lot of very wealthy enemies who have a significant vested interest in making sure it goes away. I would not expect it to last long under those conditions.

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