Americans Are Putting Billions More Than Usual in Their 401(k)s • Hacker News Board

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

#261

Post by oddsockmachine » Thu, Jan 05, 2017, 7:57 PM UTC

kasperni wrote: post #51

Anyone else around here that does not have a pension account? On the basis that technology will have changed the economic system (for good or worse) in such fundamental ways so we either have greatly expanded life span, "free" handouts such as basic income, or major financial busts that have wiped out most pension savers.

I have no pension account.

My first software job was with a pensions administration firm, where I had to take numerous courses on the economics behind pensions. Boring stuff, but the one thing that the teachers drilled into us over and over was that, for my cohort (currently If anyone's interested, I have instead chosen to aim for the so-called Lean-FIRE, and my "investment", if you can call it that, is in fertile land in a stable country and extensive experience in permaculture. I'm about 5 years away from being able to semi-retire and being reasonably self-sufficient in food, power and water.

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

#262

Post by AnimalMuppet » Thu, Jan 05, 2017, 7:59 PM UTC

Fnoord wrote: post #173

brewdad wrote: post #132

Earlier quoted context omitted.

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.

> 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. Except we're not pretending like they don't matter. We're pretending they have a proportionate say. Regardless of wether your hypothetical proportion would be sound or not the proportion just isn't based on the size of the economy of a…

> Except we're not pretending like they don't matter. We're pretending they have a proportionate say.

Well... they don't have a proportionate say, if by "proportionate" you mean "in proportion to their population". They have less say then that.

But they also don't have a proportionate say if you mean "in proportion to their only being one state out of fifty". They have more say than that.

All of which is by design. Whining about it now is just sour grapes. Now, if people had been complaining about it since they first learned about it in junior high civics class, then I'd be more inclined to grant them that they have a principled position...

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

#263

Post by rebootthesystem » Thu, Jan 05, 2017, 7:59 PM UTC

jandrewrogers wrote: post #128

DoodleBuggy wrote: post #47

Earlier quoted context omitted.

> "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.

It is not your money, it is a tax on income like any other. The Supreme Court established in 1960 (Flemming v Nestor) that contributions to Social Security are not your property and the government has no obligation to ever pay you benefits regardless of contribution. People have had this entitlement revoked in practice, though the targeting tends to be selective for out-groups and not a substantial fraction of the po…

Yes. I wish more people understood this.

The other one nobody seems to want to talk about or understand is Medicaid. People think they are getting health insurance (or whatever they want to call it) when, in reality, they are accumulating debt with the government and a debt most states are required, by law, to collect.

This is one of the huge problems (outside of costs and lies) I have with Obamacare. The claim is that millions of people now have insurance when, in reality, millions of people were shoved into Medicaid and are accumulating a non-trivial financial obligation with the government. To say this is dishonest is probably cutting it short.

https://www.medicaid.gov/medicaid/eligibility/estate-recover...

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

#264

Post by awinder » Thu, Jan 05, 2017, 7:59 PM UTC

readams wrote: post #252

awinder wrote: post #182

Earlier quoted context omitted.

This is almost too ridiculously misinformed a statement to even justify replying to, but since it's easy enough, the SS trust funds earn interest through investment as necessitated by law. They've also been used as an intergovernmental loan vehicle, acting to keep gov't debt lower than it would otherwise have been. It's not a Ponzi scheme.

The trust fund is an accounting fiction. Social Security is paid out entirely by proceeds from people paying into the system. If ever the number of new people paying in is not enough to cover the outflows, then the system collapses. That is how a Ponzi scheme works.

This is fake news.

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

#265

Post by kgwgk » Thu, Jan 05, 2017, 8:00 PM UTC

pc86 wrote: post #245

avn2109 wrote: post #167

Earlier quoted context omitted.

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.

> such that every offer you ever receive is ~6.2% lower than it would be if SS didn't exist Every offer is up to 6.2% lower. I have a business with employees but their pay is sufficiently low (compared to the revenue of the business; their pay is above market for the jobs they do) that SS does not enter into our calculations. If the employer portion of SS was eliminated tomorrow we would not give anyone a 6.2% raise,…

Maybe you will have to give them a raise when they notice that pay elsewhere has gone up. Of course if they already get 6% more than they would at the next comparable job today there is no economic reason to give them the raise, but there is not economic reason to pay them so much currently either.

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

#266

Post by jellicle » Thu, Jan 05, 2017, 8:02 PM UTC

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.

In practice, every employer pays what it needs to get employees, and nothing more. Unless something changes the number of employees available, salaries don't change.

Tax cuts go straight into the employer's pocket, as the employer will happily tell you to your face:

https://theintercept.com/2017/01/05/corporations-prepare-to-...

Sure, it's theoretically possible that the employer could pass all tax cuts to its suppliers. McDonald's could call up and offer to pay more for frozen hamburgers and fries. Walmart could tell its Chinese shoe makers that it plans to pay double for all future pairs, just because. But, why would that happen as opposed to rewarding the shareholders?

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

#267

Post by jacalata » Thu, Jan 05, 2017, 8:05 PM UTC

merpnderp wrote: post #234

jacalata wrote: post #78

Earlier quoted context omitted.

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?

We have an old-age pension if your income and assets are below a certain amount: https://www.humanservices.gov.au/customer/services/centrelin...

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

#268

Post by jellicle » Thu, Jan 05, 2017, 8:05 PM UTC

jeremyt wrote: post #199

dlp211 wrote: post #105

Earlier quoted context omitted.

To pile on to this. Even is SS makes no changes whatsoever, they can still pay out ~75% of the benefits starting in the late 2020's or early 2030's and all the way through the 2080's or 2090's based on the SS Trustee report. SS is going to be around unless we choose to elect officials that dismantle it. The fear mongering and apathy needs to stop.

I'm sorry, but this statement is not true. These numbers require the use of the Social Security trust fund. The Social Security trust fund is a "special issue treasury bond" in which money is deposited and then spent by the US government. So, when the trustees say that Social Security can pay 75% of the benefits, what they mean is that there are enough IOUs in the trust fund to pay 75% of the benefits. But when we st…

Actually, the 75% number is when there is no trust fund whatsoever and all outgoing payments are funded directly by incoming payments.

> But when we start redeeming the IOUs

You are aware, I'm sure, that said IOUs have been redeemed every year of SS's existence.

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

#269

Post by chrisabrams » Thu, Jan 05, 2017, 8:06 PM UTC

Am I the only one that is scared of 401ks? It sounds nice: put your money into an account tax-free, let it grow tax free over 30-40 years. When you retire, you have this nice large fund to pull money from.

My biggest fear is that in 30-40 years the US government and/or 401k funds are so poorly run that they tax 50/60/70% of the income (withdrawals) out of the 401k to sustain theirselves. Lots of people tell me "that won't happen" but when I study history, I realize that the only people who think that are ones who have never lived through a major war. Wars = higher taxes. To me, putting money in a 401k is trusting that everything will be ok for a long time to come, and it's just hard to justify that the way history books show the cycles of war.

It scares me so much that I'd rather pay the taxes now, and invest as I please.

Edit: as omouse mentioned, that is my other fear. That through technology and healthcare innovations, as well as the government recognizing the need to "adjusting" the retirement age, how do I know I will get my 401k at 65? What if it is 85? That's too risky for me :/

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

#270

Post by slv77 » Thu, Jan 05, 2017, 8:08 PM UTC

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.

"It is not an entitlement, it's your money."

I think you'd be on higher moral ground if Social Security was on sound footing from an actuarial basis, the US had balanced budgets for the last 30+ years and had invested heavily in the next generation (here or abroad) through education, infrastructure and social capital. Writing an IOU from the general fund to the Social Security "Trust" fund is no more legitimate than "saving" for retirement by funding an IRA with a credit card cash advance.

Money is just an implied promise with future workers. As the last person on planet earth I could have stacks of hundred dollar bills and it won't get me a sandwich.

If you look at US demographics the entire notion of retirement is at risk unless we assume some combination of massive productivity boosts, massive immigration and/or massive, sustained trade deficits or a next generation of workers that is willing to forgo children and embrace minimalism and self sacrifice that would make a monk look like a hedonist.

Otherwise the future will consist of lower standard of living for the vast majority of seniors; working longer; and some combination of lower asset prices and higher long term interest rates.