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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

#271

Post by chockablock »

JumpCrisscross wrote: post #205
Frondo wrote: post #184

Earlier quoted context omitted.

Social security is not a Ponzi scheme. http://www.politifact.com/florida/statements/2014/sep/24/car...

> A Ponzi scheme is by definition an illegal crime and an unsustainable set-up that crashes very quickly. Social Security and Medicare, which have been around for decades, are not criminal schemes. This is terrible legalistic reasoning. It essentially says the government cannot create a Ponzi scheme because Ponzi schemes are by definition illegal and governments define what is legal. Better reasoning would incorporat…

Enough with the straw man. The article's thesis absolutely does not hang on this interpretation, which only appears deep into the summary. Briefly, in contrast with a Ponzi scheme promising unsustainable returns on investment:

-There are no promises of huge returns

-The inner workings of the program are public knowledge

-There is no fundamental demographic or mathematical reason the system (a pretty straight-ahead social insurance program involving a certain amount of wealth transfer) should ever become insolvent, assuming the political will exists to keep it running.

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

#272

Post by harryh »

pc86 wrote: post #249
harryh wrote: post #192

Earlier quoted context omitted.

It's worth noting that if there are benefit cuts of 25% that it's unlikely that each individual will see a 25% cut. It's more likely (in my opinion at least) that we'll see some sort of means testing where seniors with other income (from 401Ks, private pensions, other savings) see their benefits cut much more than 25% while those with low incomes retain their full benefits. So if you are saving a lot it could, ironic…

So what you're saying is I can cash in my 401k for a boat.

I dunno. Fishing boat or speed boat?

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

#273

Post by mikeyouse »

twoodfin wrote: post #185
mikeyouse wrote: post #111

Earlier quoted context omitted.

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. Afterw…

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. Increasing the marginal rate of income tax for anyone making more than $120,000 by 12%+ may be a "simple" fix or just a matter of politics, but it's some pretty hard politics! (And also might lead to some unfortunate economic outcomes.)

> Increasing the marginal rate of income tax for anyone making more than $120,000 by 12%+ may be a "simple" fix or just a matter of politics, but it's some pretty hard politics! (And also might lead to some unfortunate economic outcomes.)

Two things come to mind; The politics shouldn't be that hard in the current populist environment since only ~6% of taxpayers earn above the max.[1] Secondly, employees would 'only' see a 6% marginal tax increase since the employer portion isn't included with AGI.

But there are numerous other options to extend the program as well. The top 5% of taxpaying households earned at least ~$170k in 2011. As a simplifying assumption, let's just say they all meet the cap. There were 6.8 million returns above this level, which would mean that only $800 billion of the $2.8 trillion in AGI earned that year was subject to the social security tax. If you levy a 1% tax on income above the FICA limit, it would raise an additional $40B/year which with simple perpetuity math would mean an additional $1.2 trillion into the trust fund.[2]

Alternatively, since the top 5% of income payers receive something like 1/3 of their income from capital gains (which aren't subject to any FICA taxes), a 1% levy on capital gains would likely raise a similarly large amount.

I don't have any specific preference for those two ideas, but they're just a few examples.

[1] - https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html

[2] - Base figures from here: http://www.mybudget360.com/wp-content/uploads/2015/06/irs-ta...

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

#274

Post by jellicle »

RestlessMind wrote: post #223
monocasa wrote: post #208

Earlier quoted context omitted.

> The most docile 60 year olds I know become positively vitriolic at the idea of even the age of benefit payout being changed by 5 years. I guess I'm afraid of a slow rollout. ie. everyone who's 40 and older gets normal social security, if you're ~35 now, you'll have to wait a few years more. It's exactly the kind of "we got ours" BS that the boomers are so known for.

Honestly, I don't think its such a bad idea. Life expectancy in 1935 was 62. Today its 79. So if we want the program to be solvent, we have to adopt one or more of the following solutions: keep increasing the SS-eligibility age in tandem with life expectancy, increase the FICA tax, cut benefits

You could also choose what the U.S. is choosing now, which is to reduce U.S. life expectancy.

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

#275

Post by omouse »

chrisabrams wrote: post #269

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…

You should be scared, in Canada the government pushed the retirement age from 65 to 67 so that's 2 years more of working and 2 more years before you have access to your own cash.

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

#276

Post by AnimalMuppet »

legodt wrote: post #259
AnimalMuppet wrote: post #241

Earlier quoted context omitted.

Being eager to label (and therefore dismiss) half the country does make you as bad as them. In particular, it makes you a bigot. (Where "you" = thesimpsons1022, not legodt.) No, I am not an apologist for bigotry. That's why I'm against it when it's done by liberals, just the same as I'm against it when it's done by conservatives. The only difference is that liberals don't do it based on race. I'm not sure that makes…

I'm definitely willing to wager that half of the country is awful, but that's if you're willing to use voter turnout as a valid sample size to represent the population at large. That's not the point. Racism is bigger than political parties. It's crazy to say that the left doesn't do racism, of course both sides carry that weight! I'm really confused by your comment, I don't know what point you were trying to make bey…

OK, I'll try to be more clear.

I was claiming that what thesimpsons1022 said was in fact bigotry. It wasn't racist bigotry, but it was bigotry against less educated, less "tolerant" (presumably = "subscribing to liberal values"), "rednecks".

Therefore, I was (implicitly) trying to say, your statement that "Being intolerant of bigots doesn't exactly make you as bad as them" did not clear thesimpsons1022, since thesimpsons1022 was being bigoted, not just intolerant of bigots.

I wasn't claiming that liberals were bigots about race, but I will accept your statement that the left also does racism. It wasn't my point, but I agree with you.

I'm confused by your first sentence. Are you saying that "voter turnout" (i.e., the recent election) proves that half the country is awful? Intolerant? Bigoted?

I am not claiming anything based on the election. More: I don't think that the election proves very much about the level of bigotry, intolerance, or racism in this country. I think it says more about how tired people were of establishment politicians in general, and of Democrats who claimed to stand up for the little guy and yet did very little about job loss in the heartland. In fact, my (perhaps rose-tinted) perspective is that Trump got more "Ugh, not Hillary" votes than he got "Yes, Trump!" votes.

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

#277

Post by ryandrake »

kgwgk wrote: post #242
ryandrake wrote: post #165

Earlier quoted context omitted.

To be fair, when I buy a company's stock on the public stock market, it's more of a lottery ticket than an investment. It's not as if buying a stock actually puts money into the company's pocket for them to use to "create economic value". Buying a stock puts money into the pocket of whoever last bought that stock so that they can continue gambling.

Is buying real estate or a business an investment? You're not creating economic value, just putting money into the pocket of the previous owner.

I guess it depends on your definition of "creating economic value". If I buy something for $110 from someone who paid $100 for it, I guess you could argue that either you or I just "created" $10 of economic value. I don't subscribe to that. Value is only created when you improve something.

Buy a lump of gold for $100 and turn it into a $110 bracelet -> value created.

Buy a lump of gold for $100 and sell it to someone 1 second later for $110 -> no value created.

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

#278

Post by jackvalentine »

jacalata wrote: post #267
merpnderp wrote: post #234

Earlier quoted context omitted.

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...

And in my opinion the assets test is too generous.

My grandmother is sitting in a multi million dollar inner suburb property and claiming a pension. It seems harsh but I think she should be required to get her pension via the Pension Loans Scheme: https://www.humanservices.gov.au/customer/services/centrelin...

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

#279

Post by logfromblammo »

brandonmenc wrote: post #230
monocasa wrote: post #208

Earlier quoted context omitted.

> The most docile 60 year olds I know become positively vitriolic at the idea of even the age of benefit payout being changed by 5 years. I guess I'm afraid of a slow rollout. ie. everyone who's 40 and older gets normal social security, if you're ~35 now, you'll have to wait a few years more. It's exactly the kind of "we got ours" BS that the boomers are so known for.

> It's exactly the kind of "we got ours" BS that the boomers are so known for. The boomers are just recipients of an anomalous post-war economic order that heavily benefitted the US for a couple decades. The average 60-year old had no role in pulling the rug out from millennials.

Right. The average Boomer had nothing to do with it. To be fair, the Boomer politicians and business managers didn't screw the Millennials, either. Not directly. They pulled the rug out from the Gen-Xers, and let the domino effect take out the Millennials, too. Yeah, as a generation, we still exist, even though nobody talks about us.

The Boomers were the beneficiaries of post-war prosperity, but they also decided to steal money from the future to finance their generational party/gravy train. The Greatests gave them a gift of some free money, but then they also decided to smash open their own childrens' and grandchildrens' piggy banks and fill them full of promissory notes. Except they aren't IOUs that are promises from the parents to pay their kids back. They are UOMEs that obligate the kids to pay their parents more money, if they ever actually get some.

I'm biased by anecdote, because I'm old enough to have seen typical (late) Boomer lifestyles and compare them to typical Gen X lifestyles in the same age range. In other words, I'm old enough now to compare my own life with that of my parents when they were the age I am now.

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

#280

Post by ubercow13 »

legodt wrote: post #222
tingletech wrote: post #80

Earlier quoted context omitted.

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

I'm a big dummy, deletia

I think you've read OP's post as the exact opposite of what was meant
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