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…
If you are scared of the tax rate rising (which is reasonable, since tax rate in the US is at like an all time low historically speaking), consider Roth type stuff that is taxed now, not later. Or do both, as a hedge.
Wow, downvoters! Seriously, just google "is social security a pyramid scheme". You'll find a LOT of breathless articles from personal blogs and sites like World Net Daily calling it a pyramid scheme. You'll also find a lot of, for lack of a better way to put it, content of actual substance that describes how it's not a pyramid scheme, but a sustainable government program that's worked out just fine for decades (with…
Upvoted you to try to counter-act the downvotes, which I am really confused by. Social security is a pay-as-you-go pension plan, like pretty much almost every public pension plan in the Western world. I understand the comparison to Ponzi schemes, but I consider these comparisons rather hyperbolic. The intent of a pay-as-you-go pension never is fraud. There are some definite problems with pay-as-you-go systems, especi…
That's it! That's the whole crux of the matter.
A ponzi scheme has an intent to defraud. That's why they're illegal.
Social security has no intent to defraud. It's not "legal cause the gubmint says so," it's legal because it's not a fraudulent money-making scheme designed to enrich the leader.
Personally, I have put all my extra money into property. I plan to retire way before the government says I can. I won't be kept working by an organization run by someone like Trump.
So the alternative is tyranny of the minority? It doesn't reassure me that we give much more weight to a minority of voters just because they live in less densely populated areas. That's completely arbitrary.
It could be argued that 100 people living in 3 counties have a greater diversity of concerns and opinions than 100 people sharing an apartment complex.
Who cares how diverse their opinions are?
If I moved out to the countryside, should I suddenly get 10x more voting power over you, for decisions about running the country?
If they take away my social security... I want my payments back.
If they cancel some welfare program (like free lunch for poor school kids), do you want your money back that you paid into the program while it existed? What sense does this make?
Not the best comparison. Besides being a requirement, you pay into social security based on the assumption that you'll get benefits when you're older. If you paid for 20 years and then the program went bust and you didn't receive anything, I think you'd rightly feel ripped off.
> "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.
> 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. Except the facts don't match up with this. It is not designed to be like a pension. It is the workers of today paying for the retirees of today, on the assumption that when you retire there will be workers to pay for you. There is no guarantee, and there is no…
> It is the workers of today paying for the retirees of today, on the assumption that when you retire there will be workers to pay for you.
Isn't that how pensions have traditionally worked too?
> "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…
Just try considering all the old people communists, not deporting them, but also not paying them their benefits (however real or imaginary) and see where this goes. It would be uproar, and thus irrational. The case held that withholding benefits from Nestor wasn't irrational. Broadly doing to a whole population what was done to Nestor would hardly be rational, and certainly would not be smooth sailing.
...the SSTF holds exclusively US Treasury notes and bonds as assets. You're describing a distinction without a difference, as other parts of the USG have already spent the surplus.
I'm not sure I understand where you're coming from as it assumes that the US won't be paying back its debts. Do you also consider that money you deposit into your checking and savings accounts as having disappeared into a black hole?
I'm not sure I understand where you're coming from as it assumes the exponential function will stop working in the near future.
I'm coming from the perspective that there is neither a short term nor long term plan to address the inevitable default of the US government, decades hence. We WILL either default, monetize, or sell federal land. Math won't stop working in my lifetime.
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...
There is certainly room for discussion on the personal home exemptions to the asset test, I agree.
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…
By having both pre-tax (401k) and post-tax (Roth IRA), you would be also diversifying your tax liability in your retirement.
What about Traditional IRAs and Roth 401ks?
Tax deferral strategy (Roth v Traditional) is orthogonal to the plan type (IRA v 401k).