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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

#421
post #74

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.

Simply removing the payroll cap and taxing all brackets equally would fix that:

http://www.nakedcapitalism.com/2016/05/the-7-biggest-myths-a...

Social security's 2030 "insolvency" was a political decision not an economic inevitability.

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

#422
post #328

Earlier quoted context omitted.

Honestly asking: do you know if there are any protections in place to prevent Roths from becoming taxed on withdrawal in the future?

History says everything eventually gets taxed if things go bad. Roth's would be an easy one.

If you expect taxes to be higher in the future, then the obvious answer would be to borrow utility from your future self and consume more in the present.

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

#423
post #93

Even though I'm doing all the right things like maxing out 401k etc., I can't help but feel that I will regret it later. It feels like everyone grew up hearing the same thing (people are poor planners, people go broke in retirement) and now as adults have vowed that will never be them. The problem is that now everyone thinks this way - index funds are on the rise, people are saving into their 401k, I can't help but t…

Investing is simply buying something you think will increase in value over time. US stocks have traditionally been an excellent vehicle due to their rates of growth. You could also invest in bonds, purchased annuities, real estate, gold and silver, foreign currencies & companies, Bitcoin/Ethereum, your offspring, domain names, collectibles... What do you think people will value in the next 10, 20, 50 years?

guns, lots of guns [insert matrix gif]..

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

#424
post #144

Earlier quoted context omitted.

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

It's often overlooked that the deal Reagan made to get the lower tax rates was to eliminate all kinds of investment tax shelters. I.e. few were actually paying those rates, the rates were more for show and are not comparable to the tax system today.

There are ways besides cutting their rates, to deal with people who refuse to pay their taxes. Hangings, imprisonment, seizure of property...

And what a surprise - rates today are much lower, yet tax evasion continues to be a problem.

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

#425
post #240

Earlier quoted context omitted.

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 you…

>That would eliminate even the thin handkerchief of SS being a sort of mandatory government-run savings program

It would have been called mandatory social savings if that was its intended purpose. It's not. It never was. It's social security.

>one of the arguments that people regularly make in favor of SS when they feel it's under threat: "it's your money"

This is actually one of the arguments used to try and justify privatizing it and handing over the money to Wall Street to invest instead (Bush tried to do exactly this and Obama made noises about it).

>And by removing the contribution cap, it'll suddenly have a lot of very wealthy enemies

It ALREADY has a lot of very wealthy enemies who are trying to privatize it. One of the most prominent is Stan Druckenmiller, who is fairly open about inciting intergenerational warfare - telling "millenials" that "boomers" are the cause of their problems and that the "fix" is privatizing social security and austerity:

http://www.nakedcapitalism.com/2013/10/who-should-young-peop...

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

#426

Earlier quoted context omitted.

> Empire collapse (has happened with every single empire in history - what makes the U.S. exempt?) The US isn't anything like traditional historical empires for one. It hasn't built its prosperity on invading other nations to annex them and plunder their national wealth, which is traditionally how empires temporarily sustain themselves. The US built its immense wealth today (just under half of all private wealth on e…

The factors you outlined are definitely a part of the equation, but I'd argue that the US role in geopolitics post-WWII has had a much larger role in its success. First, Bretton Woods established a system that heavily favored US interests -- it was based on dollars and gold, and the US had most of the gold supply. The US was able to achieve this favorable position thanks to its place as the major merchant-state, lend…

You've taken some factoids from history and attached some simplistic "just so" explanations for events. The U.S. has egregious acts in its history but it's inaccurate to presume that its success is solely due to plundering the world economy. Do remember that European, African, Asian, Oceanic, and Latin American countries experienced a massive improvement in their economies post-war; how could that happen if they were haplessly at the mercy of a cruel victor's reserve currency?

1. Bretton Woods worked out to the disadvantage of the U.S. in the long term. Massive budget deficits brought on by Vietnam War borrowing and ballooning social programs, as well as trade deficits, led European countries to withdraw gold from the U.S. in order to preserve the value of their currency reserves. Leaving it was the only option to both stop the drain of gold and also to escape currency pegging so the dollar could be floated to reflect the trade deficits.

2. The reason why OPEC adopted the dollar was for maximum convertibility; at its inception, the dollar was the most circulated currency in the world. It was, at the time, the one backed by the most gold. The Euro did not exist and the Yen was not as strong or stable.

3. Resource pillaging surely occurred, but in that time period, massive improvements in domestic manufacturing, resource extraction, and agriculture accounts for the largest increase in U.S. citizens' wealth. Multinationals accounted for a small proportion of U.S. revenue.

4. The U.S. didn't "win" against the USSR despite what Mr. Reagan may told you on TV. The USSR failed economically due to a drop in oil prices due to its undiversified economy and the political impossibility of stopping social and military expenditures without upsetting Communist Party elites. The U.S. received paltry economic benefits from the Soviet unraveling. If anything, it received increased competition from suddenly available labor pools. Political advantage does not translate to economic advantage.

5. Outsourcing began long before the internet was significant. The cause of outsourcing was the improved political stability of countries with competing pools of labor and the improvement and commoditization of technology.

It's convenient to adopt a zero-sum outlook on global trade, to assume that if a country does well it must be at the expense of others. However, study of history does not support this conclusion.

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

#427

Earlier quoted context omitted.

Those are still pretty high limits, well above the median tech salary even in the Bay Area. If you're in "income phase out" territory you're probably not worried about your retirement. The thing I don't like about Roth is that you're contributing with post-tax money during your prime working years--the time when your taxes are probably as high as they will ever be. Especially true as a tech worker where your salary p…

My issue with the Roth is that I don't trust the rules to remain the same in the future. I pay taxes now, before the money goes in, with the promise of tax-free withdrawals. I fully expect that money to become taxable on the back-end at some future time. It might be a lower rate (like capital gains today) or be income-based, but that pot of $ will be too tempting to ignore, I fear.

If things get dicey enough that they start taxing Roths, you can bet that they'll tax traditional accounts enough to claw back the original tax deduction plus interest.

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

#428
post #112
post #74

Earlier quoted context omitted.

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://…

Well we know what the alternatives are; cut benefits or expand immigration to balance out the demographic bulge of retirees.

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

#429
post #422

Earlier quoted context omitted.

History says everything eventually gets taxed if things go bad. Roth's would be an easy one.

If you expect taxes to be higher in the future, then the obvious answer would be to borrow utility from your future self and consume more in the present.

This is sort of a self-fulfilling prophecy, or at least it was when the Boomers made the same decision...

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

#430

Earlier quoted context omitted.

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.

Bear in mind that "it goes broke" isn't the only failure mode, and it's certainly not what I consider most likely. Every few years there's another push to privatize Social Security - you don't just have to count on the mathematical solvency of the program but also its political viability.

It's one of the most popular social programs ever run in this country and that's why 'every few years' the efforts to privatize it go nowhere. Even the current unified Republican government won't dare touch it, and no one would want to more than Paul Ryan.
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