From Helaine Olen writing for the Washington Post:
There are two schools of thought when it comes to how well Americans will fare in retirement. One says we are on the verge of a crisis, that the age of the 401(k) has left large numbers of us without sufficient money for our old age. A second group is more sanguine. They point out Americans spend less in retirement than when they worked, and claim the others are overreacting.
It’s increasingly looking like the chicken littles have it right. ...
The latest warning comes in the form of a research brief for the Center for Retirement Research at Boston College ...
[S]omeone born in 1945 has a better than half chance of living in a household where at least one person receives a pension. The number drops to about 25 percent for someone born a mere eight years later. By 2020, according to the Bureau of Labor Statistics, only 1 in 7 private-sector workers worked at a firm with access to a defined benefit plan. ...
[M]ost Americans are not putting enough of their own money away, and what they do save is often less than ideally invested. ...
So what’s the most likely fix coming out of Washington? Double down.
The Secure Act 2.0 passed the House this year in a bipartisan vote, with barely a whisper of dissent. It increases the amount of money people over age 62 can set aside in tax-advantaged retirement accounts, and ups the age at which they need to begin taking mandatory distributions from 72 to 75 — two things that will generally benefit only the wealthiest seniors. ...
It would be more helpful to buttress the Social Security Trust Fund and increase benefits, but there’s little action on that front. ...
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ReplyDeleteJust think, if all the money you paid into social security went into your 401k instead, you'd be much better off.
ReplyDeleteSSA is not a savings account. If you die or become disabled you or your family will most likely get way more under SSA.
DeleteIncreased benefits mean higher tax rates for employees and higher prices as employers will need to pay more into the system.
ReplyDeleteThe 401(k) system is a failure for the people who actually need to depend on 401(k)s. It's an excellent way to generate revenue for Wall Street.
ReplyDeleteSocial Security retirement, as a pay-go system, is the best type of approach for most people. It works. It's very straightforward and very easy to maintain.
Also, the trust fund is a lie. It's money the government owes itself. It's an accounting fiction. Social Security contributions are a tax.
The majority of people need defined benefit programs of some kind, whether pensions or Social Security. To think that the general public can retire on something that is not a defined benefit system is cruel. They cannot do so.
The idea of retirement needs to be a thing o f the past. The reality is most people will need to work until the can’t or die.
ReplyDeleteNot sure I understand, 5:29, how if I die with a 401k, IRA or other investment account, my family gets all of that. If I die, what part of my social security retirement does my family get? A spouse may get 1/2 at full retirement age but nothing until then and then only 1/2.
ReplyDeleteThe rate of return on social security is 1.23 percent. You can easily beat that with many safe investments and that account can be inherited whereas social security cannot.
Also, many people forget that your employer is contributing the same amount that you are to social security. I'd much rather have that put in a 401k.
How about this? We create a type of private investment account that is heavily regulated so that it can be invested only in certain types of ver safe investments and then we have an FDIC type insurance that would guarantee a minimum amount in the case something bad did happen.
Think about it. If generation after generation could build and pass on these accounts for the next generation to build on, we would see people being able to accumulate wealth, not just get a pittance from the government ot barely survive.
That would be great but that’s not Social Security. That’s no a “social insurance program” and we already have the ability to do all of that.
DeleteYou can’t pass on Social Security benefits because they were never yours to begin with. The program needs a certain percentage to pay in a never collect.
Most people think they pay so much in to Social Security, but you real don’t. As a matter of fact, once you retire and start collecting, the majority draw out everything paid in by themselves and their employers in the first 3-5 years of getting payments.
@10:37 not sure where you're getting 1.23% from, the ROI depends on what your benefit is compared to what you paid in. The ROI is lower as you increase the benefit.
DeleteThe brilliance of SSA benefits over a private investment scheme is in the expectation it creates in the public. No matter what, unlucky circumstance, bad investments, a person knows they will get a certain income. It is easy to understand. You don’t have to worry about greedy and unscrupulous fund managers, understanding financial and market complexities, etc. You don’t have to constantly worry about financial industry lobbyists getting politicians to change the rules to allow them to deal more sharply with investors. If you want a system that significantly reduces poverty for most seniors, you want what we have, a Social Security program. Yes, savvy higher income investors who are not unlucky might do better on privately investing the same amount of money. That’s not the point. Many Americans are not savvy investors and a too high number would not be lucky. That would translate into a system producing millions of severely impoverished seniors. If you have done work with low to no income seniors you know what that means.
ReplyDeleteMy employer matches 3% for my 401k. I started with 5% and then moved to 7%. We have the option to move any bonus or profit sharing to our 401k. I do that every time but most of my coworkers dont. I have always put 5%-10% in any 401k since the late 80s early 90s. I have had and moved them with me from job to job. I am sorry people are not responsible for themselves, that isnt my problem. I have managed to put away a very nice retirement without having to rely on SSA because I do not trust them. They already have moved my goalpost for retirement and I dont put it past them to move it again and my Medicare start date too.
ReplyDeleteTake care of yourself and never ever ever trust a government ponzi scheme.
Amen!
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ReplyDeleteSome things were better in the 1950's and 1960's. You retired with a gold watch and a pension.
Congress should have never let companies do away with their pension plans , and expected people to make up for it by saving themselves in retirement plans. Some people are not good at saving. Others have to spend down their retirement savings before retirement due to financial issues.
People should learn to not depend on the government 11:14 because they can take away a right or a program and any given moment with little or no consequence.
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