There's a move on the left to push for just such a change. There are a couple of motivations. 1. It's explicitly an attempt to move the Overton window. If the debate is about whether or not to increase benefits, then the debate is NOT about whether or not to decrease benefits. (And vice versa.) 2. The argument is that the 401K system has failed. Clearly, that system has vastly enriched the financial sector, which has diminished the well being of the nation as a whole. 3. Those making the argument for such a change usually talk about paying for it by lifting the cap on how much income is taxable for FICA, which means the proposal is, in part, about redistribution of wealth. Thoughts?
After the thread has had some time to breath, I'll go into more depth. Anyway, the argument is based on statistics regarding income among the elderly. The average figures are pretty good but the median figures are pretty bad.
Agree with Matt. The left has it wrong on 401(k)s 401(ks) symbolize what the right likes and the left does not, so they are a battlefield. But 401(k)s are pretty good, all in all. They are portable, despite all the bad publicity they have performed well (yes, target-date funds have done nicely, thanks much), and most plans are cheaper than the left portrays them to be. But items #1 and #3 are solid.
Theoretically, elder people with more money could take pressure off of Medicaid as well. Sure, it wouldn't be a 1:1 difference, but I'd guess it would be significant.
While I get that a lot of (most) Americans don't have nearly enough in their retirement accounts, I'm rather fond of ours. So hands off.
Partially right. 401(k)s as a supplemental benefit to your standard pension plan were a good idea. 401(k)s as they're mostly used now as THE retirement plan for workers is not a great idea (hint hint - employers ditched DB plans and passed on the cost & responsibility to employees) which leads us to: #1 the costs of a 401(k) are borne by participants. In a large corporate plan that might mean 10-20 basis pts. on average. In a small 401(k) that might be 150-200 basis pts. Those high costs wear away at earnings and unless your employer can be convinced to add some low-cost Vanguard funds into the mix, you're fcked! #2 - the average person has no idea what a large cap, mid or small cap fund is or how much to allocate to each. Target date funds make it somewhat easier. But if you saw the numbers of ppl who, even in the booming market of the past few yrs, have 100% sitting in money market...it'd make your head spin. The overall numbers aren't good for many Americans so I'd be in favor of raising the taxable wage base & means testing.
Or you can open a $15/yr IRA with oppenheimer and have a selection of about 25 no load funds Don't care. I'm not their ********ing babysitter.
I think it's a bad idea. We need to get people thinking of social security as welfare, not a retirement plan. Social security should be means tested to cut costs rather than taxing high earners more. Call me cold hearted, but I don't want to pay more in taxes to provide a better retirement for people who didn't have the good sense to save and invest more. 401k's and IRAs are good, but there could definitely be improvements.
You effectively are if they ******** up and have nothing when they retire. Somebody -- meaning those with the ability to pay taxes -- will end up funding their security blanket. Anyway, it's a moot point, these days new participants are defaulted into target-date funds, which will do them fine over time.
The notion of a nation of 70-year old workers, postponing their retirement benefits, is a fantasy. My mother-in-law tried to volunteer at local hospitals, and none of them would take volunteers over the age of 70. By policy. The geezers learn too slowly and work too slowly. It's not worth training them even if they're willing to work for free.
Both my parents continue to work. And I am not saying postpone, I'm saying supplement. So if you are right let's think about the process. 70 year old can't work and has to short sell their home and live with their kids because their kids weren't paying attention to the books. Meanwhile, a home goes on the market at an affordable price allowing the logjam of overpriced and under demanded housing to flow. 70 year old kids get baby sitting for their kids and meals after work, 70 year old get money for their house and a young family gets to live the American Dream (tm). I fail to see the problem here. As for work for 70 year olds, there is a critical shortage of people to watch kids between the hours of 3pm and 6-7pm. Old people are perfect for just such a task.
Back in the day most of your McDs workers were the pimply-faced kid portrayed in The Simpson's. The manager was an "old-timer" of 25. Nowadays I see a lot more 40 & 50 somethings working these so-called entry level jobs. They're worrying about paying bills not sailing boats (or whatever fantasy the commercials say) when they're 70. Double or triplr the social service safety net. This is going to be the norm in a winner-take-all society.
The drawback of watching tennis. Those damn retirement-for-the-very-rich ads. Should I buy a yacht? Or perhaps increase my art collection? I must do one or the other. If not, I've failed to plan properly.
There aren't many commercials showing Granny upgrading from Friskies to Dinty Moore beef stew because she picked a Fidelity TDF over a money market. Despite there being many more in her situation and far fewer in Biff the Boater's one. Krugman had another article on how AUSTERITY NOW! is harming millions and how going into debt to get ppl working after 2008 was the better option. I guess we all must do penance for the greed of our betters.
And hopefully this happens with health insurance, maybe in 20 years; Employer provided insurance will be seen as rare as pension plans.
Retirement communities in Latin America. I keep telling you all, that is the way to go. 1,000 a month is shit when you live in LA, Chicago or NYC, shit even Florida and Arizona. But that 1,000 in a nice, safe (and there are out there) community in Mexico, Guatemala, Costa Rica would go a long way. We won’t have to increase Social Security payments, old people can better afford services and Latin Americans get jobs and foreign investment to help their GDP. Everyone wins (well there would be losers for sure, like our economy losing billions of dollars in old people spending). But overall it is a winning idea. Now this is really up to the Governments in Lain America to pass laws and regulations to make this happen, and for private companies to develop safe zones for old people to live. But saying that grandma can't afford his apartment in NYC so Social Security payments must go up so she can stay in that apartment is not the way to go. (yes a bit of a exageration I know).
My father retired in Mexico for that reason. A bare bones Social Security retirement works pretty well in Mexico. No yachts, but you can rent a nice room, have plenty of good food, and still have a bit of money for entertainment.
My inlaws are in Argentina for the same reason. With only SSI and a sub 6 digit amount of savings they were able to get a hold of a floor of an apartment building that also houses players for Estudiantes.
Great, so now I'm worried my damn kid is gonna send me outta the country when I get older. I had previously only been terrified I'd end up in some religious elderly home. I have hopefully sabotaged her possible plan by never having a passport - but who knows what the laws will be like for dumping old people in a few years, I may not need one, they may ship me in the cargo hold instead.
We already dump our toxic waste, our asbestos laden ships and our worn out clothing abroad-why not our old people?
I'm pretty sure I read a semi-serious article advocating shipping off the old people in U.S. and Europe to China and India. Reverse emigration ... but with the same goal of putting cheap labor to work.