Skip to comments.The shape of 401k's to come
Posted on 02/08/2014 4:26:40 AM PST by Libloather
The biggest change will be a new emphasis on retirement readiness, rather than simply getting workers to join a plan and contribute. The idea is to focus on actual retirement outcomes, and it reflects apprehension about the large number of Americans who are approaching retirement unprepared. If that's something you're worried about, it turns out your boss shares your concern.
The 2013 Retirement Confidence Survey by the Employee Benefits Research Institute (EBRI) found that just 13 percent of workers are very confident they will have enough money to live comfortably in retirement.
And a 401k benchmarking survey released last year found that just 12 percent of employers believe that most of their employees will be financially prepared to retire, down from 15 percent in 2011. That survey is conducted annually by Deloitte, the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialists.
(Excerpt) Read more at money.msn.com ...
Hope I planned things right. Old age is not for the foolish.
As long as there is no hyper inflation in the future then you should be good. I say your chances are 50-50.
I plan to keep it in as long as possible using the interest to pay my taxes and fuel bills.
In a lawless environment, possession is everything. - Ann Barnhardt
Socialism Is Legal Plunder
The Law Defends Plunder
Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame, danger, and scruple which their acts would otherwise involve. Sometimes the law places the whole apparatus of judges, police, prisons, and gendarmes at the service of the plunderers, and treats the victim when he defends himself as a criminal. - Bastiat
Be Prepared - Motto; Boy Scouts
Let us please remember that a Democratic administration limited the amounts a person could contribute to a 401-k or IRA in any given year. Then complained about low savings rates
Retirement as we know it today is a modern invention that was based upon an expectation that greater productivity would enable savings.
The actual facts don’t necessarily support such a picture as indefinitely sustainable. And even many “retired” folks find themselves pursuing something that produces something of economic or spiritual value on the side.
I’ll be bold and assert here that the key to life on earth, once matters of spiritual life are taken care of, is exalting God “in your body,” and money is only one medium of blessing to that end. God doesn’t expect that as one’s body deteriorates, one will be able to work as vigorously at advanced ages as in one’s youth. But one might be able to better apply wisdom and engage in sedentary pursuits that are still gainful.
Rather than retirement planni,ng we probably ought to be talking about career phase planning, and for that matter, economic disaster recovery planning. But that’s just IMHO and YMMV and all that grand alphabet soup of disclaimers :-).
Of all economic theories, I believe I’ve never seen one, even by Christians such as Dave Ramsey, that is squarely built upon the concepts of exalting God and of blessings. I think such a theory would stand an excellent chance of enabling the analysis of otherwise baffling economic scenarios, because it is tied to reality. I’d certainly invite those who are sharper with finances than I am, to advance such theories. One thing you might find is that you don’t need much money to be rich in such an economic view.
For me here are the ‘money’ paragraphs:
“It would be nice to think employers are motivated by altruistic concern about the retirement security of their workers. No doubt, some are - but there’s also a human resources issue here straight out of Adam Smith. Companies are worried that older workers will overstay their welcome. Transamerica even came up with a name for it: Aging Worker Syndrome.
The federal Age Discrimination in Employment Act (ADEA) of 1967 made it illegal to have a mandatory retirement age younger than 65, and the law was amended in 1986 to rule out any mandatory age for most occupations. And in the wake of the last recession, rising numbers of older workers are staying on the job longer - either for the money and the benefits or because they like working. That EBRI report found that 36 percent of workers expect to stay on the job past age 65, up from 11 percent in 1991. Meanwhile, 25 percent of workers expect to retire before age 65 - half as many as in 1991.
Clearly, working longer is one of the best ways to boost long-range retirement security. Every year of additional work can help you delay filing for Social Security (thereby increasing annual benefits when you do file) while allowing you to contribute to your retirement accounts longer and spend fewer years drawing those accounts down for living expenses.
But for employers it raises the prospect of workers staying on the job past the point where they are productive, not to mention higher health care costs. “We don’t want people to have to work longer if they don’t want to,” says Grace Basile, assistant director of market research at Transamerica.”
It’s get out of here before you start costing us to much money in salary and compensation let enough ‘healthcare bennies’.
On a different side of the retirement equation is the constant question - - When are the Feds going to ‘nationalize’ the 401(k)’s? And what can I do to keep from losing all of my money to them?
With the country trillions in debt looming...
Who says Congress won't amend the rules to say they will tax your capital gains at a mere 75 % (like the french) when you pull your money out...instead of the 36 to 42 % now...
I moved 50 % of my retirement 401 K contribution to a Roth 401 K where you are taxed when you contribute verses taxes after years of capital gains...
My returns may be smaller but my tax liability is much less
Yes, and older workers who have been on the job longer have higher salaries than those just starting out. In tech fields younger workers often (though not always) exploit new technologies better, too.
Good for you. Obama’s economy destroyed my savings and reduced my incomd by more than half. I am trying to get on solid footing again and it has’t been easy. With the current job market and my age its not like I can find any sustainable employment. Even the minimum wage job market is flooded with applicants not that I would apply for one of them unless I was in extremely dire citcumstances and was forced to live under someone else’s roof because I sure wouldn’t be able to pay rent, utilities, snd buy food on it with the high cost of living nowadays.
When we are on the edge of national default and no way out...
You know for the "good of the people" and future generations they stole from.../ S
“Let us please remember that a Democratic administration limited the amounts a person could contribute to a 401-k or IRA in any given year. Then complained about low savings rates”
Oh really? I did not know that but it is good to know that. I’ve often complained ‘why is it I cannot contribute more’? I mean, how can you tell people how much they can save?
Well, you need to work your self up to an officer of the corporation and the 401 (K) limits are very different...from the proletariat working class stiff...
Enter the federal retirement program. All your money will be directed to thier account and they will administer it to you at retirement according to what they feel you should have and the rest will go into a slush fund for those who have no retirement or were not responsible enough to think of it. It’s all about fairness
My salary has been essentially flat for four years, but my healthcare costs have more than doubled, among other rising expenses. No way I can contribute more.
That I mean, how can you tell people how much they can save?"
The fundamental issue is tax revenue. That is also why at age 701/2 you have to take out a portion of your 401-k/IRA money even if you do not want to, or be taxed at 50% of what the government says you have to withdraw.
Remember that it was Hillary Clinton who complained about IRA/401-k monies that "it's just sitting there." Totally ignorant about money flows and the multiples it creates.
The government doesn’t limit how much you can save. It DOES limit how much you can shield from income tax. That’s a separate question.
Personally, I think that we should tax consumption rather than income. That would make savings tax deferred until the saver takes money out and spends it. Always liked Pete Domenini’s consumed income tax. Too bad it never got traction on the Hill.
One of the things you don’t hear about these days is that a fear of “age discrimination” lawsuits is driving up health care costs for employers. What you have today is a bizarre, unsustainable employment situation where many companies have a disproportionate number of older workers that are harder to lay off (because of a fear of these lawsuits), and fewer young employees (because the company doesn’t have the need for them). This means the cost of medical coverage gets astronomical as the work force of any given employer ages, because they simply don’t have the premiums of the younger, healthier employees to help support the insurance pool.
The problem there is that the same Congress that will want to get their greedy filthy hands on the tax revenues from 401(k) plans will also want to get their greedy filthy hands on your "tax exempt" Roth IRA withdrawals.
I had a financial advisor telling me to do one of those Roth IRA conversions back in the 1990s when the Roth was first established. I came back to him with the following response:
"Why would I pay taxes on a Roth conversion right now if Congress can change the law in the future to tax the Roth IRAs just like regular IRA withdrawals anyway?"
He thought about it for several days, then came back to me and said I was right. From that point forward, he was still a big fan of Roth IRAs as new accounts, but was no longer advising his clients to do a Roth conversion from a traditional IRA. His rationale was the same as mine: There's no need to give up tax-deferred plan contributions you've made in the past in exchange for a tax-exempt withdrawal that may not be there when you retire.
Of course, there were some exceptions to this. He had some "asset-rich" clients who were temporarily out of work who were able to do the Roth IRA conversions in a year when their income put them in a low tax bracket. For these folks it was worth the risk.
In my particular field, companies may likely encourage us older engineers to stay on due to the lack of new engineers and technicians (instrumentation, controls, and process automation). When I do decide to retire, I may wind up teaching at one of the tech schools here in the Houston area. Not so much the money, it would be something to keep me busy. Add to that the canard that older engineers are not current on new technologies, which has been proven untrue.
For now, Federal government will offer the typical, low interest long term bond in exchange for what? YOUR CASH MONEY. When that plan fails, as it is designed to do, with lower return on investment than the market will afford, then employer tax breaks will be offered if their 401-k matching funds are issued using these bonds. When that fails, as it is designed to do, the individual tax exemption on contributions will be altered such that contributions made in the purchase of the bonds will have no contribution ceiling versus contributions made for traditional investments (e.g. mutual funds). In other words, 100% of contributions made for the bonds can be written off from AGI but contributions made in traditional investments will see the write off lowered or eliminated. When that fails, as it is designed to do, all new contributions will be only in the bonds and a law passed that no personal savings, regardless of designation, held longer than a defined amount of time will be converted into bonds and it will have a retroactive element involved such that all funds currently saved (and growing even modestly greater than these stupid bonds) will be converted.
The object is to raid the retirement accounts for cash. They know they can't do it out right without losing elections. Retirement will be nothing more than personal Social Security accounts funded by the same worthless bonds stuffed into the current Federal Social Security, which began with LBJ robbing the “Trust Fund” and putting it into the General Fund to fight the War on Poverty and the Vietnam War simultaneously. And because a Democrat controlled government is so inept, they wound up LOSING BOTH WARS.
We are so screwed.
People would rather pay for new cars and iPhones than invest for their future.
Yeah, I said that.
-—”Why would I pay taxes on a Roth conversion right now if Congress can change the law in the future to tax the Roth IRAs just like regular IRA withdrawals anyway?”——
I considered that and came to the conclusion that if Congress does go after regular 401 K they will leave Roth alone simply because the “rich” utilize the Roth far more than joe six pack....
No real “evidence” to think that....just a gut feel that congress will protect the rich and gives them an out saying.... See we didn’t touch all 401 K
Also I didn’t convert my regular 401 K just opened up a Roth and split my future contribution 50/50
I forget to add: if congress does try to tax Roth accounts.... You would be penalized twice on you investments... Not saying that they won’t but double dipping on taxing Roth would make them look look like greedy bastards....instead of trying to save the country....
Plus I imagine many in congress have Roth since they can afford to make large contributions to them...
It is probably in their self interest not to tax Roth ....
You know for the “women’s and child” /S
The idea is not to pay taxes. The Roth makes some sense if you have money to contribute while in the 15% tax bracket or below. Or you know in all likelihood that you're going to be in a higher tax bracket when you retire.
My take on tax deferred retirement accounts is to let a person have control of their own retirement account. The average person changes jobs 11 times in their career. Just have the company make a direct deposit into the account. Then your not screwing around with roll overs when switching jobs.
“Personally, I think that we should tax consumption rather than income. “
I see the G’ment as THE PROBLEM. Too Big, Too Intrusive Too much of the DICTATOR. - And it makes no difference if it is a Democrat or a Republican in charge.
Nixon gave us the Dept. of Education
Bush increased the Fed. G’met with No Child Left behind
Most of the Federal Departments NEED to be ELIMINATED and the scum who work there need to be enjoying putting their Kids to bed at night because they cannot get a Job.
“lack of new engineers and technicians (instrumentation, controls, and process automation).”
In the 1990’ SOME EPCs in Houston ran training courses. Now most are pushing work to Low Cost Centers like India, Philippines, Check Rep. etc.
And they all complain that they cannot find quality Designers, Engineers or Project Managers.
Government can never steal enough money.
Also I didnt convert my regular 401 K just opened up a Roth and split my future contribution 50/50.
Very good! LOL.
The only thing that saved my butt was the real estate bubble 10 years ago and cashing out of the Los Angeles market then at the absolute peak. We had a big house, plus a 4-plex rental property there, both of which we sold in 2005 and cleaned up on, allowing us to move out of CA and get out of the corporate rat race and into working for myself.
Being self employed my retirement consists of zero ‘investments’ in government backed anything, and 100% new capacity in my shop. There is no doubt, in my mind anyway, that IRAs 401ks and other schemes will be taken over by the feds. MyRA opened the flood wall. Besides, chances are with my family health history I will drop dead on the shop floor. There are a lot of people depending on my tax dollars.
That's what MyIRA is for, a vehicle that has the potential to make all privately held retirement saving into worthless Treasury Bonds. Voluntary now but given a T-Bill crisis, Congress could mandate the purchase. And another thank you to Justice Roberts who ruled, that as part of being a US citizen the government has the right to make you purchase a product (i.e. obamacare). Like you I am also trying to figure outwhat can I do to keep from losing all of my money to them.