Was the 401(k) a Mistake? How an obscure, 45-year old tax change transformed retirement and left so many Americans out in the cold.
Was the 401(k) a Mistake? How an obscure, 45-year old tax change transformed retirement and left so many Americans out in the cold.
How an obscure, 45-year old tax change transformed retirement and left so many Americans out in the cold.
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Good article overall, mainly it talks about 401k's benefit people who can afford to contribute, but also caused a reduction in traditional retirement opportunities.
It is certainly part of a larger problem that retirements have become extremely complicated, and the DIY aspect of it makes it confusing to most people. I do like her suggestion of a basically government run annuity, but that just seems like Social Security with extra steps. Might as well keep the traditional Social Security fund, get rid of the wealth cap, and provide an option to buy more credits for people who want a more extravagant retirement.
Yeah.
And getting rid of wealth caps on social services has a hidden benefit: it removes the "I'm a future billionaire so this isn't fair to me" argument from the table.
That said, I figure people who want a more extravagant retirement can hire a tax advisor to navigate a traditional 401k. So there's probably no need to burden the public option with extra options for wealthier folks.
The virtue of the old employer-sponsored pensions is that they forced contributions. Letting people decide means that lower-income wages will fall so that people can't contribute.
Social Security wasn't ever meant to be enough; it was mean to be something minimal.
Social Security is forced contributions from employers and employees. It's the same thing, just on a national level. And the original intention doesn't matter. Social Security is changed all the time. Old people always need more money.
Social Security wasn't ever meant to be enough; it was mean to be something minimal.
People like to claim this but no one ever attempts to prove it because it's right wing bullshit. It's one of the reason used to justify the reduced value of the payouts against inflation.
Look at what the payments were in say, 1950 — about 10% of the average yearly wage. That's not a retirement; that's a little bit to keep you going.