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As soon as I saw the title and then read the article I immediately thought of ReachTheBeach's thread We need a new way to fully fund retirements (55, pension plan, grandparents) We need a new way to fully fund retirements
This seems like the answer to the questions posed there.
Except that I was/am worried about what happens with programs not adequately funded for people who are too old to hold jobs now and in the next decade or two. It's too late for them to start saving at the beginning of their careers.
Wasn't this problem the target of the myRA program started by Obama and killed by Trump? This program was a low entry hurdle/no entry hurdle, tax advantaged, personal retirement savings program intended for lower wage earners.
I think this problem needs to be attacked on two fronts:
1) Constantly inform people of the 'insufficient retirement income' problem so they eventually believe it is true. I have recently seen articles claiming that 70% of the population believes that Social Security is enough to sustain them in retirement.
2) Resurrect the myRA or create a new equivalent program.
For those of you who say that it is a drop in the bucket and it wouldn't amount to much you are absolutely right but here we are complaining that there are too many moochers on the system now. So instead of adding a bit in another place we just say "Nah, if they can't figure it out on their own forget them" or words to that effect. Trouble is we are already at the we don't care about those people because they don't have any accountability of their own. We are already telling them we don't care about you.
Some of you who complained here that we shouldn't do that probably already are covered under their own 401k's. Maybe you didn't want to have a 401k. I don't presume to know. But wouldn't it be nice if a small business owner be able to get a low cost alternative to setting up a company 401k plan. I don't know how expensive and how much work it is to do but it has to be better than doing absolutely nothing. I for one would have loved to have the beginnings of a 401k as a teenager working at the bike shop to roll over into an more robust 401k when I am established. Nice head start for something that doesn't amount to a hill of beans.
FYI, companies already are forced to pay for your retirement... they pay an equal amount of your social security for you
edit: and it is 6% each, and people claim social security is going to be gone... how would 3% additional help when the current 12% doesn't work?
1. SS is completely different than a 401k or similar product. It is silly to make that comparison.
2. This retirement fund would be yours based on what you put into it, just like a 401k.
3. The minimum is 3%. You could save more than 3%.
4. Many small companies do not offer retirement programs. This program would help all workers contribute something to a retirement savings account.
5. SS plus even the 3% minimum is better than SS plus zero.
edit: and it is 6% each, and people claim social security is going to be gone... how would 3% additional help when the current 12% doesn't work?
Part of the problem is that a considerable chunk of SS dollars goes to things other than retirement benefits (especially disability). Another part of the problem is that multiple ex-spouses can be drawing SS payments based in part on what their ex earned while the marriage was intact. Plus, people are just plain living longer, which means many will draw out more in benefits than they ever paid in while working.
This proposal is basically forced participation in a national IRA plan. One person pays in, one person (and ONLY one person) later gets a payout, and that payout doesn't start until age 65. And once the money's depleted, it's gone; it doesn't have the annuity aspect that SS does. So it wouldn't cover everything, but it would be on a fiscally sounder footing than SS currently is.
Part of the problem is that a considerable chunk of SS dollars goes to things other than retirement benefits (especially disability). Another part of the problem is that multiple ex-spouses can be drawing SS payments based in part on what their ex earned while the marriage was intact. Plus, people are just plain living longer, which means many will draw out more in benefits than they ever paid in while working.
This proposal is basically forced participation in a national IRA plan. One person pays in, one person (and ONLY one person) later gets a payout, and that payout doesn't start until age 65. And once the money's depleted, it's gone; it doesn't have the annuity aspect that SS does. So it wouldn't cover everything, but it would be on a fiscally sounder footing than SS currently is.
Has anyone determined just how big of a problem this is? People are outraged but is it a significant amount? Each marriage has to last at least 10 years to be eligible, you know.
Part of the problem is that a considerable chunk of SS dollars goes to things other than retirement benefits (especially disability). Another part of the problem is that multiple ex-spouses can be drawing SS payments based in part on what their ex earned while the marriage was intact. Plus, people are just plain living longer, which means many will draw out more in benefits than they ever paid in while working.
This proposal is basically forced participation in a national IRA plan. One person pays in, one person (and ONLY one person) later gets a payout, and that payout doesn't start until age 65. And once the money's depleted, it's gone; it doesn't have the annuity aspect that SS does. So it wouldn't cover everything, but it would be on a fiscally sounder footing than SS currently is.
So agree with this but it'll never change. Why, cause it benefits men the most. So they can continue to get married. Who do you think marrries (overall) the most after a death or divorce. Men.
Do women marry for the social security, yes some do. Heck I know a woman who stays with her poor sap of a husband because of the health insurance. She cheats on him with multiple men. She's self employed and even admits she stays for the health insurance. The good thing (for him) is she isn't thinking far enough ahead about social security. She makes much more than him. But this is rare.
I say SS to one wife who makes it 15 years+. Raise it from 10. The young who think nothing of starter marriages, won't hang on for 15 years. They might for 10. So then the guy will be more mature and make a better decision in his 30's and 40's. Then his long term wife will not be penalized.
Here's another thing. If you aren't a US citizen, no SS. Friend has a husband who works for Microsoft. Many tech guys here from over seas, never were US citizens. Start getting paid SS and they were shocked they got it as they didn't even file for it! WTH. They worked for a period of time here in the US and went back to their home countries. Check getting sent overseas.
Some states have pensions that you get less, if you move out of that state. A friend is in that position now. She would get 1/3 less, that is a chunk. Want to move but would not have the lifestyle they have now with 1/3 less if they did.
I read this piece wondering where it would go with the question. It went exactly in the direction I thought it should with a few added details I had not seen before. I think it is an idea we as Americans should consider but I know a lot will say it is too far and others it doesn't answer enough of the questions retiring Americans need answered.
A modest, one-time price increase of less than 1% on their goods or services will fund the entire plan for most employers.
I think that is grossly underestimated. I also don't believe smaller employers could financially handle it, even if they were in a position to raise the cost of their goods or services 1%.
And the money would be a drop in the bucket and not a significant amount.
Worse than that, for many of the lower wage workers, that asset would put them out of reach of State and federal programs, leaving them in the nebulous gray area where they don't qualify for benefits, and barely have enough money for basic needs.
Quote:
Originally Posted by TimAZ
There is a big gap between "should" and "did". We have a relative who is now sixty with serious health issues. They never saved a penny during their 40 years of work, never owned a home, and now they are on SS disability, owe $30K to three banks, a huge, as yet undefined hospital copay, and are facing the prospect of Medicaide placement into assisted living.
If your relative is going to be in assisted living, then why would they need a huge retirement fund?
It's not like they're going to be going anywhere or doing anything.
Quote:
Originally Posted by MI-Roger
I think this problem needs to be attacked on two fronts:
1) Constantly inform people of the 'insufficient retirement income' problem so they eventually believe it is true. I have recently seen articles claiming that 70% of the population believes that Social Security is enough to sustain them in retirement.
2) Resurrect the myRA or create a new equivalent program.
Uh, it was the Social Security Administration that convinced everyone that Social Security was enough for retirement in the first place.
It will be difficult, if not impossible, to undo decades of government-sponsored propaganda.
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