Obama administration pushing state-run retirement plans

[geronl]

Now let me present a possible alternative to Social Security.
After a person is born or 1 year after qualifying for SS, SSA opens an account for the individual with $200, and afterwards, adds $50 per month. 8 percent interest 64 years (retire at 65) the net value would be about $1 Million.  The cost for such a program is about $180 billion for the monthly payments so less than $200 billion total.  Can be paid for with a 1.5% sales tax. Sales tax would be about $250 Billion.  The overage could be used to replace the SS tax.  In 2015 the SS tax only brought in a little less than $1 Billion.  This would fund SSA until the program becomes self sustaining

No. I don't want government opening accounts and funding accounts for newborns paid for by taxes. The idea is insane. Let the parents open the account and let the parents have the option of funding it tax-free, even automatic deductions from checks. There is no reason for a massive new government program and new taxes (no new taxes!).

[mountaineer]

The federal government shouldn't have anything to do with our saving - or not saving - for retirement. What a freakin' mess this is!

[Neverdul]

Side note to all investors - take a close look at the ROTH IRA.  You can put in up to $5,000 per year.  Grows tax free and the proceeds are tax free after 59 and 1/2.  You can't take out until after that time point but $5,000 one time invested at 8% from 20 till 60 (40 years) would be $108K

My last employer added a Roth 401k option to our existing 401k plan.

The employer match was the same for both -  a rather generous 100% employer match up to 3% and a 50% match up to 6%. And the investment options, which were numerous and very good and very low fee, were the same. The company also made/contributed an annual profit sharing employer contribution, tax free, that usually ran around 2-3% of the employee’s annual contribution.

The only thing with the Roth option is that, yes, withdrawals starting at 59 and ½ are tax free, they are not tax deferred (not pre-tax deductions like with the 401k).

I opted to keep my 401k pre-tax contribution at 6% an added the Roth at 2% but the combined 401k and Roth was subject to annual contribution limits as well as the employer contribution limits. 

https://www.irs.gov/retirement-plans/designated-roth-accounts-contributing-to-a-designated-roth-account

In “theory” tax deferment is preferable if one is in their high earning years.  The idea is that once retired, they will fall into a lower tax bracket and therefore pay less in taxes on the withdrawals (assuming no huge tax increase or changed to the tax brackets or other post retirement investment income) and will therefore make out on the tax deferment.

Personally I would suggest that if your employer has a good, well managed 401k plan with a generous match, take full advantage of the match and the tax deferment.  Add either an employer sponsored Roth or a personal Roth as is affordable with after tax dollars. Younger employees, however, at the lower end of their earnings probably do well to contribute more to a Roth.

Just something to consider.

[bilo]

The federal government shouldn't have anything to do with our saving - or not saving - for retirement. What a freakin' mess this is!

You mean we would have to be responsible and put something away for our "golden years"? Our children would have to help out as needed and maybe even take us in if we don't save enough? Oh my gosh, what kind of society would that be where family helps family, our churches help our members, we save and try to plan for the future.

Unfortunately, those days are gone. We have generations who expect govt to take care of them when they no longer work.

Everything is upside down. The people who do the right things are penalized and those who don't are rewarded.

[Elderberry]

I know raises are small and far between. But when you get a raise, that's the time to increase the amount that you are putting into your 401K.

[Dirt for sale]

The richest man in babylon is a good book for the young ones to learn how to earn, save, and eventially earn on their savings. I haven't mastered that last one, myself.

[Taxcontrol]

No. I don't want government opening accounts and funding accounts for newborns paid for by taxes. The idea is insane. Let the parents open the account and let the parents have the option of funding it tax-free, even automatic deductions from checks. There is no reason for a massive new government program and new taxes (no new taxes!).

Geronl,
Once the Rubicon is crossed, there is no going back.  The government ALREADY has a savings account called SSN.  Only it is really a Ponzi scheme instead of a real savings account.  And since it is based ONLY on earnings, the account is not started until most people are in the late teens and early twenties. 

By starting earlier in life, the system can take advantage of years of interest earned to grow the principle.  The reason for the program is to replace a failed system with one that can sustain itself WITHOUT taxes after a generation or two.