The Briefing Room
General Category => National/Breaking News => Topic started by: mystery-ak on August 25, 2016, 03:26:39 pm
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Obama administration pushing state-run retirement plans
Aug. 25, 2016 10:56 AM EDT
WASHINGTON (AP) — The Obama administration has finalized a new rule intended to encourage states to set up their own retirement plans.
The Department of Labor rule is designed to clarify how voluntary, state-run retirement programs are regulated by the federal government.
Labor Secretary Tom Perez says the state-run plans are a promising new option for people who are saving too little for retirement. He says one-third of U.S. workers don't have access to employer-based retirement programs.
Eight states have created their own plans, and some require some employers to automatically enroll workers if they don't offer their own plans.
Perez says his department is also proposing a rule that would allow some large cities to follow suit.
http://www.bigstory.ap.org/article/3955320ffe2d47acb2f65b8364657fbb/obama-administration-pushing-state-run-retirement-plans
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Labor Secretary Tom Perez says the state-run plans are a promising new option for people who are saving too little for retirement. He says one-third of U.S. workers don't have access to employer-based retirement programs.
Will I have the NEW OPTION to not have my savings account, Social Security; real estate, stock and IRA holdings confiscated and forfeited to people that deserve to be living out their retirement on 9 Lives Liver Pate and stale crackers?
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Will I have the NEW OPTION to not have my savings account, Social Security; real estate, stock and IRA holdings confiscated and forfeited to people that deserve to be living out their retirement on 9 Lives Liver Pate and stale crackers?
No, of course not, the demonrat plan is for a socialist utopia, you know like Venezuela where the people are separated in a fair and just manner the elite haves at the top and everyone else at the bottom with no middle whatsoever.
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Will I have the NEW OPTION to not have my savings account, Social Security; real estate, stock and IRA holdings confiscated and forfeited to people that deserve to be living out their retirement on 9 Lives Liver Pate and stale crackers?
Doubtful....
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Because state-run public sector pension plans are performing so well these days. :chairbang:
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...but yet he wants a federally run health care program.
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From March of this year: www.time.com/money/4262916/mandatory-retirement-savings
"Progressives hope not only to restore the trust fund's health, but to expand social security benefits as part of the reform debate. They hope to inject new revenue into the system by lifting or eliminating the cap on wages subject to the payroll tax and gradually increasing payroll tax rates. Conservatives will push for savings via higher retirement ages and possible means-testing of benefits."
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Obama-Tire
nothing good will come of it
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Because state-run public sector pension plans are performing so well these days. :chairbang:
Obama's adopted state leads the pack!
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Remember when Americans took care of themselves?
Me either.
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Remember when Americans took care of themselves?
Me either.
I'm not that old, but I can remember self reliance.
I also remember company loyalty. And companies recognized an employee's worth to the company.
And rational pensions, not the cushy public pension plans.
Now companies don't recognize the worth of their employees. Pensions are a thing of the past, mostly.
And employees no longer feel any loyalty to their employers.
Now more than ever, retirement is dependent upon the individual.
Social Security was never intended to be a retirement plan, only a supplement.
How do we instill in our young people the importance of Saving for their Retirement?
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I'm not that old, but I can remember self reliance.
Now companies don't recognize the worth of their employees. Pensions are a thing of the past, mostly.
I don't see the connection between seeing the worth of your employees, and not offering pensions.
Pensions are a bad idea -- they encourage companies to make promises of generous pensions for which the company may not have the assets when they become due. And they are too dependent on the ups and downs of the economy overall for businesses to incur that kind of mandatory future financial obligation.
Much safer simply to take the money that the company would have put into pensions, and give it to employees to invest on their own.
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Much safer simply to take the money that the company would have put into pensions, and give it to employees to invest on their own.
How many of these kids Today have the self discipline to invest it for their future?
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I don't see the connection between seeing the worth of your employees, and not offering pensions.
Pensions are a bad idea -- they encourage companies to make promises of generous pensions for which the company may not have the assets when they become due. And they are too dependent on the ups and downs of the economy overall for businesses to incur that kind of mandatory future financial obligation.
Much safer simply to take the money that the company would have put into pensions, and give it to employees to invest on their own.
You are so right!
The best pensions are the 401k model, where you contribute a portion and the employer contributes a portion. The money goes to a 3rd entity who manages the money as the owner has directed and whatever is there at retirement is the owners, or their heirs. The defined benefit pension only works where you have a monopoly and even in the case of govt these pensions are going bankrupt because govt has promised more than the tax base can sustain.
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The best pensions are the 401k model, where you contribute a portion and the employer contributes a portion. The money goes to a 3rd entity who manages the money as the owner has directed and whatever is there at retirement is the owners, or their heirs. The defined benefit pension only works where you have a monopoly and even in the case of govt these pensions are going bankrupt because govt has promised more than the tax base can sustain.
The issue is people are not investing enough in their 401k's to retire on.
(https://15on25czles18a6scj3e1i10i2-wpengine.netdna-ssl.com/wp-content/uploads/2014/03/401k-average.png)
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The issue is people are not investing enough in their 401k's to retire on.
(https://15on25czles18a6scj3e1i10i2-wpengine.netdna-ssl.com/wp-content/uploads/2014/03/401k-average.png)
You are correct. People are not investing enough in their retirement plans - even in spite of increasingly generous company match provisions and ever-lower expense ratios and fees for pooled investment vehicles.
But it's worse than that. An increasing number of plan participants are using loan and hardship withdrawal provisions in order to pay current expenses, including rent, revolving debt and medical expenses.
While plan loans are not taxable, they entail processing and maintenance fees and remove money from investment accounts that might otherwise be invested and compounding over time.
Hardship withdrawals on the other hand, are taxable and frequently penalized as premature distributions, and also result in the suspension of contribution rights for six months.
I work for one of the above-referenced institutions and I see the damage every single day. It's depressing.
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Is this about opening the TSP to non-government (and military) workers?
If so, it might be a good idea for those that aren't offered a 401k... as long as it remains a voluntary thing.
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I'm not that old, but I can remember self reliance.
I also remember company loyalty. And companies recognized an employee's worth to the company.
And rational pensions, not the cushy public pension plans.
Now companies don't recognize the worth of their employees. Pensions are a thing of the past, mostly.
And employees no longer feel any loyalty to their employers.
Now more than ever, retirement is dependent upon the individual.
Social Security was never intended to be a retirement plan, only a supplement.
How do we instill in our young people the importance of Saving for their Retirement?
Pay them enough to save?
Also, company pensions used to take care of that. So young employees, in the past, didn't have to think about it.
Do you think they'd have done any better if the circumstances were the same?
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Because state-run public sector pension plans are performing so well these days. :chairbang:
I can give you a perfect example of one that is: New York's. It has a guaranteed 7.5% APR and is fully funded—it's hard to beat that!
How do they do it? Easy: if the comptroller (who's in charge of investing the pension funds) botches things and doesn't meet that rate of return, he passes the buck to county, local and school governments, who are forced to pay more into the system to cover the difference, which in turn drives up local taxes. As a result, most of the highest property taxes in America are in New York rural counties that can't afford the exorbitant demands.
For obvious reasons, non-public employees can't invest in this fund.
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How many of these kids Today have the self discipline to invest it for their future?
How many even have the resources with all the debt they have to take on?
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My parents were children of the Great Depression (born mid-1920s), and I took to heart their accounts of living in poverty - and started saving as soon as I entered the workforce. My impression is that many of today's under-40s just don't want to deny themselves the "stuff" they want, and so money that might have gone toward an IRA or some other savings plans instead goes to the latest technology, vacations and the like. This isn't meant as a stereotype, just an observation.
Taking on too much debt, whether student loans, automobiles or anything else, certainly doesn't help matters.
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I am of the opinion that the government will not directly seize retirement accounts. Too much negative social unrest would come from such a move. Rather they will take a more incremental approach. They will require that some small percentage be invested in government bonds. This will be done to "guarantee" the retirement fund. Later more and more of a percentage of investment will be required.
Of course the intent is NOT to insure the pension funds but rather gain access to the Trillions in retirement funds by FORCING "investors" to buy worthless bonds. Wealth transfer to the government outside of taxation, then used by the government to support their crony socialism.
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I am of the opinion that the government will not directly seize retirement accounts. Too much negative social unrest would come from such a move. Rather they will take a more incremental approach. They will require that some small percentage be invested in government bonds. This will be done to "guarantee" the retirement fund. Later more and more of a percentage of investment will be required.
Of course the intent is NOT to insure the pension funds but rather gain access to the Trillions in retirement funds by FORCING "investors" to buy worthless bonds. Wealth transfer to the government outside of taxation, then used by the government to support their crony socialism.
That's not how the federal retirement system works. This looks like an expansion of the TSP. That is the federal government's name for their own 401k.
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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
$200 per check or $400 month ($4,800 per year) 8% of the same 40 years works out to $1.2 Million. When young people understand this concept, getting them to invest, even if it is not $400 per month is not that a difficult challenge. What is difficult is for them to get a job that allows them the $400 per month plus cover medical and car insurance, rent, utilities and food.
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 (see below)
At 65, the account no longer grows, but the interest is paid to the account holder, about $80K for retirement. When the person dies, 20% goes to the person's estate, and the remaining 80% goes back to the Government to off set future costs. Should the person die between the age of 1 and 20, the first $10K goes to the estate the rest goes to the government. Between the ages of 20 and 30, the amount increases to $20K, Between 30 and 40, the amount is $30K. Between 40 and 50, $40K and 50 to 60 would be $50K, 60 to 65 would be $60K. At 65 and older, 20% to the estate, the rest goes back to the government. If the person is disabled for any reason prior to the age of 65, then they receive 1/2 of their declared disability percentage of the interest earned. I.e 50% disabled would be 25% and 100% disability would receive 50%. The remaining interest would go back to their fund.
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I am of the opinion that the government will not directly seize retirement accounts. Too much negative social unrest would come from such a move. Rather they will take a more incremental approach. They will require that some small percentage be invested in government bonds. This will be done to "guarantee" the retirement fund. Later more and more of a percentage of investment will be required.
Of course the intent is NOT to insure the pension funds but rather gain access to the Trillions in retirement funds by FORCING "investors" to buy worthless bonds. Wealth transfer to the government outside of taxation, then used by the government to support their crony socialism.
You are so right!!!!
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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!).
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The federal government shouldn't have anything to do with our saving - or not saving - for retirement. What a freakin' mess this is!
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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.
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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.
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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.
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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.
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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.