5 ms·

> Snark aside, I think we have an extremely big problem on our hands, in a sense this big bucket of money does exist, it is in the bank accounts of the 1%. Now

by wtbob 11y ago

> Snark aside, I think we have an extremely big problem on our hands, in a sense this big bucket of money does exist, it is in the bank accounts of the 1%. Now who that money "belongs" to is kind of a fun but futile philosophical argument, the fact of the matter is a LOT of people are going to be reaching retirement age without the funds necessary to sustain an even remotely pleasant lifestyle, with (in my opinion) very little correlation to each individual's contribution to society throughout their lifetime. That's what scares me to death. I've spent my entire working life scrimping and saving. I haven't had the fun lifestyles, the swanky apartments or the fancy cars that many others I've personally known have had. As a result, I have accumulated a sizable sum. Meanwhile, I personally know people a few years younger than me with zero savings, not even cash, who literally live paycheque to paycheque, despite making roughly what I make. When they are no longer able to work, the only possible thing will be for the State to rob that nest egg I've been accumulating and sacrificing for, in order to finance their retirements. Whether it's tax-deferred or tax-exempt, I know that I am going to lose the vast majority of that money. It'd be inhuman to let them starve on the street, and so my own dwindling years will be impoverished. I should have just lived high on the hog like everyone else.

distances 11y ago
Not being too familiar with US pension schemes, could you elaborate why you expect to end up paying for this personally? Aren't your private pension savings comparable to other private assets?
- sliverstorm 11y ago
  The exact mechanism is not important, but in general your parent is afraid that an overburned underfunded social welfare system will set its eyes on private retirement savings accounts, and begin taxing them heavily.
- Jtsummers 11y ago
  Retirement options in the US: * 401(k) or similar. These are usually tax advantaged (no tax up front, but taxed on payout; taxed up front, but no tax on earnings at payout). Usually very limited investment options (bonds, domestic markets, international markets). Which investment options depends on who your employer selects as the manager for the 401(k). Typically funded entirely by your own money, may get some matching (3-10% of your annual salary). Capped at various amounts (401k is capped at $18k/year right now) depending on the particular one. * IRAs. Similar tax advantages to 401(k), many more investment options (essentially any bank/investment account can be used so the full market is at your disposal). Capped at $5500/year right now, entirely your own funds, your employer is uninvolved. * Social Security - outside state employees and maybe some federal employee, everyone is supposed to be paying into this as a payroll tax (6% from you, matched by your employer). You can start collecting at 62 with penalties, 67 (?) for full amount. * Pensions - very few companies offer these anymore, really only the big ones and often the result of union actions. In theory, a lifetime guaranteed income starting either on retirement or at a certain age. Usually a percentage of your annual income (or high 3-year average or similar) based on number of years of service. FERS (the federal pension) works by giving 1% per year of service of your high 3-year average. Collectible at 58 with at least 5 years of service and a penalty, 62 (?) with no penalty. Graduated penalty between those two ages. If you hit 20 or 30 years of service it changes when you can collect and what penalties apply. In theory, corporate pensions encourage employees to stick with it for the longhaul. But at the rate employees get screwed, it's not the most compelling thing anymore. With regard to your specific question. Some people seem to get scared that private retirement accounts will suddenly be taken by the federal government or have much higher taxes/penalties applied. This seems incredibly unlikely to me, and would require the US federal government to be in severe fiscal distress. It would devastate several generations of workers, and completely remove any trust in the US dollar and government by most people. It would be a moronic move, though not entirely impossible. There is some precedence (see [1]). But given the reaction, I can't imagine them repeating that. It makes sense to discount the future value of Social Security and corporate pensions when planning for retirement. But 401(k) (and similar) and IRAs are unlikely to be touched, IMHO. [1] https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
- wtbob 11y ago
  > Not being too familiar with US pension schemes, could you elaborate why you expect to end up paying for this personally? Because they have no money and I have a fair amount, and because letting them starve on the street would be unfair. Someone's going to have to finance their waning years.
mistermann 11y ago
I did the same but decided to blow it all up in the stock market. :(

by wtbob 11y ago

distances 11y ago

Not being too familiar with US pension schemes, could you elaborate why you expect to end up paying for this personally? Aren't your private pension savings comparable to other private assets?

sliverstorm 11y ago
The exact mechanism is not important, but in general your parent is afraid that an overburned underfunded social welfare system will set its eyes on private retirement savings accounts, and begin taxing them heavily.
Jtsummers 11y ago
Retirement options in the US: * 401(k) or similar. These are usually tax advantaged (no tax up front, but taxed on payout; taxed up front, but no tax on earnings at payout). Usually very limited investment options (bonds, domestic markets, international markets). Which investment options depends on who your employer selects as the manager for the 401(k). Typically funded entirely by your own money, may get some matching (3-10% of your annual salary). Capped at various amounts (401k is capped at $18k/year right now) depending on the particular one. * IRAs. Similar tax advantages to 401(k), many more investment options (essentially any bank/investment account can be used so the full market is at your disposal). Capped at $5500/year right now, entirely your own funds, your employer is uninvolved. * Social Security - outside state employees and maybe some federal employee, everyone is supposed to be paying into this as a payroll tax (6% from you, matched by your employer). You can start collecting at 62 with penalties, 67 (?) for full amount. * Pensions - very few companies offer these anymore, really only the big ones and often the result of union actions. In theory, a lifetime guaranteed income starting either on retirement or at a certain age. Usually a percentage of your annual income (or high 3-year average or similar) based on number of years of service. FERS (the federal pension) works by giving 1% per year of service of your high 3-year average. Collectible at 58 with at least 5 years of service and a penalty, 62 (?) with no penalty. Graduated penalty between those two ages. If you hit 20 or 30 years of service it changes when you can collect and what penalties apply. In theory, corporate pensions encourage employees to stick with it for the longhaul. But at the rate employees get screwed, it's not the most compelling thing anymore. With regard to your specific question. Some people seem to get scared that private retirement accounts will suddenly be taken by the federal government or have much higher taxes/penalties applied. This seems incredibly unlikely to me, and would require the US federal government to be in severe fiscal distress. It would devastate several generations of workers, and completely remove any trust in the US dollar and government by most people. It would be a moronic move, though not entirely impossible. There is some precedence (see [1]). But given the reaction, I can't imagine them repeating that. It makes sense to discount the future value of Social Security and corporate pensions when planning for retirement. But 401(k) (and similar) and IRAs are unlikely to be touched, IMHO. [1] https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
wtbob 11y ago
> Not being too familiar with US pension schemes, could you elaborate why you expect to end up paying for this personally? Because they have no money and I have a fair amount, and because letting them starve on the street would be unfair. Someone's going to have to finance their waning years.

mistermann 11y ago

I did the same but decided to blow it all up in the stock market. :(