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A simple solution would be mandatory 401k contributions by employers for all workers. Even a 2500/year contribution for a worker will yield almost 200k at a 2%
by darth_avocado 4y ago
A simple solution would be mandatory 401k contributions by employers for all workers.
Even a 2500/year contribution for a worker will yield almost 200k at a 2% annual return on an average and almost 500k at a 5% return over 45 years. While by no means could independently support a lifestyle, it can definitely supplement social security. The burden for workers to save would be significantly lower.
- toomuchtodo 4y agoAustralia’s Superannuation concept is a reasonable model imho. Not only must employer contributions be mandated, but it must be very hard to get access to the funds before retirement. Otherwise, they’re just cashed out. You also have to have strong guardrails around fees and fiduciaries so it’s not a big pot of money for finance to leach off of. https://en.wikipedia.org/wiki/Superannuation_in_Australia https://en.wikipedia.org/wiki/Superannuation_in_Australia Also agree with Retric’s sibling comment.
- Retric 4y agoAt that scale there’s no reason to use 401k style personal investments that’s just pointless overhead and risk. Social Security tracks individual contributions and that’s all that is needed. Just pool everyone’s investment and pool everyone into a single safe asset allocation. We don’t use that system because individual 401k’s are extremely profitable for the companies running them. Fees can reduce the long term payout by as much as 1/3.
- klipklop 4y agoYeah the worst part is they don't have to clearly/obviously disclose how much they are taking out in fees. It just vanishes from your account unless you actually look into it. 401k's funds sometimes have fees that are multiples of Vanguard....and perform worse. Best to go into a self directed account and use Vanguard and safe yourself thousands in fees over a lifetime.