4 ms·

Unless you plan to retire with a very expensive lifestyle, the contribution max of $22,500 per year is very fair, plus you can also put $6,500 max in a roth IRA

Unless you plan to retire with a very expensive lifestyle, the contribution max of $22,500 per year is very fair, plus you can also put $6,500 max in a roth IRA. That's almost $30,000 per year in tax advantaged accounts. More if you're in you're 50s. If you were to max your accounts for any reasonable portion of your career, you would retire with millions. Most people don't make enough to hit the max every year, thankfully, retirement will still work without going near the max. The problem is that people don't put anything in, or only put 1-3% in. My friend works in HR at a company that employs a lot of engineers. These are people that are educated, can do 6th grade math, and make decent incomes. I think the average contribution in the department was a little over 4%. Those people are going to retire with $150k in their account and have to life off social security but they shouldn't blame it on anyone else. I know a lot of people are struggling in America right now, but a lot of retirement savings shortfalls are just ignorance. The only policy solution to this is to force some kind of deduction from paychecks into retirement accounts. Australia and Singapore do this and it works reasonably well.

lmm 3y ago
> The only policy solution to this is to force some kind of deduction from paychecks into retirement accounts. Or to admit that privately managed retirement accounts were a mistake, and ramp social security up to the point where it's enough to live on, taking enough contributions to cover that. Investment should be money that someone can afford to lose. Treating privately managed investment as the way to do retirement savings is going to leave some people destitute.
- missedthecue 3y ago
  The demographics of the world mean that social security and government pensions are no longer going to work very well. They will need to be cut, and can certainly not be raised even higher. In your lifetime, most countries will have 1 worker per retiree. Some, like South Korea, will have two retirees per worker. Good luck paying all your normal taxes as well as increased levels of medicare and social security all on one income. Investment will continue to be the cornerstorne or retirement, the math for redistribution just doesn't work. Especially if you increase the distributions.
  - lmm 3y ago
    The government can invest just as well as individuals can. The only difference is that everyone would get the average growth, rather than the wise or lucky getting more and the foolish or unlucky getting less. If we can't afford to fund people's retirement that way, they can't afford to fund it themselves either, and investment accounts were only ever about shifting the blame.
- HDThoreaun 3y ago
  Social security invests in low interest bonds, if they invest at all. Having the government invest everyone's retirement savings will at best lead to sub-optimal returns and more likely lead to corruption and theft.
  - lmm 3y ago
    If the government can't figure out how to invest for decent returns, how is it remotely reasonable to expect individual citizens to?
polishdude20 3y ago
They could also be doing that because they're saving up for a home maybe? I know I stopped putting anything in my index funds because I need money that'll be available to me in the near future.

lmm 3y ago

> The only policy solution to this is to force some kind of deduction from paychecks into retirement accounts. Or to admit that privately managed retirement accounts were a mistake, and ramp social security up to the point where it's enough to live on, taking enough contributions to cover that. Investment should be money that someone can afford to lose. Treating privately managed investment as the way to do retirement savings is going to leave some people destitute.

missedthecue 3y ago
The demographics of the world mean that social security and government pensions are no longer going to work very well. They will need to be cut, and can certainly not be raised even higher. In your lifetime, most countries will have 1 worker per retiree. Some, like South Korea, will have two retirees per worker. Good luck paying all your normal taxes as well as increased levels of medicare and social security all on one income. Investment will continue to be the cornerstorne or retirement, the math for redistribution just doesn't work. Especially if you increase the distributions.
- lmm 3y ago
  The government can invest just as well as individuals can. The only difference is that everyone would get the average growth, rather than the wise or lucky getting more and the foolish or unlucky getting less. If we can't afford to fund people's retirement that way, they can't afford to fund it themselves either, and investment accounts were only ever about shifting the blame.
HDThoreaun 3y ago
Social security invests in low interest bonds, if they invest at all. Having the government invest everyone's retirement savings will at best lead to sub-optimal returns and more likely lead to corruption and theft.
- lmm 3y ago
  If the government can't figure out how to invest for decent returns, how is it remotely reasonable to expect individual citizens to?

polishdude20 3y ago

They could also be doing that because they're saving up for a home maybe? I know I stopped putting anything in my index funds because I need money that'll be available to me in the near future.