4 ms·

I'm not talking about social security, I'm talking about pensions. To which a 401k or IRA is infinitely preferable. But SS has the same problem as pensions: the

by drcube 13y ago

I'm not talking about social security, I'm talking about pensions. To which a 401k or IRA is infinitely preferable. But SS has the same problem as pensions: there's nothing to stop future politicians from eliminating it at any time to free up some headroom in the budget. Perhaps a mandatory 401k everyone must have, contribute to and refrain from using until age 65 would be the best of both worlds?

coldtea 13y ago
>But SS has the same problem as pensions: there's nothing to stop future politicians from eliminating it at any time to free up some headroom in the budget. The same goes for salaries. There's nothing to stop them from offering them and enforcing slavery. Except, you know, the people that would be affected.
- drcube 13y ago
  No, if they stop paying your salary, you can stop working for them. If you work your entire career, you don't really have a recourse if they then refuse to pay the pension you were promised. You can't go back in time and choose another career.
  - dragonwriter 13y ago
    > If you work your entire career, you don't really have a recourse if they then refuse to pay the pension you were promised. Society needs to find some way to make promises of future money in exchange for present goods and services enforceable. If only there was some mechanism for that...
rpedela 13y ago
While I generally agree with your view on pensions. 401K is currently not a good solution because many of them have higher fees and perform worse than an index fund. Over a 30+ year period, those higher fees often result in a 2-5% loss in income which can easily be tens of thousands of dollars or more. What happens if you are unlucky to retire right when a crash occurs? There is an upside though: tax-free income. There are some 401K plans (not many) that allow you to have index funds as your core which is definitely good. But not sure how to handle the market crash problem.
gnaritas 13y ago
> I'm not talking about social security I didn't say you were, I merely pointed out that we already know people can't in general handle their own retirements.
dragonwriter 13y ago
> I'm not talking about social security, I'm talking about pensions. Social security is a pension. > To which a 401k or IRA is infinitely preferable. I dunno, the people who have had 401k's wiped out in various economic collapses might disagree on whether such plans are "infinitely preferable" to defined-benefit pensions. > But SS has the same problem as pensions: there's nothing to stop future politicians from eliminating it at any time to free up some headroom in the budget. Well, except voters, which have stopped politicians on several occasions who wanted to make much smaller changes -- which would not even affect current beneficiaries -- to Social Security than eliminating it. > Perhaps a mandatory 401k everyone must have, contribute to and refrain from using until age 65 would be the best of both worlds? Well, certainly, it would be one of the best (of the very many!) public subsidies the financial services industry has received. Not sure it would be good for anything beyond that, though.

by drcube 13y ago

coldtea 13y ago

>But SS has the same problem as pensions: there's nothing to stop future politicians from eliminating it at any time to free up some headroom in the budget. The same goes for salaries. There's nothing to stop them from offering them and enforcing slavery. Except, you know, the people that would be affected.

drcube 13y ago
No, if they stop paying your salary, you can stop working for them. If you work your entire career, you don't really have a recourse if they then refuse to pay the pension you were promised. You can't go back in time and choose another career.
- dragonwriter 13y ago
  > If you work your entire career, you don't really have a recourse if they then refuse to pay the pension you were promised. Society needs to find some way to make promises of future money in exchange for present goods and services enforceable. If only there was some mechanism for that...

rpedela 13y ago

While I generally agree with your view on pensions. 401K is currently not a good solution because many of them have higher fees and perform worse than an index fund. Over a 30+ year period, those higher fees often result in a 2-5% loss in income which can easily be tens of thousands of dollars or more. What happens if you are unlucky to retire right when a crash occurs? There is an upside though: tax-free income. There are some 401K plans (not many) that allow you to have index funds as your core which is definitely good. But not sure how to handle the market crash problem.

gnaritas 13y ago

> I'm not talking about social security I didn't say you were, I merely pointed out that we already know people can't in general handle their own retirements.

dragonwriter 13y ago

> I'm not talking about social security, I'm talking about pensions. Social security is a pension. > To which a 401k or IRA is infinitely preferable. I dunno, the people who have had 401k's wiped out in various economic collapses might disagree on whether such plans are "infinitely preferable" to defined-benefit pensions. > But SS has the same problem as pensions: there's nothing to stop future politicians from eliminating it at any time to free up some headroom in the budget. Well, except voters, which have stopped politicians on several occasions who wanted to make much smaller changes -- which would not even affect current beneficiaries -- to Social Security than eliminating it. > Perhaps a mandatory 401k everyone must have, contribute to and refrain from using until age 65 would be the best of both worlds? Well, certainly, it would be one of the best (of the very many!) public subsidies the financial services industry has received. Not sure it would be good for anything beyond that, though.