Oh I agree, I think that fear is more perception than reality. I could see it discouraging small employers maybe, but those employers who already have good plans in place probably wouldn't change anything. But who knows? And as much as I think there should be an alternative to workplace plans so that everyone has equal access to a good retirement account, realistically how much would that improve retirement security for those who currently don't have a plan with their employer? How many such workers would even contribute, especially if there were no match?
I realize this is not going to be a popular comment, but as a young worker I know I would appreciate some serious declines in stocks going forward. COVID was a huge benefit, and this more recent drop around 2022-23 was great for my retirement accounts too, since I was basically maxing out everything at that time. That said, I also don't like the idea of people losing their shirt because of a recession. People will say they should have planned better, but fortune (good and bad) is a heck of a thing. What's the saying, man plans and god laughs?
As far as I know, as long as the ratios of employee contributions to compensation are relatively equal (something like not more than a 2x difference between highly-comped employees and non-highly-comped employees, for example) then it's considered fair by the rules. But I completely agree 401k plans are a better deal the more money you make, and significantly worse deal than a pension if you're middle or lower income. It wasn't the most equitable solution, but really the point of the 401k was saving money for companies, wasn't it?
Having taken a quick peak at this article from Morningstar, the gap has always existed since the creation of the 401k, and the fear is that if the contribution limits are equalized it will disincentivize employers from offering retirement plans through work, since a comparable alternative now exists that the employer doesn't have to put any effort or money into. Basically it would reduce the value of a 401k plan to the point where employers would stop caring about offering a good one, hurting employees with good plans currently, and reducing the likelihood of more people getting access to such plans. Idk how reasonable that is as a basis, but that's the gist of the article.
It was targeted at people who worked government or foreign jobs that provided pension plans and whose income was not subject to social security taxation. It was more complicated to read about than I expected, but it had something to do with the ratio of AIME to PIA being higher for people who worked such jobs for a portion of their career compared than for workers whose whole career was spent paying into social security. I'm sure the motivations had less to do with actual fairness and more to do with targeting workers with pensions considering this was a Reagan era policy.
This is the advice I give my coworkers if the question arises. Start with getting the maximum match, and then add half of your raise (or all) to that. Once the retirement money starts adding up they become more self-motivated. I, on the other hand, am an all of nothing kind of guy, so I have FIRE approach to my savings.
I haven't actually calculated my total dividends for this past year, but last I looked I'm netting around $1500 a month, so like $18k per year. Hourly that's what, like $9/hr? I'm still flirting with federal minimum wage level at this point 😅
I guess it has to do with a lot of people being forced by their circumstances to work into old age. People that want to keep working generally can without much issue, so I don't think about that aspect as much. I don't mind a bit if someone wants to keep working in a role that brings them joy and fulfillment, all the power to them. It just doesn't match what I see in my own workplace, or the places I shop. Most people in their 60s that I know would like to retire already, and the one person I know who stayed through her 70s said retirement is the best choice she could have made. I just have limited experiences. And don't mind the snark, my bark is worse than my bite 😉
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Because the WEP applies to foreign pension systems as well.
Post: An Insignificant Sum?
Link to comment from March 27, 2025
The music hasn't stopped yet.
Post: I’m concerned about the stock market. How concerned are you? Jonathan, any comforting words?
Link to comment from March 27, 2025
Oh I agree, I think that fear is more perception than reality. I could see it discouraging small employers maybe, but those employers who already have good plans in place probably wouldn't change anything. But who knows? And as much as I think there should be an alternative to workplace plans so that everyone has equal access to a good retirement account, realistically how much would that improve retirement security for those who currently don't have a plan with their employer? How many such workers would even contribute, especially if there were no match?
Post: 401(k) Savings Limits
Link to comment from March 27, 2025
I realize this is not going to be a popular comment, but as a young worker I know I would appreciate some serious declines in stocks going forward. COVID was a huge benefit, and this more recent drop around 2022-23 was great for my retirement accounts too, since I was basically maxing out everything at that time. That said, I also don't like the idea of people losing their shirt because of a recession. People will say they should have planned better, but fortune (good and bad) is a heck of a thing. What's the saying, man plans and god laughs?
Post: Twenty-five years ago today… by Sanjib Saha
Link to comment from March 27, 2025
As far as I know, as long as the ratios of employee contributions to compensation are relatively equal (something like not more than a 2x difference between highly-comped employees and non-highly-comped employees, for example) then it's considered fair by the rules. But I completely agree 401k plans are a better deal the more money you make, and significantly worse deal than a pension if you're middle or lower income. It wasn't the most equitable solution, but really the point of the 401k was saving money for companies, wasn't it?
Post: 401(k) Savings Limits
Link to comment from March 27, 2025
Having taken a quick peak at this article from Morningstar, the gap has always existed since the creation of the 401k, and the fear is that if the contribution limits are equalized it will disincentivize employers from offering retirement plans through work, since a comparable alternative now exists that the employer doesn't have to put any effort or money into. Basically it would reduce the value of a 401k plan to the point where employers would stop caring about offering a good one, hurting employees with good plans currently, and reducing the likelihood of more people getting access to such plans. Idk how reasonable that is as a basis, but that's the gist of the article.
Post: 401(k) Savings Limits
Link to comment from March 27, 2025
It was targeted at people who worked government or foreign jobs that provided pension plans and whose income was not subject to social security taxation. It was more complicated to read about than I expected, but it had something to do with the ratio of AIME to PIA being higher for people who worked such jobs for a portion of their career compared than for workers whose whole career was spent paying into social security. I'm sure the motivations had less to do with actual fairness and more to do with targeting workers with pensions considering this was a Reagan era policy.
Post: An Insignificant Sum?
Link to comment from March 27, 2025
This is the advice I give my coworkers if the question arises. Start with getting the maximum match, and then add half of your raise (or all) to that. Once the retirement money starts adding up they become more self-motivated. I, on the other hand, am an all of nothing kind of guy, so I have FIRE approach to my savings.
Post: 401(k) Savings Limits
Link to comment from March 26, 2025
I haven't actually calculated my total dividends for this past year, but last I looked I'm netting around $1500 a month, so like $18k per year. Hourly that's what, like $9/hr? I'm still flirting with federal minimum wage level at this point 😅
Post: Quinn’s grand new way to plan for a secure retirement. It’s called the McDonalds strategy
Link to comment from March 26, 2025
I guess it has to do with a lot of people being forced by their circumstances to work into old age. People that want to keep working generally can without much issue, so I don't think about that aspect as much. I don't mind a bit if someone wants to keep working in a role that brings them joy and fulfillment, all the power to them. It just doesn't match what I see in my own workplace, or the places I shop. Most people in their 60s that I know would like to retire already, and the one person I know who stayed through her 70s said retirement is the best choice she could have made. I just have limited experiences. And don't mind the snark, my bark is worse than my bite 😉
Post: Worried? Concerned? Confident? About the future of Social Security and Medicare
Link to comment from March 26, 2025