Senator Rubio unveils proposal to reform retirement policy

[donquixote99]

Originally Posted by whell

You have no clue what you're talking about.

If you wonder why people call you a troll, this sort of thing would be it. Pure abuse, not one mumbling word as to why anyone should think Ike is clueless in this matter. We're just supposed to believe it because you say so?

[donquixote99]

If you get to pick who you invest your 401 funds with, all may be well.

If your employer picks, maybe good, maybe awful.

Senator Rubio (and the always-present possibility of others like him) is the biggest single argument for not having all your retirement eggs in the government basket.

[Ike Bana]

Originally Posted by whell

Does the TD Ameritrade account allow you to defer up to $17500 annually from pre-tax funds? No.

Actually...yes. The pre-tax retirement fund contribution for last year on our 1040 was just short of $10,000. If we had generated the income, it could have been 17,500. If we had generated the income, it could have been over $50,000.

Originally Posted by whell

Is that a significant advantage for most folks? Yes, huge.

It's an advantage for some folks. Is it an advantage for most folks? I can't say...and until you show me some proof that it's an advantage for most folks, neither can you. The fact remains that at some point one has to pay income tax on everything at some point. The higher one's income is at the time the tax comes due the more income tax you pay. There's also a significant disadvantage for the heirs of people who pump huge amounts of money into retirement accounts to cut their federal income taxes at the time the money is earned. Whatever is left on the date of death is subject to all the income tax...right then, in one lump sum...and all the accrued capital gains tax...right then, in one lump sum. After all that is paid, there are many, if not most heirs who are left with next to nothing. That's huge. Estate planning is part of this as well. And for some folks, if not most folks it might be a significant disadvantage

Originally Posted by whell

As far as the set and forget piece, you know as well as I do that there are many folks who wouldn't have the discipline to invest in their retirement on their own. Having it come out via payroll deduction - set and forget - allow the funds to come out of their paycheck before they have a chance to miss it. And since the funds come out pre-tax, the hit on their paycheck "feels less" impactful than what it might otherwise be.

Is that a significant advantage for most folks? Yes, huge.

Look whell, some Americans, and here's where I'll use the term most Amercans are intellectually lazy-ass couch potato joe six-packs, for whom it's too much trouble to invest a couple of hours a year (because that's all it takes) in being responsible for their own money. Isn't that quite so typical. So in their latter years they can depend on the government for their medical coverage as I do, and for supplemental SS retirement income as I do as well. And they can pay through the nose in management fees and high expense ratios, and get lousy returns because of the shit investment choices in their 401K program (which is making other people more rich than the investor) in their earlier years, and in the end come out worse because it's too much trouble to be responsible for the management of their own money. Good...fine with me...be a chump.

All I'm saying is...it's not a good deal for everybody, and IMHO it may not even be that good a deal for most folks.

[mpholland]

My 401K is pretty much just a play-toy. The only reason I have it is because my employer matches 50%, up to 3% of my wage. That is why i contribute exactly 6%. It is a good toy to play with, as you can change any of the options you want, any time you want, as many times as you want with no fees or penalties. The downside is that the options in most plans are pretty slim. Ours has been offering more and more lately, but the good money-makers just aren't there. There are much better investments out there than a 401K, but employers don't match them. That is the stupid part.

[Ike Bana]

Originally Posted by mpholland

My 401K is pretty much just a play-toy. The only reason I have it is because my employer matches 50%, up to 3% of my wage. That is why i contribute exactly 6%. It is a good toy to play with, as you can change any of the options you want, any time you want, as many times as you want with no fees or penalties. The downside is that the options in most plans are pretty slim. Ours has been offering more and more lately, but the good money-makers just aren't there. There are much better investments out there than a 401K, but employers don't match them. That is the stupid part.

Thank-you. My contention has always been that the limitations in fund options, which is all about the 401K vendors profits and nothing about the customer's earnings is (to use whell's oft spewed adjective)...huge. I don't think he's being honest, or maybe just doesn't really understand what a...huge...dent a 1.5% expense ratio will take out of one's capital gains over a .05% expense ratio, as we have in our VTI ETF, for instance. And we haven't even talked about the mystery management and middleman's fees lurking about in 401K plans. Over a period of years it's a lot of money, and may kill whatever benefit one gets from being able to pump more pre-tax money into the portfolio. Particularly since you have to pay those taxes at some point. I'm retired now, the blonde is semi-retired, and we're in the same tax bracket we were when we were both getting working full time. When she's fully retired we will obviously be in the next lower braket, but it's not gonna make that much difference weighed against how much better we've done in the last 20 years with a full range of investment choices.

[finnbow]

Rubio's is so far out of his league when it comes to proposing something useful or meaningful when it comes to public policy. The only thing keeping him from looking like a bigger fool are the even more idiotic Teabaggers in the GOP.

[Ike Bana]

Originally Posted by finnbow

Rubio's is so far out of his league when it comes to proposing something useful or meaningful when it comes to public policy. The only thing keeping him from looking like a bigger fool are the even more idiotic Teabaggers in the GOP.

It's same old, same old GOP crap. TJ called it in the OP when he refered to it as Recycled Ryan Plan.

[Twodogs]

You guys are freeking out over nothing. We have Social Security as a safety net for those too stoopid to put money away. I'm retiring at 55, Go Union!

[mpholland]

Originally Posted by Twodogs

You guys are freeking out over nothing. We have Social Security as a safety net for those too stoopid to put money away. I'm retiring at 55, Go Union!

No freaking out here. I don't foresee any issues with my retirement. I would like to know why a union isn't looked at like a small government though, and why when they take money and put it away and distribute it among the union members for retirement that isn't considered soshulism?

[d-ray657]

Originally Posted by mpholland

No freaking out here. I don't foresee any issues with my retirement. I would like to know why a union isn't looked at like a small government though, and why when they take money and put it away and distribute it among the union members for retirement that isn't considered soshulism?

Technically, it isn't the members' money - at least in the building trades. The employers make an hourly contribution to the pension fund on behalf of each member. Some unions negotiate both a fixed benefit pension plan and an employer contribution to a 401(k). The trusts that govern the funds are composed of equal numbers of members of management and labor representatives.

Regards,

D-Ray