401(k)s Will Be Gone Within a Decade

[Lisa558]

Here is what is causing my wife and I angst as we research and plan out a transition from work to retirement.

Currently my wife and I will have 6 defined benefits revenue streams where we will pretty comfortable in retirement. Able to meet all bills with enough left over to fund a couple of pretty significant trips a year. My 3 streams will bring in about 2/3rds and her's about 1/3rd.

If something happens to her, all 3 of her revenue streams go away leaving me with the 2/3rds share. Which being single will be fine.

If something happens to me, then she ends up with pretty close to the 2/3rds mark herself. That results from:

• Her Social Security being raised to my level.
• I have an active Survivor Benefit option on my military retirement. So if I pass she will receive 55% of my military retirement for the rest of her life.

So either one of us alone will have roughly the same amounts. And honestly we would be fine either as a couple or as a widow(er). Which is really good.
.
.
.
.
So then if we add our 401K's into the mix.

Taking an annuities adds,. this 2 more revenue streams (total of 8 now) since 401K's are an individual account, not joint. If we take annuities and opt for the survivor option, the monthly amount will be a little lower, but if something happens to the other then the surviving spouse has that income for the rest of their life.

The other option is to not take an annuity, roll it out of the employer sponsored 401K and into a qualifying IRA investment account. That gives us direct control of the funds and we can withdraw as needed. (If at all until we reach RMD age.)

So here is the cause for the angst:

• As we understand it, if we take the annuities, that is the safest income stream(s) for us. However once we pass, that's it. There is nothing to pass to the kids. If we pass in 10 years, it's gone. If we pass in 35 years it's gone. That's what an annuity is. The gambling is done by the annuity provider.
• On the other hand if we roll the money into an IRA investment, we can draw as needed. Even accounting for eventually having to take RMDs. Once we pass though, any remaining balance then becomes part of the estate and can pass to our children.

So the gamble is security for us for as long as we live, or if we were to pass being able to pass something to the kids.

WW

Well, I’m not an advisor, but I just went through all the options with annuities, and it’s not true it’s “gone” when you pass - depending on the option. You can choose something like “cash refund” or “period certain for 20 years” that means if you die before you draw out your initial refund the balance will be refunded to your heirs, or if you die before 20 years, your heirs receive payments through year 20.

 

[Lisa558]

….one other thought….

its not all or nothing, either. You can annuitize some of it for security, and roll over some of it into a IRA for the kids.

 

[WorldWatcher]

Well, I’m not an advisor, but I just went through all the options with annuities, and it’s not true it’s “gone” when you pass - depending on the option. You can choose something like “cash refund” or “period certain for 20 years” that means if you die before you draw out your initial refund the balance will be refunded to your heirs, or if you die before 20 years, your heirs receive payments through year 20.

….one other thought….

its not all or nothing, either. You can annuitize some of it for security, and roll over some of it into a IRA for the kids.

Thanks, valid considerations to add to the mix.

WW

 

[Flopper]

Here is what is causing my wife and I angst as we research and plan out a transition from work to retirement.

Currently my wife and I will have 6 defined benefits revenue streams where we will pretty comfortable in retirement. Able to meet all bills with enough left over to fund a couple of pretty significant trips a year. My 3 streams will bring in about 2/3rds and her's about 1/3rd.

If something happens to her, all 3 of her revenue streams go away leaving me with the 2/3rds share. Which being single will be fine.

If something happens to me, then she ends up with pretty close to the 2/3rds mark herself. That results from:

• Her Social Security being raised to my level.
• I have an active Survivor Benefit option on my military retirement. So if I pass she will receive 55% of my military retirement for the rest of her life.

So either one of us alone will have roughly the same amounts. And honestly we would be fine either as a couple or as a widow(er). Which is really good.
.
.
.
.
So then if we add our 401K's into the mix.

Taking an annuities adds,. this 2 more revenue streams (total of 8 now) since 401K's are an individual account, not joint. If we take annuities and opt for the survivor option, the monthly amount will be a little lower, but if something happens to the other then the surviving spouse has that income for the rest of their life.

The other option is to not take an annuity, roll it out of the employer sponsored 401K and into a qualifying IRA investment account. That gives us direct control of the funds and we can withdraw as needed. (If at all until we reach RMD age.)

So here is the cause for the angst:

• As we understand it, if we take the annuities, that is the safest income stream(s) for us. However once we pass, that's it. There is nothing to pass to the kids. If we pass in 10 years, it's gone. If we pass in 35 years it's gone. That's what an annuity is. The gambling is done by the annuity provider.
• On the other hand if we roll the money into an IRA investment, we can draw as needed. Even accounting for eventually having to take RMDs. Once we pass though, any remaining balance then becomes part of the estate and can pass to our children.

So the gamble is security for us for as long as we live, or if we were to pass being able to pass something to the kids.

WW

In your case the question yourself is how

Here is what is causing my wife and I angst as we research and plan out a transition from work to retirement.

Currently my wife and I will have 6 defined benefits revenue streams where we will pretty comfortable in retirement. Able to meet all bills with enough left over to fund a couple of pretty significant trips a year. My 3 streams will bring in about 2/3rds and her's about 1/3rd.

If something happens to her, all 3 of her revenue streams go away leaving me with the 2/3rds share. Which being single will be fine.

If something happens to me, then she ends up with pretty close to the 2/3rds mark herself. That results from:

• Her Social Security being raised to my level.
• I have an active Survivor Benefit option on my military retirement. So if I pass she will receive 55% of my military retirement for the rest of her life.

So either one of us alone will have roughly the same amounts. And honestly we would be fine either as a couple or as a widow(er). Which is really good.
.
.
.
.
So then if we add our 401K's into the mix.

Taking an annuities adds,. this 2 more revenue streams (total of 8 now) since 401K's are an individual account, not joint. If we take annuities and opt for the survivor option, the monthly amount will be a little lower, but if something happens to the other then the surviving spouse has that income for the rest of their life.

The other option is to not take an annuity, roll it out of the employer sponsored 401K and into a qualifying IRA investment account. That gives us direct control of the funds and we can withdraw as needed. (If at all until we reach RMD age.)

So here is the cause for the angst:

• As we understand it, if we take the annuities, that is the safest income stream(s) for us. However once we pass, that's it. There is nothing to pass to the kids. If we pass in 10 years, it's gone. If we pass in 35 years it's gone. That's what an annuity is. The gambling is done by the annuity provider.
• On the other hand if we roll the money into an IRA investment, we can draw as needed. Even accounting for eventually having to take RMDs. Once we pass though, any remaining balance then becomes part of the estate and can pass to our children.

So the gamble is security for us for as long as we live, or if we were to pass being able to pass something to the kids.

My wife and I retired at 59 1/2 and we have been retired for about 25 years so we have gone where you are going. However, I can't offer any really good advice because I don't know you or your circumstances but here are some tips I received that you might want to consider.

• You might consider hiring a financial planner to help you. If you do decide to go this route, you might want to hire a planner that charges a fee for their service. There are plenty of people offering free financing planning but most of them have something to sell you, annuities, mutual funds, stocks and bonds, etc. I hired a planner and the advice I got was worth every cent I paid.
• When people retire, they often try to make all their retirement decisions before they retire. Rushing into decisions that will effect the rest of your life is not a good idea. Delay making major decesion as long as you can. Some things like Annuity contracts and application for social security are difficult to change if not impossible. Going from a life of hard work and many responsibilities to a life of leisure is a big adjustment. You may find that things you planned to do when you were working are not as attractive now you are in retirement.
• When purchasing an annuity consider the effects of inflation. Over the last 20 years we had relatively low inflation. The 50 year average is about 5%. Some annuities offer some protection against inflation. If the one you are considering does not then consider having and investment portfolio containing some equities to offset inflation.
• When considering leaving an estate, ask yourself how badly do your kids or whoever is likely to inherit need that inheritance. If you have kids that are supporting themselves and their prospects are good, consider setting side a small inheritance of equity investments that will grow over the years and use the rest of your funds to finance the retirement you have dreamed about over the years. I have seen unneeded inheritances create far more problems for the heirs than they solve.
• Leaving large tax sheltered retirements to anyone except your spouse can create a significant tax liability. For example if you or your spouse have 5 million in all your tax sheltered retirement plans, the tax liability is likely to be about a quarter million dollars or more. Your spouse is exempt but your kids aren't.
• For tax purposes the base price of inherited assets is reset to its value on the day that you inherited it. So a person that inherits property and then immediately sells it, would owe no income taxes on those assets. This can be helpful in deciding what to leave your kids. Inherited tax shelter retirement plans can have a large tax liability where a portfolio of stocks, bonds, and mutual funds, or other assets that accumulate capital gains are inherited free on any income tax.
• You might want to consider Trusts. They allow you a lot more options in determining how your assets are distributed to your heirs than a simple will. In some cases there can be signicantly tax advantages. Your lawyer or financial planner will be able to help you with this.
• Lastly, there is an important topic in planning a retirement that no one wants to talk about but it is really important. I'm talking about how long does your retirement have to last or to be blunt, how long are you going to live. Of course no one knows this however, there are a number of important factors that effect your probably of a long life such as the age of your parents that died of natural death. There are a number of other factors you can find on the Internet. You can probably find a calculator that will tell you the odds of living to a certain age. Whatever target you end up with add a few years since people are living longer. Also keep in mind long term care. Medicare does not pay for it and 70% of those 65 years old will need it.

 

[WorldWatcher]

In your case the question yourself is how

My wife and I retired at 59 1/2 and we have been retired for about 25 years so we have gone where you are going. However, I can't offer any really good advice because I don't know you or your circumstances but here are some tips I received that you might want to consider.

• You might consider hiring a financial planner to help you. If you do decide to go this route, you might want to hire a planner that charges a fee for their service. There are plenty of people offering free financing planning but most of them have something to sell you, annuities, mutual funds, stocks and bonds, etc. I hired a planner and the advice I got was worth every cent I paid.
• When people retire, they often try to make all their retirement decisions before they retire. Rushing into decisions that will effect the rest of your life is not a good idea. Delay making major decesion as long as you can. Some things like Annuity contracts and application for social security are difficult to change if not impossible. Going from a life of hard work and many responsibilities to a life of leisure is a big adjustment. You may find that things you planned to do when you were working are not as attractive now you are in retirement.
• When purchasing an annuity consider the effects of inflation. Over the last 20 years we had relatively low inflation. The 50 year average is about 5%. Some annuities offer some protection against inflation. If the one you are considering does not then consider having and investment portfolio containing some equities to offset inflation.
• When considering leaving an estate, ask yourself how badly do your kids or whoever is likely to inherit need that inheritance. If you have kids that are supporting themselves and their prospects are good, consider setting side a small inheritance of equity investments that will grow over the years and use the rest of your funds to finance the retirement you have dreamed about over the years. I have seen unneeded inheritances create far more problems for the heirs than they solve.
• Leaving large tax sheltered retirements to anyone except your spouse can create a significant tax liability. For example if you or your spouse have 5 million in all your tax sheltered retirement plans, the tax liability is likely to be about a quarter million dollars or more. Your spouse is exempt but your kids aren't.
• For tax purposes the base price of inherited assets is reset to its value on the day that you inherited it. So a person that inherits property and then immediately sells it, would owe no income taxes on those assets. This can be helpful in deciding what to leave your kids. Inherited tax shelter retirement plans can have a large tax liability where a portfolio of stocks, bonds, and mutual funds, or other assets that accumulate capital gains are inherited free on any income tax.
• You might want to consider Trusts. They allow you a lot more options in determining how your assets are distributed to your heirs than a simple will. In some cases there can be signicantly tax advantages. Your lawyer or financial planner will be able to help you with this.
• Lastly, there is an important topic in planning a retirement that no one wants to talk about but it is really important. I'm talking about how long does your retirement have to last or to be blunt, how long are you going to live. Of course no one knows this however, there are a number of important factors that effect your probably of a long life such as the age of your parents that died of natural death. There are a number of other factors you can find on the Internet. You can probably find a calculator that will tell you the odds of living to a certain age. Whatever target you end up with add a few years since people are living longer. Also keep in mind long term care. Medicare does not pay for it and 70% of those 65 years old will need it.

Thanks for that. Good stuff to consider.

WW

 

[Flopper]

Here is what is causing my wife and I angst as we research and plan out a transition from work to retirement.

Currently my wife and I will have 6 defined benefits revenue streams where we will pretty comfortable in retirement. Able to meet all bills with enough left over to fund a couple of pretty significant trips a year. My 3 streams will bring in about 2/3rds and her's about 1/3rd.

If something happens to her, all 3 of her revenue streams go away leaving me with the 2/3rds share. Which being single will be fine.

If something happens to me, then she ends up with pretty close to the 2/3rds mark herself. That results from:

• Her Social Security being raised to my level.
• I have an active Survivor Benefit option on my military retirement. So if I pass she will receive 55% of my military retirement for the rest of her life.

So either one of us alone will have roughly the same amounts. And honestly we would be fine either as a couple or as a widow(er). Which is really good.
.
.
.
.
So then if we add our 401K's into the mix.

Taking an annuities adds,. this 2 more revenue streams (total of 8 now) since 401K's are an individual account, not joint. If we take annuities and opt for the survivor option, the monthly amount will be a little lower, but if something happens to the other then the surviving spouse has that income for the rest of their life.

The other option is to not take an annuity, roll it out of the employer sponsored 401K and into a qualifying IRA investment account. That gives us direct control of the funds and we can withdraw as needed. (If at all until we reach RMD age.)

So here is the cause for the angst:

• As we understand it, if we take the annuities, that is the safest income stream(s) for us. However once we pass, that's it. There is nothing to pass to the kids. If we pass in 10 years, it's gone. If we pass in 35 years it's gone. That's what an annuity is. The gambling is done by the annuity provider.
• On the other hand if we roll the money into an IRA investment, we can draw as needed. Even accounting for eventually having to take RMDs. Once we pass though, any remaining balance then becomes part of the estate and can pass to our children.

So the gamble is security for us for as long as we live, or if we were to pass being able to pass something to the kids.

WW

WorldWathcer, let me first correct a statement you made. Tax sheltered investments do not go into your estate. They go directly to the beneficiary or beneficiaries you specify. So make sure those beneficiaries you specified are correct. Quite often someone get's a divorce and fails to change their beneficiaries on their retirement plans. Then 30 years later the person passes and all the retirement goes not to their current spouse but to the person they divorced 30 years. ago.

Getting back to your tax sheltered retirement plans, although the plans bypass the estate, they may or may not be included for calculating inheritance tax. You don't have to worry about federal inheritance taxes unless your estate will be over 13 million. However, keep in mind some states have inheritance tax so you should check on that.

You might think it is good idea to name your kids as beneficiaries of your retirement plans. That is probably a big mistake if you are married. The spouse inherits the tax sheltered retirement plans free of any taxes. The spouse just pays taxes on the distributions. Anyone other than your spouse or a charity can not take distributions but must pay income taxes on the value of the retirement plans at the time they are inherited. There is a 10 year rule that allows the taxes to be paid within ten years. However it is still a pretty big hit. What most people do is name their spouse as beneficiary. Then the surviving spouse changes the beneficiary to the other heirs.

I face the same decision as you are facing about providing lifetime income for my spouse but at a lower amount. I calculate the anticipated rate of growth of assets less distributions and I found that 10 years in retirement was a sort of a breakeven point for me. That is, if I lived more that 10 years in retirement taking the higher distribution, I would be able to provide adequately for my spouse. There is no general rule to follow. It depends on asset values, growth of assets, distributions, and very important, is your spouse willing to take the risk because there is always risks, nothing is certain if you don't take the guaranteed benefit for the spouse.

 

[Flopper]

Well, I’m not an advisor, but I just went through all the options with annuities, and it’s not true it’s “gone” when you pass - depending on the option. You can choose something like “cash refund” or “period certain for 20 years” that means if you die before you draw out your initial refund the balance will be refunded to your heirs, or if you die before 20 years, your heirs receive payments through year 20.

There are many different plans that fall under the umbellar of an annuity. Some plans are combination of an annuity and investment ins stocks bonds. There are plans that guarantee a payment on death and of course there are traditional annuities that pay a relative high rate of interest and nothing on death.

Although there are certain advantage to annuities, I personally don't like them. They make there investors rich and and leave their annuity holders with nothing.

 

[Harpy Eagle]

You might consider hiring a financial planner to help you. If you do decide to go this route, you might want to hire a planner that charges a fee for their service. There are plenty of people offering free financing planning but most of them have something to sell you, annuities, mutual funds, stocks and bonds, etc. I hired a planner and the advice I got was worth every cent I paid.

Great advice. This year I moved all but 5k of my 401k money to a semi-self administered IRA. Nothing gets done without my approval, though I have given some basic approvals ahead of time as I trust my advisor. I could maybe do what he does, but not for the price. I do not have the information they do and to get it I would have to subscribe to sites like Morningstar which is about 250 a year. Instead I pay for a service not unlike hiring a professional for plumbing or fixing my car or even doing our lawn and landscaping.

Free advice that you get is basic and worth what you pay for it.

 

[Flopper]

Here is what is causing my wife and I angst as we research and plan out a transition from work to retirement.

Currently my wife and I will have 6 defined benefits revenue streams where we will pretty comfortable in retirement. Able to meet all bills with enough left over to fund a couple of pretty significant trips a year. My 3 streams will bring in about 2/3rds and her's about 1/3rd.

If something happens to her, all 3 of her revenue streams go away leaving me with the 2/3rds share. Which being single will be fine.

If something happens to me, then she ends up with pretty close to the 2/3rds mark herself. That results from:

• Her Social Security being raised to my level.
• I have an active Survivor Benefit option on my military retirement. So if I pass she will receive 55% of my military retirement for the rest of her life.

So either one of us alone will have roughly the same amounts. And honestly we would be fine either as a couple or as a widow(er). Which is really good.
.
.
.
.
So then if we add our 401K's into the mix.

Taking an annuities adds,. this 2 more revenue streams (total of 8 now) since 401K's are an individual account, not joint. If we take annuities and opt for the survivor option, the monthly amount will be a little lower, but if something happens to the other then the surviving spouse has that income for the rest of their life.

The other option is to not take an annuity, roll it out of the employer sponsored 401K and into a qualifying IRA investment account. That gives us direct control of the funds and we can withdraw as needed. (If at all until we reach RMD age.)

So here is the cause for the angst:

• As we understand it, if we take the annuities, that is the safest income stream(s) for us. However once we pass, that's it. There is nothing to pass to the kids. If we pass in 10 years, it's gone. If we pass in 35 years it's gone. That's what an annuity is. The gambling is done by the annuity provider.
• On the other hand if we roll the money into an IRA investment, we can draw as needed. Even accounting for eventually having to take RMDs. Once we pass though, any remaining balance then becomes part of the estate and can pass to our children.

So the gamble is security for us for as long as we live, or if we were to pass being able to pass something to the kids.

WW
[/QUOTE

401(k)s Will Be Gone Within a Decade

The intellectual case for getting rid of tax-advantaged retirement plans is strong, and the political case is catching up.

www.wealthmanagement.com

Had this link in a retirement related email I get weekly. I found it pretty interesting ..

If you are among the 56% of US workers with a retirement plan, I have some bad news for you: Your 401(k) will be gone in 10 years, tops. Not the money, thank goodness — Americans have trillions of dollars in these accounts, and there is an entire industry built around them — but the plans themselves.

I have been seeing more and more about this lately...and it all comes down to the Govt and money....


There has been a brewing intellectual movement to get rid of the 401(k) for several years, with scholars on both the right and left questioning its value. And as the federal government gets increasingly desperate for new sources of revenue, the tax treatment of 401(k)s is a likely target. There are good policy reasons to end it, but the question remains: Will Americans still save for retirement?

The 401(k) is not tax-free but what is known as tax-advantaged. Contributions made while working are not taxed, but participants pay taxes when they withdraw the money during retirement. Whether there is a big tax savings depends on the tax rate in retirement — which is usually lower because retirees tend to have lower earnings. Savers also avoid capital gains taxes on returns.

All of this cost the government an estimated $185 billion in 2019, or 0.9% of GDP. That’s not nothing. And in theory it’s justifiable because it creates a powerful incentive to save for retirement. More retirement savings have a triple benefit: for the economy overall, since they fuel growth; for the government, since retirees with income are less likely to be a burden on the state; and, of course, for workers who might not save enough today and regret it later.

Then again, maybe not. The first rumblings that the benefits of the tax breaks may be overstated came in a 2014 study of Danish savers. Without tax-advantaged accounts, it found, people just put their money in another kind of account. People did save more in retirement accounts, but that’s mostly because of automatic paycheck deduction. Subsequent research in other countries found similar results. Not only did the tax incentive fail to encourage more saving; the biggest beneficiaries tended to be the wealthy.
One alternative...

Enter the employer-sponsored liquid account. Like a retirement account, it is funded by payroll deductions, but unlike a 401(k), it allows employees to withdraw money without a penalty when needed. As these accounts grow in popularity, they may displace the 401(k). More liquid accounts, similar to a Roth IRA, have been become popular in Canada, and Canadians are saving more in them than in the tax-advantaged retirement accounts.

This is an opinion piece. Yes, there are some people that believe 401K's should be done away with. However, on the other side of the issue is the reason we have tax sheltered retirement plans. They encourage people to save for retirement. The evidence of their success is the fact that there are over 70 million active 401K's. The money government loses in taxes today will be more than made up by taxes on distributions

So what would happen if we didn't have 401K's. Retirement saving would drop drastically putting a huge pressure on the goverment to drastically increase social security. The losers' in such a plan would be the American workers and Wall Street. The winners are most large employers.

 

[Flopper]

Great advice. This year I moved all but 5k of my 401k money to a semi-self administered IRA. Nothing gets done without my approval, though I have given some basic approvals ahead of time as I trust my advisor. I could maybe do what he does, but not for the price. I do not have the information they do and to get it I would have to subscribe to sites like Morningstar which is about 250 a year. Instead I pay for a service not unlike hiring a professional for plumbing or fixing my car or even doing our lawn and landscaping.

Free advice that you get is basic and worth what you pay for it.

I've learn by 50 years of managing my family members retirement plans that actively managed plans do not do as well as non-managed plans; that is, plans that invest all assets in index funds and the only changes made are due to contributions, distributions, and rebalancing investments to maintain asset allocations based on age of the beneficiary.

 

[Flopper]

I've learn by 50 years of managing my family members retirement plans that actively managed plans do not do as well as non-managed plans; that is, plans that invest all assets in index funds and the only changes made are due to contributions, distributions, and rebalancing investments to maintain asset allocations based on age of the beneficiary.

 

[Harpy Eagle]

This is an opinion piece. Yes, there are some people that believe 401K's should be done away with. However, on the other side of the issue is the reason we have tax sheltered retirement plans. They encourage people to save for retirement. The evidence of their success is the fact that there are over 70 million active 401K's. The money government loses in taxes today will be more than made up by taxes on distributions

So what would happen if we didn't have 401K's. Retirement saving would drop drastically putting a huge pressure on the goverment to drastically increase social security. The losers' in such a plan would be the American workers and Wall Street. The winners are most large employers.

Well, yes obviously it is an opinion piece. This is an opinion forum after all.

The point of the piece is that they are not encouraging the right people to save for retirement. There are over 127 million families in the US, there are more than 158 million people employed in the US. So, how are the 88 million that do not have a 401k? For the most part is is poor people for whom the tax break of a 401k does not really mean a thing to.

Taxes on distributions is going to be less than the taxes on the money going in for the most part. I know there are a few people that claim to make more money in retirement than before, but they are rare. Thus the taxes on distribution will be at a lower rate than the taxes on the money going in would have been.

Personally I think the employee matching is more of an incentive than the tax break. The wife and I would be saving regardless of the taxes, in fact her 401k is a ROTH and mine is traditional. If the only reason people are saving is the tax break, they have bigger problems.

 

[Flopper]

Well, yes obviously it is an opinion piece. This is an opinion forum after all.

The point of the piece is that they are not encouraging the right people to save for retirement. There are over 127 million families in the US, there are more than 158 million people employed in the US. So, how are the 88 million that do not have a 401k? For the most part is is poor people for whom the tax break of a 401k does not really mean a thing to.

Taxes on distributions is going to be less than the taxes on the money going in for the most part. I know there are a few people that claim to make more money in retirement than before, but they are rare. Thus the taxes on distribution will be at a lower rate than the taxes on the money going in would have been.

Personally I think the employee matching is more of an incentive than the tax break. The wife and I would be saving regardless of the taxes, in fact her 401k is a ROTH and mine is traditional. If the only reason people are saving is the tax break, they have bigger problems.

You raise some good points however I don’t think there is any chance that they will be abolished in 10 years. 70 million active 401’s represents a huge voting block.

 

[Harpy Eagle]

You raise some good points however I don’t think there is any chance that they will be abolished in 10 years. 70 million active 401’s represents a huge voting block.

The article said that the existing ones would never be touched, but the tax savings of adding to them might change.

 

[Lisa558]

There are many different plans that fall under the umbellar of an annuity. Some plans are combination of an annuity and investment ins stocks bonds. There are plans that guarantee a payment on death and of course there are traditional annuities that pay a relative high rate of interest and nothing on death.

Although there are certain advantage to annuities, I personally don't like them. They make there investors rich and and leave their annuity holders with nothing.

The one I bought has a payout of 7.8% annually for the rest of my life. The payment, added to my social security, will cover my essential expenses and thus I will never be forced to sell stock in a down market. The Single-Premium it cost me was less than 15% of my portfolio, and I have the peace-of-mind knowing I can cover all living costs regardless of the stock market.

 

[skews13]

401(k)s Will Be Gone Within a Decade

The intellectual case for getting rid of tax-advantaged retirement plans is strong, and the political case is catching up.

www.wealthmanagement.com

Had this link in a retirement related email I get weekly. I found it pretty interesting ..

If you are among the 56% of US workers with a retirement plan, I have some bad news for you: Your 401(k) will be gone in 10 years, tops. Not the money, thank goodness — Americans have trillions of dollars in these accounts, and there is an entire industry built around them — but the plans themselves.

I have been seeing more and more about this lately...and it all comes down to the Govt and money....


There has been a brewing intellectual movement to get rid of the 401(k) for several years, with scholars on both the right and left questioning its value. And as the federal government gets increasingly desperate for new sources of revenue, the tax treatment of 401(k)s is a likely target. There are good policy reasons to end it, but the question remains: Will Americans still save for retirement?

The 401(k) is not tax-free but what is known as tax-advantaged. Contributions made while working are not taxed, but participants pay taxes when they withdraw the money during retirement. Whether there is a big tax savings depends on the tax rate in retirement — which is usually lower because retirees tend to have lower earnings. Savers also avoid capital gains taxes on returns.

All of this cost the government an estimated $185 billion in 2019, or 0.9% of GDP. That’s not nothing. And in theory it’s justifiable because it creates a powerful incentive to save for retirement. More retirement savings have a triple benefit: for the economy overall, since they fuel growth; for the government, since retirees with income are less likely to be a burden on the state; and, of course, for workers who might not save enough today and regret it later.

Then again, maybe not. The first rumblings that the benefits of the tax breaks may be overstated came in a 2014 study of Danish savers. Without tax-advantaged accounts, it found, people just put their money in another kind of account. People did save more in retirement accounts, but that’s mostly because of automatic paycheck deduction. Subsequent research in other countries found similar results. Not only did the tax incentive fail to encourage more saving; the biggest beneficiaries tended to be the wealthy.
One alternative...

Enter the employer-sponsored liquid account. Like a retirement account, it is funded by payroll deductions, but unlike a 401(k), it allows employees to withdraw money without a penalty when needed. As these accounts grow in popularity, they may displace the 401(k). More liquid accounts, similar to a Roth IRA, have been become popular in Canada, and Canadians are saving more in them than in the tax-advantaged retirement accounts.

401Ks were ne ver intended for workers in companies. When they were first devised, it was a perk for corporate officers, as a part of their bonus package when they retired.

Before 401Ks, workers actually got pensions from the companies they worked for. That's because corporations were able to avoid the tax rates by investing back into their companies, and buying back your own companies stock was illegal.

That all change after the Reagan Revolution, when anti trust laws were repealed allowing corporations to buy back their own stocks, and got big fat tax cuts on top of that, and the added bonus of being allowed to move their companies abroad to cut labor costs in order to bust unions.

An VOILA! The American Rust Belt is born, and Americas legs are spread wide open to the Japanese auto industry, and cheap Chinese goods.

So now nobody has a pension anymore. Mom and pop operations start closing by the thousands, and the age of Walmart is born.

And to all of the right wing pukes that voted for this shit for the last 40 years

Fuck you. Eat shit and die.

 

[candycorn]

401Ks were ne ver intended for workers in companies. When they were first devised, it was a perk for corporate officers, as a part of their bonus package when they retired.

Before 401Ks, workers actually got pensions from the companies they worked for. That's because corporations were able to avoid the tax rates by investing back into their companies, and buying back your own companies stock was illegal.

That all change after the Reagan Revolution, when anti trust laws were repealed allowing corporations to buy back their own stocks, and got big fat tax cuts on top of that, and the added bonus of being allowed to move their companies abroad to cut labor costs in order to bust unions.

An VOILA! The American Rust Belt is born, and Americas legs are spread wide open to the Japanese auto industry, and cheap Chinese goods.

So now nobody has a pension anymore. Mom and pop operations start closing by the thousands, and the age of Walmart is born.

And to all of the right wing pukes that voted for this shit for the last 40 years

Fuck you. Eat shit and die.

Absolutely correct. Companies are worried more about their investors than their employees.

 

[Flopper]

Absolutely correct. Companies are worried more about their investors than their employees.

The birth of Corporatocracy

 

[candycorn]

The birth of Corporatocracy

I think we’re closer to the wonder years of the corporatocracy.

 

[San Souci]

The cancer will always go to the nearest blood supply until it kills the host entirely.

It is only a matter of time.

And the Cancer is the STAFF behind Senile Biden the Puppet.