401k plans-dems/obama want to get rid of
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401k plans-dems/obama want to get rid of
| Sat, 10-25-2008 - 11:03pm |
Okay, without getting nasty I just want to hear feedback on what some of you think about this.

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Hi Heather, thanks a lot for the info from your DH.
I've been thinking about this 401K business recently and believe the 401K was developed by greedy financial sales type who want us to get into risky investment, so that they can collect huge administrative fees.
My spouse and I have a good bit of our money in FDIC insured savings but we also have some fairly long standing conservatively invested 401K's. We do not see these are a particularly great way to save. The only reason we are in them is due to the employer match. We not sure that we will ever see any sort of significant return on our money. We are less than 10 years away from retirement. In my opinion it will take the market that long to recover, if indeed it every will recover.
I met with our investment adviser last week and they tried to get us to put more of our money into this scheme which confirmed by suspicion's that these people are just a bunch of scam artists. If the feds want us to have any confidence in these investment, they need to insure them.
That is too bad you have not
I'm extremely opposed to this idea that congress seems to have found intriguing. One thing that I'm unsure about is whether they would plan to take (steal)the money we've already built up in our current 401k or if it would just affect all future investing. I do have to say that I find it hard to believe that this would pass because I think there would be a huge backlash if it did. Even if Obama is elected and the democrats are in control of Congress they still have to worry about being reelected. This type of thing is a big reason to have a different party in the White House than controls the Congress.
You are right that the 401k is flexible. When you're young you may decide to put your money in riskier investments that could have a higher return. As you age you would want to have fewer risky investments. We've been very happy with our 401k. Of course we've taken a hit with the roller coaster ride lately but the market is a long term investment. You can't afford to get our of the market for even a day because, as we've seen lately, you never know when it's going to go back up. We will not pull any of our money out, it will improve over time. Pulling your money out at the bottom is the opposite of what you want to do.
This plan that's being talked about has several things that I don't like:
-It's mandatory to put 5% of your income in. Some people may not be able to afford this. While I think everyone should be putting 5% into a 401k or savings it should not be required. We're not cookie cutter people, we all face different challenges in our day to day lives and I don't like the government telling people what they have to do with their own money.
-This plan will increase people's taxable income. It's like a double whammy IMO. If you currently put money in a 401k this new program would increase your taxable income and could kick some people into a higher tax bracket.
-The mandatory 5% is on top of the social security we already pay.
-You're not allowed to touch the money. In the current 401k system, you can get to your money if you really need it. There are penalties, but if something catastrophic happens it's your money and you can get at it if you need to. The government should not be taking your money and telling you that you can't touch it. It's just wrong. It's like they think they're our parents and we're two years old and need guidance. I'm a grown-up, I can control my own finances without the government's help.
-The employer match is gone. The government will give us a whopping $600 a year maximum. Whoopdee freaking doo.
-There's only one investment option and the return on that is 3%. Again whoopdee freaking doo.
-I don't know if this is part of the plan but if the government thinks they're going to take my current 401k savings and put it forcibly into this plan that's stealing IMO. As dh says, they'll have to pry it out of my cold dead hand. We would cash it out and pay the penalties before we'd give it to the government.
I think that's it, other than that I think it's a great idea. ;-) No really, I hate it. Like I said, this is the type of stupid idea that makes it important to have different political parties in the White House and in control of Congress.
But, that being said, I still want to be able to do what I want with our money for retirement vs the govt deciding that I have to put it in another govt run retirement account. You and I have very different needs right now, you being much closer to retirement than me. I have to live with the fact that there is a very real chance I will not have any ss income when I retire, yet I have been contributing for 20 years.
At this juncture, I'm not sure that I will be able to retire. We have more in the bank than most people but not enough to retires.
I believe that I might have a different point of view on the economy than younger people. My parents lived through the great depression. If really damaged their lives and personalities. My fathers family in particular were at times closed to starvation. I grew up poor, my dad never made more than $13,000 in any one year.
What I also remember was the last days of the "poor house". Prior to SSA (Social Security). People put their trust in the free market and in banks. They failed. The result was massive homelessness and the establishment of poor houses. These were places where you were institutionalize and forced to work for food and housing. This was also a time when there was an expansion of orphan asylums, people who could no longer take care of their kids abandoned them (Clarence Thomas was a product of a Catholic orphanage). Other children like my dad were forced to quit school (5th grade)and find work.
People in their 20-40's have never had to face real adversity and are not aware of how government regulations had stabilized the economy and how SSA and Medicare has provided a safety net for the elderly. Timothy Egan's "Worst Hard Times" provides a pretty good description of what was going on.
We are a country on the brink of collapse and will if we continue down the Republican path of unregulated free markets. We also need to save SSA.
I'm not sure if you have seen the articles that are dealing with Alan Greenspan
http://www.ajc.com/services/content/opinion/stories/2008/10/27/bookmaned.html
Here is the headlines from one of them. Greenspan admits free market has foundered.
This is quite stunning. I'm not sure people realize it yet but globalization and the free market deregulation have put us into what may be an economic death spiral.
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