There's a push in Congress for a new national retirement plan to fill big savings gap

[sl8]

https://www.cnbc.com/2022/06/04/theres-a-push-in-congress-for-a-new-national-retirement-savings-plan.html

There’s a push in Congress for a new national retirement plan to fill big savings gap

PUBLISHED SAT, JUN 4 20229:30 AM EDT
UPDATED SAT, JUN 4 20222:43 PM EDT

Sarah O’Brien

KEY POINTS

- An estimated 57 million workers have no retirement plan offered through their job.

- A group in Congress is exploring a program modeled after the federal Thrift Savings Plan to reach those people.

- A legislative proposal is expected in the coming months.

[...]

[Shermann]

1. If they add the matching contributions, it would be significant

Focusing on auto-enrollment is rearranging the proverbial deckchairs on the Titanic.

It's astounding that so many are oblivious and/or opposed to the idea of retirement savings. Rest assured that when the savings from auto-enrollment creeps up to a noticeable amount, those anti-savers will wake up and find ways to loot it. I don't think "Pew Charitable Trusts" accounted for that.

[3Hotdogs]

2. More fuckin' socia -- no it's Communism. Gub'mint getting involved in banking.

What's wrong with the corner Savings and Loan bank in our towns?

[bucolic_frolic]

3. This imples IRAs - the great Republican freedom from Social Security - have been a flop

Only those who funded and managed them well saw a benefit, and even there some fizzled with market crashes and management fees. Roth conversions became a big revenue for government.

And this proposal, like IRAs deals with the future and those with decades to build assets. What of poor retirees stuck with Social Security minimums? And health care costs? Yeah, supplemental SS income for the destitute.

[Shermann]

5. They aren't a flop for high-net-worth individuals

IRAs and 401ks and the like can provide significant tax shelters for the wealthy.

For the lower and even middle classes, not as much. Most retirees in that range are lightly taxed to begin with, or don't pay income taxes at all. So, the benefits from tax deferment and tax-free growth can be minimal.

A far simpler strategy would be to set the 10% and 12% tax bracket rates to 0% starting the year you hit your full retirement age. Across the board, no merit-based approach. This provides the exact same benefit to low earners, and high earners are capped at that same tax haven. Then you can abolish retirement accounts altogether.

Encouraging savings is a separate problem requiring new ideas.

[Chainfire]

4. If Republicans think that more forced savings are in order, up the FICA tax

and increase SS payouts. SS does not benefit the wealthy so it is a "wasteful" government program.

Instead of ditching SS I think that the government should stop giveaways to corporate farmers, stop building stadiums for professional sports teams and start collecting fair taxes from the wealthy, with mandatory prison time for cheaters. I would be happy as a pig in poop with a single rate tax with no deductions for anything; that would have the billionaires screaming bloody murder. If it cost 15% or 50% to run the country, so be it.

[Midnight Writer]

6. How about simply beefing up Social Security so it gives a livable income to all who are eligible?

The Thrift Savings Plan is OK, but the money in it needs to be invested, and some investments will do much better than others. Common folk are not expert investors, and the people who will really need that benefit are even less sophisticated in the ways of the Markets.

There is nothing better than a defined benefits plan for all. If it is not sufficient, raise the payout and increase the eligibility.

Yes, I realize I am talking about higher SS taxes.

[elleng]

7. Would be fine, if it works. TSP was good for us.