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Rex-Goliath posted:Man if you think it's difficult to retire you should see how hard it is to transfer an estate. Truly no one understands the plight of the wealthy. How can anyone expect them to survive at 40%? May as well just burn it all at that point.
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Oct 20, 2017 19:05
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Accretionist posted:Thanks, I'd overlooked that one. https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0114#tab=1 Found Strategic Equity intriguing so I played with the $10k growth chart here and it's a lot less flattering for a lookback of 10 years as opposed to 20. Pretty much identical. Compared with SP500 bench. I still can't get over how awesome it is that VG offers a computational strategy fund for an ER of .18%. Contrafund is .68%. Everyone should invest with VG. Michael Scott fucked around with this message at 19:17 on Oct 20, 2017 |
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Oct 20, 2017 19:14
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Nail Rat posted:I disagree with this unequivocally. It shouldn't be tied to employers, but anyone should be able to contribute over 20k per year if they have the means. 401ks were a replacement for pensions. And I disagree with this unequivocally also. First, remember that anyone can save as much as they want to. What we are talking about are tax advantaged ways to save. There is nothing to stop this theoretical household you mention from putting thousands, or millions into tax efficient mutual funds. They will be fine. To clarify, I am not talking about class envy. You never mentioned anything about class envy, so I'm happy we are leaving that strawman out of it. My point is that as a nation we have collectively agreed that we are going to spend 4 trillion dollars or so. That doesn't count state budgets, which may also grant deductions. Leaving out deficits, we will need to collect most of that in the form of various taxes. Every decision to protect a certain category of income means that the remaining pool is taxed heavier. That is not inherently bad. It makes a lot of sense to grant every tax payer a standard deduction. Or deduct part of your tuition and student loan interest. We want to promote education. But everything represents a choice. Because as a country we don't tax capital gains and dividends very much and we have huge loopholes in our corporate tax code, we have to make up the difference elsewhere, and that largely means we tax wage income particularly hard, and renters who don't have kids get taxed the hardest. The thing is you could make a case for EVERY deduction and tax cut. And when there are high paid lobbyists who represent multi billion dollar companies who will do that for you, so don't worry, you will get lots of very compelling push back anytime anytime any deduction is talked about. I agree that it is hard to retire with dignity in this country. But frankly I am way more worried about the folks earning $13/hr without access to any employer sponsored plan than I am with an upper middle class household who is being phased out of IRA contributions. At the same time, far too much ink is spilled worrying about how folks who have saved a million won't have enough and far too little on the folks who have absolutely nothing saved.
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Oct 20, 2017 19:18
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Rex-Goliath posted:Man if you think it's difficult to retire you should see how hard it is to transfer an estate. Truly no one understands the plight of the wealthy. How can anyone expect them to survive at 40%? May as well just burn it all at that point. I'm not saying people should be able to contribute 100k, I'm saying the current limits are reasonable given you're supposed to be living off of a 401k. That's not going to be possible at 2400 a year, and while it's possible at 10k you need to start at 22 and you probably would need to work longer. quote:And I disagree with this unequivocally also. I'd be fine with lower limits if it were funding something worthwhile; instead, it's funding tax cuts primarily for the mega-rich. You want to make the 401k limit $2400 to fund free universal healthcare for all? Fine, sign me up. Nail Rat fucked around with this message at 19:23 on Oct 20, 2017 |
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Oct 20, 2017 19:19
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Nail Rat posted:I'm not saying people should be able to contribute 100k, I'm saying the current limits are reasonable given you're supposed to be living off of a 401k. That's not going to be possible at 2400 a year, and while it's possible at 10k you need to start at 22 and you probably would need to work longer. $10k/per year is around 17% of the median US income. If your typical, actually middle class, American saved at that rate they'd be fine in retirement. Nothing is stopping you from saving more in taxable accounts, you aren't forced to "live off" your 401k alone (and you obviously weren't intended to, since Social Security still exists). I don't think it's crazy to reduce the 401k contribution limits to something like $10k; much like the mortgage interest tax deduction, high contribution limits are a huge wealth transfer to the people who least need it. Granted, I'm with you that lowering the limit is a really bad way to fund tax cuts for even wealthier Americans, and politically it seems like such a terrible idea to bring forward if you like winning elections. But maybe the GOP really is doubling down on the new "Trump voters," with an "eat the liberal East Coast elites" strategy.
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Oct 20, 2017 19:34
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I'm not even sure reducing the contribution limit or deferrable amount would generate all that much tax revenue either. Sounds like it would just swiftly tap on the balls of a very select slice of upper-middle class folks.
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Oct 20, 2017 19:46
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It's not like your average American is contributing more than $2400 a year anyway 
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Oct 20, 2017 19:47
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Nail Rat posted:I'm not saying people should be able to contribute 100k, I'm saying the current limits are reasonable given you're supposed to be living off of a 401k. That's not going to be possible at 2400 a year, and while it's possible at 10k you need to start at 22 and you probably would need to work longer. I was agreeing with you and being facetious 
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Oct 20, 2017 19:52
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That change would be awful. $2400 is an insanely low amount to put away each year. Isn't the entire purpose of a 401k is that it's pre-tax? Is there any reason I wouldn't just throw the money after $2400 into any other investment vehicle ie index funds and bonds? At least then I could get cash in an emergency.
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Oct 20, 2017 21:06
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TFW you realize that "tax cuts for the rich" never meant you.
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Oct 20, 2017 21:25
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Hardly anyone makes enough money to save for retirement and some of those who do don't even have access to accounts with preferential tax treatment or have ridiculously small contribution limits. Obviously the solution to this problem is to remove all the tax benefits of saving for retirement  disclosure: I'm maxing out my 401k
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Oct 20, 2017 21:31
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If people contribute far less to their 401k, won't that also have major consequences for the stock market? How much in total is invested on a monthly or annual basis through 401k accounts?
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Oct 20, 2017 22:25
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Charles Mansion posted:If people contribute far less to their 401k, won't that also have major consequences for the stock market? How much in total is invested on a monthly or annual basis through 401k accounts? Yes, there are many who believe that a large part of the growth in the stock market in the past thirty years has a lot to do with the boomers funding their 401ks like crazy.
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Oct 20, 2017 22:36
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TraderStav posted:Yes, there are many who believe that a large part of the growth in the stock market in the past thirty years has a lot to do with the boomers funding their 401ks like crazy. On the other hand, boomers are collectively terrible at thinking past the ends of their own noses, so it's not like that money will vaporize out of the economy; it'll just get dumped into the market on the revenue side.
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Oct 20, 2017 22:53
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401ks essentially allowed large employers to get rid of pensions, which meant moving huge (often underfunded) liabilities off their books. Eliminating the bulk of tax advantaged savings means reducing the pressure on large employers to bother having 401k plans at all; after all, it's a way bigger deal that an employer has no 401k plan for you if that means you're losing $18k per year of tax advantaged savings, vs only 2400 a year of tax advantaged savings. The ultimate goal of course is to get employers entirely out of the job of providing any sort of retirement benefit to employees. This means more profits, so don't be too sure that the wall street lobby will win - 401k providers and mutual funds lose, but large employers in general win big. What the republicans are doing right now, though, is trying to figure out how to get away with a giant, enormous tax cut for the very wealthiest, hand out a modest tax cut to placate the middle class, and "simplify the tax code" enough to be able to claim with a straight face that they've "closed loopholes" and that this is a good thing for everyone. The deficit hawks are also actually hoping for a huge increase in the deficit, because that will justify cutting programs they hate in a year or two as the federal budget explodes, and that's just as much of their ultimate goal as tax cuts are. "Obamacare sucks but even if you love it we have to cancel it because the government is broke" is a potential path forward.
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Oct 20, 2017 23:15
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With the rates that the Treasury gets for borrowing we should be borrowing as much as we can and paying it off with half priced dollars in the future. The whole deficit spending is bad thing makes no sense for the USA.
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Oct 21, 2017 01:43
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Leperflesh posted:What the republicans are doing right now, though, is trying to figure out how to get away with a giant, enormous tax cut for the very wealthiest, hand out a modest tax cut to placate the middle class, and "simplify the tax code" enough to be able to claim with a straight face that they've "closed loopholes" and that this is a good thing for everyone. The deficit hawks are also actually hoping for a huge increase in the deficit, because that will justify cutting programs they hate in a year or two as the federal budget explodes, and that's just as much of their ultimate goal as tax cuts are. "Obamacare sucks but even if you love it we have to cancel it because the government is broke" is a potential path forward. It's interesting how this is a strong swat against even the upper middle/lower high class from the Republicans. If you're making great money at $150-400k (regardless of the divisions between those endpoints), you're not in the same world as multi-million dollar earners that stand to gain ridiculously more. The Republican proposal would seem to relatively harm this bracket as much as other lower brackets, if that helps drive home the point that the Republican tax plan is a shitshow of a giveaway to the rich.
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Oct 21, 2017 02:16
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Murgos posted:With the rates that the Treasury gets for borrowing we should be borrowing as much as we can and paying it off with half priced dollars in the future. So you're saying that we should borrow massively and then plan to deal with that by having a whole bunch of extra inflation? Yes, a moderate but low rate of inflation, and a moderate but affordable budget deficit, are considered good things by most economists. But the tax cut is projected to add $5.8T to deficits over the next ten years. The current national debt is currently about $20T. So we're talking a 29% increase in the national debt in 10 years, offset by whatever spending cuts the Republicans can manage. That is alarming.
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Oct 21, 2017 03:55
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This NY Times article makes it sound like the plan is to cut the contribution limit for Traditional 401(k)s, while still allowing a higher contribution amount for Roths. quote:The proposals under discussion would potentially cap the annual amount workers can set aside to as low as $2,400 for 401(k) accounts, several lobbyists and consultants said on Friday. Workers may currently put up to $18,000 a year in 401(k) accounts without paying taxes upfront on that money; that figure rises to $24,000 for workers over 50. When workers retire and begin to draw income from those accounts, they pay taxes on the benefits. That would free up money in the short term, as people shift to investing in Roth accounts, but would leave the Federal Government with less revenue in the future since there'd be few traditional 401(k) assets to tax when distributed. Congress is bad with money.
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Oct 21, 2017 04:12
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Hello thread, I am a formerly poor gently caress who struck it middle-class and have more money than I know what to do with.
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Oct 21, 2017 04:19
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HoboMan posted:Hello thread, I am a formerly poor gently caress who struck it middle-class and have more money than I know what to do with. Have you heard of Bitcoin?
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Oct 21, 2017 05:05
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Evil SpongeBob posted:Have you heard of Bitcoin? Please don't lead this innocent lamb astray. Ethereum is where the smart money is these days.
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Oct 21, 2017 05:12
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HoboMan posted:Hello thread, I am a formerly poor gently caress who struck it middle-class and have more money than I know what to do with. My hobo have you tried IRA?
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Oct 21, 2017 05:22
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Doesn't the $2,400 number put most people earning like 50-70k into the likely max employer match if it's the typical 3-6%? If you were to follow the general advice of 401k to company match then max Roth IRA you'd be in fine shape for retirement as you'd have an effective savings rate of probably like 15-20% and that'd be around 50/50 pre and post tax dollars. People who are able and willing to max 401k + max Roth IRA + pay off a mortgage + kids + college etc are a pretty small segment of the population. Edit: Can anyone explain to me why more employers don't do like 2x match on the first 3% of your salary or whatever? I know that employers can contribute close to double the individual limit and that always seemed like a good way for executives to stash away extra cash. Like my company is family owned and has an absurd 20% match, but you need to stay 6 years to be fully vested. Since most of our employees leave after like 2 years the effective match rate is probably in the like 5-8% range, but for the executives and family members on payroll they are all probably banking close to the 50k total contribution limit annually. LastDeadMouse fucked around with this message at 10:41 on Oct 21, 2017 |
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Oct 21, 2017 10:10
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Our government in Denmark is cutting post-tax retirement savings to max ~ 800 USD p.a., pre-tax savings are somewhere around 9,5k USD max p.a. Retirement savings are taxed at a low rate of 15.3% on gains p.a., stocks start off at 27% on dividends/gains. So it could be worse.
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Oct 21, 2017 11:31
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Harveygod posted:My hobo have you tried IRA?
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Oct 21, 2017 14:41
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Tetraptous posted:This NY Times article makes it sound like the plan is to cut the contribution limit for Traditional 401(k)s, while still allowing a higher contribution amount for Roths. Constraining future government by reducing long term revenue is a feature, not a bug.
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Oct 21, 2017 18:02
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LastDeadMouse posted:Doesn't the $2,400 number put most people earning like 50-70k into the likely max employer match if it's the typical 3-6%? If you were to follow the general advice of 401k to company match then max Roth IRA you'd be in fine shape for retirement as you'd have an effective savings rate of probably like 15-20% and that'd be around 50/50 pre and post tax dollars. People who are able and willing to max 401k + max Roth IRA + pay off a mortgage + kids + college etc are a pretty small segment of the population. The standard advice is to contribute to your 401(k) up to the free money match, max a Roth IRA, then continue contributing to the 401(k) as much as possible. As for your numbers, take a $2,400 hypothetical 401(k) max + 3% match on $70,000 + $5,500 Roth max = $10,000 put away per year. $10,000 / $70,000 = not even a 15% savings rate, taking match into account. Hope you've got a permanent and strong bull market to hit the "save your salary every five years" benchmark. Yes, the 401(k) system, like every program incentivized by tax deductions, favors high earners. Not a lot of people can afford the full max, either. But it's not like the additional revenue here would be going to prop up a more egalitarian social safety net. No doubt it'd be sold on class envy, both the traditional "guy making $5M/year tells person making $15,000/year to hate the 'rich snobs' making $100,000/year" and upper middle class folks who could afford to save quite a bit but would prefer to spend and stick it to the "elitist" savers. Cutting the cap is fundamentally designed to hurt the middle to upper middle class so that the hyper-wealthy can benefit. As far as using 401(k) plans to shuffle tax-free money to high earners, they're subject to several tests to make sure they're not backdoor executive compensation. A small family business might be able to structure things to technically meet those tests while maxing the company contribution for the "right people," but a large business won't. Plus, matching 2-for-1 is a significant expense, and most people prefer to negotiate salary over retirement contributions. Employers won't want to take on the extra expense unless they're in a very competitive environment.
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Oct 21, 2017 18:39
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Frankly, high employer contributions to your 401(k) plan are a really difficult draw to begin with. Most people are going to go for $2k more raw salary than 1% more in matching funds that they can't use until their sixties, even if that 1% translates to thousands more contributed per year. It just flat-out seems like you're getting less money. Sure, in a theoretical place where you're already contributing to the cap and the two jobs offer equal salaries and benefits otherwise, you'd go for the larger match, because that's free money that can't be put in your retirement fund in any other manner. And it almost certainly makes sense to take the higher match in the scenario above, too. We're just really, really, really bad at weighing future benefits against our current desires in a logical manner. Thinking about this now, though, maybe that would be an interesting way to select for employees that are good about thinking in the long term? You'd have to be running a really stable profit, of course, but I kind of like it...
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Oct 21, 2017 19:49
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Tricky Ed posted:Frankly, high employer contributions to your 401(k) plan are a really difficult draw to begin with. Most people are going to go for $2k more raw salary than 1% more in matching funds that they can't use until their sixties, even if that 1% translates to thousands more contributed per year. It just flat-out seems like you're getting less money. Someone would need to be making ~$140k before a 1% match would pull ahead of $2k raw over a 30 year time period and other standard return/tax assumptions, so statistically the vast majority of people would in fact do better with $2k more raw salary. People making significantly more than that who opt for the $2k would just be financially retarded, particularly so because of their high salaries.
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Oct 21, 2017 20:22
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Our company sets the vesting rate at the lowest end of the legal limit. No vesting until you hit 2 years then 20% of your match is released each year until you hit year 6 and are then fully vested. My understanding is that when you leave before fully vesting the non-vested money is then given back to the employer, but I'm not sure how that part works. I assume they can only use it to fund other employees 401k matches? We also never know what our match actually is until the next year when they announce it in Febuary or March. I.e. during my time there it's always been 100% match up to 20% of your salary, but it could be 50% match of your contribution or even 0%. They've always played this up as being tied to how we are doing as a company, but now I realize that it's probably so that they can figure out how much they need to boost the plebs contributions to not run afoul of the high earner restrictions. I've always wondered why the 401k perk was so good when they try to screw employees as much as legally possible in other regards. Edit: We aren't THAT small either ~500 employees. There are around 10 or so family members employed in "executive" positions who I'm sure are just using this as a way to shelter money from taxes. LastDeadMouse fucked around with this message at 20:51 on Oct 21, 2017 |
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Oct 21, 2017 20:39
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Tricky Ed posted:Most people are going to go for $2k more raw salary than 1% more in matching funds that they can't use until their sixties, even if that 1% translates to thousands more contributed per year.
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Oct 21, 2017 21:39
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HoboMan posted:Hello thread, I am a formerly poor gently caress who struck it middle-class and have more money than I know what to do with.
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Oct 21, 2017 22:35
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moana posted:assets/debts/income Usually the most important one.
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Oct 21, 2017 22:49
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LastDeadMouse posted:
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Oct 21, 2017 23:44
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DeceasedHorse posted:Constraining future government by reducing long term revenue is a feature, not a bug. There is no constraint on spending. Income has nothing to do with outflows.
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Oct 22, 2017 01:40
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Murgos posted:There is no constraint on spending. Income has nothing to do with outflows. There absolutely is a constraint on spending, and that's the borrowing limit. The more the government borrows, the higher the interest required, and eventually there is a limit to what the globe is willing to lend you. However. In this case we are more directly referring to the limits imposed by the tolerance of Congress to run up debt. A powerful quasi-Libertarian contingent within the Republican party strongly desires to eliminate all of the entitlement programs and social safety nets and reduce the US federal government to nothing more than funding for the military and the courts, with everything else privatized. After decades of failing to directly reign in spending on the programs they hate, they have adopted a new tactic, which is to bankrupt the government. They figure if they can cut income enough, the rest of their party will be forced to accept the draconian cuts they want to implement. A massive tax cut (for the rich) is popular among the mainstream Republicans, so the anti-government radical right can presumably get that through, and then watch as the inevitable skyrocketing debt convinces voters to begrudgingly accept deep cuts to medicare, social security, etc. Best of all, since "everyone knows" that these spending programs are owned by the Democrats, skyrocketing debt can and will be blamed on the Left, regardless. So with that in mind, slashing 401ks but not Roths means cutting business expenses now, and cutting tax income in the future. That's a double-win for these people.
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Oct 22, 2017 01:49
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Have we already covered bond funds in taxable accounts? Is it really a bad idea to hold something like VTB or should I be looking at a tax advantaged bond fund? Does it matter that much if it's purely buy and hold?
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Oct 22, 2017 17:15
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Leperflesh posted:There absolutely is a constraint on spending, and that's the borrowing limit. The more the government borrows, the higher the interest required, and eventually there is a limit to what the globe is willing to lend you. Interest on American debt is at historical lows. The mean salary of the second-highest quintile households of Americans is a whopping $92,000/yr. This quintile also tends to have two earners, which would mean they could save $15,800/yr between Roth and the possible new 401k limit, before any match. If they actually saved this much to retirement, they would be the top savers for their group. Lowering the 401k limit to $2400 seems a bit much to do all at once, but it would by and large still only effect the upper class. Dreadite posted:Have we already covered bond funds in taxable accounts? Is it really a bad idea to hold something like VTB or should I be looking at a tax advantaged bond fund? Does it matter that much if it's purely buy and hold? https://www.bogleheads.org/wiki/Tax-efficient_fund_placement#Tax_efficiency_of_bonds Neon Belly fucked around with this message at 17:23 on Oct 22, 2017 |
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Oct 22, 2017 17:17
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Neon Belly posted:The mean salary of the second-highest quintile households of Americans is a whopping $92,000/yr. This quintile also tends to have two earners, which would mean they could save $15,800/yr between Roth and the possible new 401k limit, before any match. If they actually saved this much to retirement, they would be the top savers for their group. Lowering the 401k limit to $2400 seems a bit much to do all at once, but it would by and large still only effect the upper class. I won't argue that the 18k limit isn't excessive for the vast majority of Americans, but this is all missing the point. The (rumored) proposed changes still allow for Roth 401k contributions up to the current limit. The intent of the proposal is very clearly to move taxes from the far future to the present by forcing Roth contributions, not to lower the total 401k limit or in any way address inequality in savings rates. I think this is a good moment to remember the original purpose of 401ks: to allow individually-directed retirement savings to have the same tax advantages as defined benefit pension plans. I should point out that many (maybe most these days) of those plans have employee contributions higher than $2400 - should you limit those as well, for consistency? What about employer contributions to either type? Should we disallow employers from offering below-market pay while providing plans with higher than average employer contribution to benefits? Unrelated but this is also the same reason HSAs exist - to allow for higher deductible plans to have the same tax advantages as more expensive plans that trade lower deductibles for higher premiums.
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Oct 22, 2017 21:05
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