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SamDabbers posted:It's absurd that retirement savings vehicles are tied to employment. gently caress you if your employer doesn't offer a 401k I guess. Well, remember there are still IRAs.
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Aug 31, 2023 14:48
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Agronox posted:Well, remember there are still IRAs. Even assuming you get zero employer match, if your employer does not offer a 401(k) your ability to contribute tax advantaged money for your retirement goes from $29,000/year to $6,500/year. That's brutal.
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Aug 31, 2023 14:52
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Agronox posted:Well, remember there are still IRAs. The contribution limits are much lower than 401k though, and people with 401k plans can also contribute to an IRA. It really is gently caress you if your employer doesn't offer it. I wonder what it'd take to get congress to amend ERISA and make the IRA at least as good as the 401k for contribution limits and employer matching and then eliminate the latter entirely. That'd level the playing field quite a bit.
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Aug 31, 2023 14:54
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SamDabbers posted:The contribution limits are much lower than 401k though, and people with 401k plans can also contribute to an IRA. It really is gently caress you if your employer doesn't offer it. i mean the normal/good way to do this is to get rid of 401(k) plans entirely, make the IRA contribution limit $29k/year or whatever, and allow employers to contribute to the IRA as they do with an employer-sponsored retirement plan. this would significantly reduce the number of open plans and the opportunity of plan providers to make money, and it would decrease employer power over employees, so it will obviously not happen any time.
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Aug 31, 2023 14:57
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Yeah, no doubt. Just saying, an IRA is better than nothing if your employer doesn't offer a 401k. I remember reading somewhere that the modern 401k was sort of an accident of law and not exactly what Congress intended to do when they passed it. But it's been 40 years since and I guess it works well enough that no one wants to take the risk of making this all make sense.
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Aug 31, 2023 15:04
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KYOON GRIFFEY JR posted:i mean the normal/good way to do this is to get rid of 401(k) plans entirely, make the IRA contribution limit $29k/year or whatever, and allow employers to contribute to the IRA as they do with an employer-sponsored retirement plan. this would significantly reduce the number of open plans and the opportunity of plan providers to make money, and it would decrease employer power over employees, so it will obviously not happen any time. Plan providers would get a bunch of new IRAs to manage, but you're right about employer power over workers. Same situation with public healthcare.
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Aug 31, 2023 15:11
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KYOON GRIFFEY JR posted:i mean the normal/good way to do this is to get rid of 401(k) plans entirely, make the IRA contribution limit $29k/year or whatever, and allow employers to contribute to the IRA as they do with an employer-sponsored retirement plan. this would significantly reduce the number of open plans and the opportunity of plan providers to make money, and it would decrease employer power over employees, so it will obviously not happen any time. Yeah, this would make life a lot simpler and easier. A lot of the headaches with 401(k) plans are that you have to enroll in specific funds that are probably not optimal, and it's usually locked away in a special place separate from the rest of your poo poo. I think all of the funds I was allowed to enroll in have an ER of 0.3% at a minimum, which isn't great. The target date funds are all at >0.5%
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Aug 31, 2023 15:15
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SamDabbers posted:Plan providers would get a bunch of new IRAs to manage, but you're right about employer power over workers. Same situation with public healthcare. It wouldn't be good for plan providers. Companies pay a lot of money for 401(k) plan administration (usually a mix of fixed costs and AUM based fees) and IRAs are free or very low cost. Every 401(k) account that turned in to an IRA would be a loss for the plan provider. Total AUM wouldn't significantly change - people don't max IRAs today anyway, so it's not like that many people would be able/willing to contribute higher amounts. BFC goons aren't representative of overall pop.
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Aug 31, 2023 15:17
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jokes posted:Yeah, this would make life a lot simpler and easier. A lot of the headaches with 401(k) plans are that you have to enroll in specific funds that are probably not optimal, and it's usually locked away in a special place separate from the rest of your poo poo. I think all of the funds I was allowed to enroll in have an ER of 0.3% at a minimum, which isn't great. The target date funds are all at >0.5% I mean this is entirely up to your employer (Which is part of the problem) - my company pays a good chunk of money for 401(k) admin and part of that goes to getting people really cheap and good fund access. But that's easily a cost that can be passed, like at your joint, on to the employee.
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Aug 31, 2023 15:18
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KYOON GRIFFEY JR posted:I mean this is entirely up to your employer (Which is part of the problem) - my company pays a good chunk of money for 401(k) admin and part of that goes to getting people really cheap and good fund access. But that's easily a cost that can be passed, like at your joint, on to the employee. I briefly worked for a small clinic that 1) didn't have an employee handbook to let me know that I had a 401k, and then 2) let me know about it a month before I left, and then informed me there would be a $250 transfer fee to move the (~$2k) to Fidelity or similar. 
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Aug 31, 2023 16:18
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KYOON GRIFFEY JR posted:my company pays a good chunk of money for 401(k) admin and part of that goes to getting people really cheap and good fund access. But that's easily a cost that can be passed, like at your joint, on to the employee. But why does this overhead need to exist at all? My very free personal IRA is a brokerage account and I can buy whatever I want in it.
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Aug 31, 2023 16:19
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drk posted:But why does this overhead need to exist at all? My very free personal IRA is a brokerage account and I can buy whatever I want in it. Because it’s an opportunity for profit for financial firms?
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Aug 31, 2023 16:44
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SamDabbers posted:It's absurd that retirement savings vehicles are tied to employment. gently caress you if your employer doesn't offer a 401k I guess. Agreed. It amazing how many companies don't offer 401k plans. I am of the opinion that all employers with more than 10 or so employees should be required to offer a 401k/403b/ect. Once you get to the point of employing more than 10 or so people full time you should be a good corporate citizen and stop setting up your employees to be a burden on society when they are old. I am also amazed at how many people aren't aware that IRAs exist. Sure the contribution limits on IRAs make them severely limited in their usefulness but its better than nothing. The same goes for ordinary taxable brokerage accounts. Sure you pay taxes as you go but if you hold for long term capital gains rates, stick to low yielding index funds, municipal bonds, and/or stuff that pays qualified dividends you won't get destroyed by the IRS. But on the flip side you have to access to all of your money any time you need it and there are no contribution limits.
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Aug 31, 2023 16:47
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KYOON GRIFFEY JR posted:i mean the normal/good way to do this is to get rid of 401(k) plans entirely, make the IRA contribution limit $29k/year or whatever, and allow employers to contribute to the IRA as they do with an employer-sponsored retirement plan. this would significantly reduce the number of open plans and the opportunity of plan providers to make money, and it would decrease employer power over employees, so it will obviously not happen any time. I really like this idea. Too bad it makes far to much sense to ever actually happen.
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Aug 31, 2023 17:07
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The government likes money. Tying your 401k into you having a job stimulates the economy and keeps taxes flowing. Note that even if your 401k payroll contributions are income tax deductible, OASDI/Medicare payroll taxes are still being paid.
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Aug 31, 2023 17:30
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Antillie posted:Agreed. It amazing how many companies don't offer 401k plans. I am of the opinion that all employers with more than 10 or so employees should be required to offer a 401k/403b/ect. California actually requires employers with 1 or more employee to offer a retirement plan or participate in the state one (CalSavers). I'm sure the state offering is not perfect but its better than nothing for a lot of people working for small-ish businesses that cant be bothered to set up their own offering.
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Aug 31, 2023 17:34
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My wife's running a tiny non-profit in San Francisco and the new california law applied, she's been lobbying the board to let her set up a retirement plan for her employees for years and they had just decided to go ahead and offer a SEP or SIMPLE plan when CA passed this law. So now she's set up a 401(k). In the process we looked at CalSavers. For some loving reason (lobbying, undoubtedly) CA went with a single bank to manage CalSavers and its fees are loving garbage. Up to 1% of your assets before, being reduced this year to .325%-.49% but that's still a total balance fee on top of the ERs of each fund. It's still better than nothing but the costs and the offerings are not competitive and any small employer is better off setting up any of the other options, SEP, SIMPLE, 401(k), whatever. That said, it absolutely owns that CA did this, and while some employers are getting around it by only having independent contractors and no employees, CA also has been cracking down on that particular scam too. Albeit with massive carve-out exceptions for all the gig economy dot coms, uber etc. Leperflesh fucked around with this message at 17:59 on Aug 31, 2023 |
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Aug 31, 2023 17:56
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drk posted:But why does this overhead need to exist at all? My very free personal IRA is a brokerage account and I can buy whatever I want in it. pseudanonymous posted:Because it’s an opportunity for profit for financial firms?
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Aug 31, 2023 17:59
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Antillie posted:Agreed. It amazing how many companies don't offer 401k plans. I am of the opinion that all employers with more than 10 or so employees should be required to offer a 401k/403b/ect. Once you get to the point of employing more than 10 or so people full time you should be a good corporate citizen and stop setting up your employees to be a burden on society when they are old. Most people are poor and rules about retirement savings are needlessly complex.
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Aug 31, 2023 18:19
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Subvisual Haze posted:The government likes money. Tying your 401k into you having a job stimulates the economy and keeps taxes flowing. Note that even if your 401k payroll contributions are income tax deductible, OASDI/Medicare payroll taxes are still being paid. The job piece is a little silly, people don't work because of 401(k)s. I feel like you could get the same structure with the IRA for OASDI/medicare etc, and in fact for a Roth IRA today all of those taxes are being paid, plus income taxes! Job switching is a net good for the economy and this would help stimulate that. pseudanonymous posted:Most people are poor and rules about retirement savings are needlessly complex. for real the average person doesn't know how income tax brackets work, you think they know gently caress all about LTCG? plus add in all the doomers who think that the world will end before they retire and it's not great. current structures hinder people from maximally saving for retirement and at the margin discourage retirement savings but the entire financial services industry deliberately complicates all this stuff and will continue to do so regardless of account structures.
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Aug 31, 2023 18:24
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Quick google suggests 60% of Americans live paycheck to paycheck in 2023. If I lived paycheck to paycheck and drowning in debt why would I care about saving for 20-40 years later when I literally need the money to survive today? Can’t really fault those 60% (“most people”) for not knowing about IRAs.
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Aug 31, 2023 20:12
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Within that 60% are also people who live paycheck-to-paycheck on pretty large salaries (roughly 40% of people making >$100,000/yr live paycheck-to-paycheck). Also the people who aren't living paycheck-to-paycheck don't necessarily know poo poo about IRAs, or care about the idea of saving for retirement. A common thing about boomers is that their retirement is their house because they did absolutely zero retirement savings, despite making very healthy livings, and their home is an asset they can't touch, so it's the only asset they still have at retirement. Though 'reverse mortgages' seem to be a way to loosen up that particular line item. jokes fucked around with this message at 20:21 on Aug 31, 2023 |
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Aug 31, 2023 20:18
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Still blows me away that Cali's answer to that is to auto enroll people in an IRA with above average fees. Which came first, the rent seekers or the government?
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Aug 31, 2023 20:20
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Boris Galerkin posted:Quick google suggests 60% of Americans live paycheck to paycheck in 2023. If I lived paycheck to paycheck and drowning in debt why would I care about saving for 20-40 years later when I literally need the money to survive today? Can’t really fault those 60% (“most people”) for not knowing about IRAs. It's also just different personality types. Some are super savers by nature, most live in the moment and spend what is available.
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Aug 31, 2023 20:26
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There's also no definition of "paycheck to paycheck" besides answering the survey question "Do you live paycheck to paycheck" as "Yes" or "Sometimes". I bet if you actually investigated people's savings and consumption within that "paycheck-to-paycheck" group there would be a lot of disagreement about who actually counts.
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Aug 31, 2023 20:30
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Epitope posted:Still blows me away that Cali's answer to that is to auto enroll people in an IRA with above average fees. Which came first, the rent seekers or the government?
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Aug 31, 2023 20:32
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esquilax posted:There's also no definition of "paycheck to paycheck" besides answering the survey question "Do you live paycheck to paycheck" as "Yes" or "Sometimes". Like those ragebait articles that make the rounds every so often, “our household income is 400k and after the mortgage on our $2m house, two luxury car leases, maxing out our retirement savings, saving for kids college, paying for three lavish vacations per year, and covering all our food and entertainment expenses we just have nothing left at the end of the month!”
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Aug 31, 2023 20:46
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Guinness posted:Like those ragebait articles that make the rounds every so often, “our household income is 400k and after the mortgage on our $2m house, two luxury car leases, maxing out our retirement savings, saving for kids college, paying for three lavish vacations per year, and covering all our food and entertainment expenses we just have nothing left at the end of the month!” If your budget includes savings of any amount then you're not paycheck-to-paycheck. Also what else would that household need to buy that they haven't already? lol
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Aug 31, 2023 21:29
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Epitope posted:Still blows me away that Cali's answer to that is to auto enroll people in an IRA with above average fees. Which came first, the rent seekers or the government? California doesn't auto-enroll people, it just has a law requiring employers to provide a retirement plan and offers CalSavers as a fallback if employers can't afford any other option (because it's free to employers). However, employers who opt for CalSavers auto-enroll employees but are required to notify the employees of their option (or requirement, see below) to opt-out. Of course the poo poo part was deciding to further feed into the for-profit system when the state already has multiple pension plans for state employees, teachers, etc. that aren't for-profit, do extremely well, are well-managed, and should be how it works for every american. And the other poo poo part is it's an IRA. So employees opting into CalSavers are basically doing that instead of a much cheaper IRA, but the employer sets it up and can make direct contributions from your paycheck. Essentially the state is promoting the existence of IRAs to all employers and their employees, who have to specifically opt out if they already have their own IRA or just don't want to participate. But it does force employers to actually think about and investigate the whole retirement plan thing, and that can put some of them down the road of recognizing that SEP and SIMPLE plans are very affordable to them and can offer employees a better benefit. My wife's board agreed to go all the way to a 401k offered via ADP.
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Aug 31, 2023 21:42
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jokes posted:A common thing about boomers is that their retirement is their house because they did absolutely zero retirement savings, despite making very healthy livings, and their home is an asset they can't touch, so it's the only asset they still have at retirement. Though 'reverse mortgages' seem to be a way to loosen up that particular line item. My wife's aunt is in this situation. She got a reverse mortgage about a year ago and that's how she is funding her retirement. Her deadbeat former druggie daughter is expecting to inherit the house free and clear when her mom goes. Its literally her only hope of not ending up on the street when the day comes. She knows its her only hope and is expecting it because she has been able to leech off her mom her whole life (she is largely why her mom has no savings and needs the reverse mortgage). Boy is she going to get a shock when the bank takes the place at some point in the next ~15-20 years and refuses to sell it back to her due to her lovely credit and criminal record.
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Sep 1, 2023 03:36
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esquilax posted:There's also no definition of "paycheck to paycheck" besides answering the survey question "Do you live paycheck to paycheck" as "Yes" or "Sometimes". Yeah I have always wondered about this. I keep just under a month's worth of money in my checking account and depend on those pay checks to pay my bills. I have to watch my spending and plan for major purchases. If I lost my job I would have to hit my efund pretty darn quick. Does this make me paycheck to paycheck? I've got just under three months worth of expenses in in my efund (working on building it up to 6 months) and several years worth of expenses in my brokerage account. Does that make me not paycheck to paycheck? Sure I *could* pull that money if I had to but I really don't want to. I contribute to my 401k each paycheck, does that make me not paycheck to paycheck? When I find I have a surplus at the end of the month I invest it in either the Roth IRA or the taxable account depending on if the IRA is already maxed out for the year. Does that make me not paycheck to paycheck? What does paycheck to paycheck even mean? Like I said if I suddenly lost my job I would need to massively cut expenses and scramble to find another one pretty quick if I didn't want to cannibalize my investments. I'm probably not paycheck to paycheck by most definitions of the term. But it sure feels like I am since I have to plan my spending and investing around my paychecks.
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Sep 1, 2023 03:51
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I work in post production for the film industry, and because of recent events a lot of people are hurting financially. I went onto linkedin to see someone talking about saving and investing. At first I thought "yeah, that's a good idea, people would be a lot less stressed if they actually saved a hefty emergency fund and knew what etfs were. Then I read on and encountered: "Whether it is flipping houses, renting a property to use as an Air BnB, converting commercial to residential, or finding deals and selling to investors. I have enough knowledge and network to know how to use my money to make more money so that if I get laid off I have 0 stress." The thread replies are tons of people asking to be taught this method. Am I wrong that stepping into the world of house flipping is a huge commitment and not really recommended for the average person? like it involves taking on huge assets onto your personal balance sheet and hoping that the right economic environment persists.
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Sep 1, 2023 03:52
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Also a lot of work actually improving the house and then selling it.
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Sep 1, 2023 03:56
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Antillie posted:If I lost my job I would have to hit my efund pretty darn quick. Does this make me paycheck to paycheck? Either of these two facts make you not paycheck to paycheck
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Sep 1, 2023 04:05
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KYOON GRIFFEY JR posted:Even assuming you get zero employer match, if your employer does not offer a 401(k) your ability to contribute tax advantaged money for your retirement goes from $29,000/year to $6,500/year. That's brutal. Man, until this last year I could barely even dream of getting close to the IRA limit; the idea of saving $29k would have been a ludicrous pipe dream. That's if I even knew the 401k limit was over triple the IRA limit (and what the hell, that ratio was quintuple back in the 90s  )—not that I had access to a 401k anyway.
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Sep 1, 2023 04:45
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Colloquially, "paycheck to paycheck" means that if you miss a paycheck you cannot pay your monthly essential bills like rent, food, insurance, etc. Zero or nearly-zero savings. If you have an emergency budget, investments you can liquidate, etc. you aren't living paycheck to paycheck.Antillie posted:If I lost my job I would have to hit my efund pretty darn quick. You live on a budget, which is a different concept entirely. That is, you have allocated all of your income so that you aren't just accumulating cash (or drawing down cash) every month, because you've planned where your income should go, including putting a surplus into retirement.
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Sep 1, 2023 04:57
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Yeah, the articles like "I have no money left each month after I put 40% of my pay directly into three different kinds of retirement savings" are being deliberately misleading.
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Sep 1, 2023 05:01
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Ccs posted:Am I wrong that stepping into the world of house flipping is a huge commitment and not really recommended for the average person? like it involves taking on huge assets onto your personal balance sheet and hoping that the right economic environment persists. House flipping is extraordinarily risky and ties up an astonishing amount of capital, but the concept of flipping a house is a lot simpler to grasp than the concept of opening an investment account and purchasing stocks for most people. Plus HGTV doesn't make TV shows about passive investing.
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Sep 1, 2023 05:13
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Fuschia tude posted:Man, until this last year I could barely even dream of getting close to the IRA limit; the idea of saving $29k would have been a ludicrous pipe dream. That's if I even knew the 401k limit was over triple the IRA limit (and what the hell, that ratio was quintuple back in the 90s Who wants to tell them? I guess I'll do it. The 401k limit is actually $66k. But (most?) plans don't have the very specific criteria allowing it.
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Sep 1, 2023 07:19
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I thought it was pretty well and widely understood by everyone that living paycheck to paycheck means “if I don’t get paid I can’t pay the bills without going into debt”. People with an emergency fund can still pay the bills, ergo they aren’t living paycheck to paycheck. People contributing to a retirement account that they can pull from (even if they don’t want to) can still pay the bills, ergo they aren’t living paycheck to paycheck. It’s pretty gross that some of you are going “hurr durr technically I’m paycheck to paycheck because I budget so that I have $0 unaccounted for (after Ive contributed to x y and z retirement funds)” when you know drat well what paycheck to paycheck means. Someone taking home 100k gross can easily be paycheck to paycheck if they are living like they take home 100k net and not actually saving anything and spending more than they take home. Sure they’re in a better situation than someone barely earning 30k by virtue of spending 70k more to have a more comfortable life but if they got fired then they’d still have no savings and have to put everything on credit cards. Boris Galerkin fucked around with this message at 10:54 on Sep 1, 2023 |
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Sep 1, 2023 10:49
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