Mandatory 401K required

Yes cause those with a 401k are "privileged " in their eyes. A certain group would love to hit all retirement accounts or all over a certain threshold with a "one time" tax of say 10% or something. There has been talk of this for years!!! Scary stuff. Your essentially double taxed if that happens.

 

Companies don't run 401k's they do have an investment company that manages their employees funds. This really doesn't have to do with the company, I am pretty sure it's a form to move your funds over once you leave. If they match your money and you can get by without a few dozen dollars a paycheck it's a wise choice to contribute....it's hard to make up for the power of compound interest and growth in the market over a few decades.

 

This

Many companies like to wait three weeks to start the new employees paychecks though. That's an easy way to "make" money for the company. So by the time you get your first check for 2 weeks pay, you've been working for 3 weeks. You'll only ever get that 1 week in pay back when you leave or retire.

 

First, that article is 5 years old. Second, rhere are plenty of companies that do that already, with the opt out option. Which is exactly what this rule says, there must be an opt out option for the employee.

The interesting thing is employees must be immediately eligible to participate. I've worked with companies that you had to be there at least 6 months, a year, or even a year past the end of the quarter. That last sux - so If I get hired on 3/30, I am eligible to participate on 4/1 of the next year. But if I get hired on 4/1, I'm not eligible until 7/1 of the next year - I got caught exactly that way.

I'm a firm believer that a 401k is needed since I am unlikely to see much SS when I am able to retire. They have been saying 25-30% less than current retirees plus with higher costs for medicare. There are not enough people contributing to the tax system to pay for those in the late BB era, much less those that are younger. Pensions are few and far between.

 

I was fortunate to be employed when 401k's and IRA's were first started. Friends said they'd doubt SS would be of any assistance and the pre-tax contributions were well worth it.

Everyone's situation is different. We were fortunate to be able to max out contributions and get corporate match. The formentioned compounding over decades, has us comfortable.

I will be eligible for full SS on 1/2023.

 

SS will be "around", too many voters to anger and too many people who want to stay in office for it to totally go away....but math says it can't pay like it used to. At some point benefits will have to be reduced or taxes will have to go way up. There's no way around that. When and by how much are the real questions.

I'm 40. Will I get some SS in 25 years? Probably. Will it be enough to live on? HAHAHA. My retirement planning is expecting precisely $0.00/year from SS. Whatever I get is just an added bonus. I also working on getting as much stuff into tax free accounts as I can. I'm taking a hit on taxes now because I don't want to pay them in the future.

 

And for good reason...
Name one thing our leaders haven't screwed up...

 

There are some real numbers to apply here.
The average person will contribute $300,000 to SS over their lifetime and get back $277,000 in SS retirement benefits.
So...in general...this is a (long term) ponzi sceme at best!

Now... lets talk 401k's and compound interest. If i could invest just my SS contributions into my own 401k investment instead, i know i'd be a millionaire at retirement...(probably 3 million or so)
Obviously SS is..well...a bad investment!
(And I'll just leave it at that! )

As far as mandating companies to offer 401k's, I'm generally NOT for any kind of mandate, but in the case of 401k's, I'm 100% sure that the employee will benefit from this (Even short term). And from what I've read, there are opt-out provisions and emergency allowances.
It also seems that a large percentage of companies offer a "match".
The match, otherwise known as "free money" could easily boost an employee's 401 by 100's of thousands of dollars. (Or more. Possibly $1mil )

Maybe someday, (hopefully) SS will be phased out, in favor of a 401k system... Where we will make big dollars for our investment instead of funding our government's cash cow/ponzi scheme.

(I'm trying not to be political, but there's no way around it when talking SS...)

At this point, i think I'd gladly let the government keep what I've paid into SS if i could just invest the rest of 'my' contributions into my own investments/401k... and I'd still come out way ahead...

 

I never stated they ran the 401k, I'm not even sure how that can be interpreted as me saying they run the 401k.
Also I have been with this company for longer than I care to admit and this was started 2021, prior to that it was voluntary to sign up.
Yes it is a form and it is a hassle. Especially if the next company doesn't have a 401k setup so now you need to setup a IRA..
again not sure what I said to make anyone to interpret it otherwise.
I was bitching about my company, not the 401k company, other than the fact they opted me in after I opted out. No one will admit to who's fault that is.
UPS doesn't even match.

 

Well, I'm not that old, I have a 401k. Started putting money in the first paycheck I got after getting my BS degree from college 19 years ago.

When I worked at Briggs and Stratton 80% of my 401k had to be in Briggs stock. I feel like that artificially boosts stock prices. I cashed it out to help pay for my first house. Small penalty, but better than the lose their stock took over shortly after. New house was in a new town with a new job...

10% right into 401k with 3.5% company match. Been doing that for 18 years. On average, over the long haul I'm doing good and on target with my retirement goal.

That said,. I don't believe the government should make you do anything with your money. I don't see it listed under the powers granted by the Constitution. It seems like a big manipulation in the stock and bonds market. There would be a mandatory percentage put into the market every day, week, month.... In a business where fractions of a second make or loose millions of dollars, knowing when automatic purchases are hitting the market seems dangerous.

If everyone working is putting a set quantity of money, getting roughly the same rate of return, then I don't see how inflation would not be increased to at minimum the average rate of return. If everyone's wealth increases then the dollar becomes weaker due to money, not value, being created.

In an open market someone has to loose money to make money. This can be manipulated so the majority make the same percentage of money until some big players cash out at the same time... But there will still be guaranteed buyers the next pay period. A forced ponzi on the majority while the minority get to cash out into other currency.

This country needs less regulation and mandates. The freedom to pursue happiness, the way you see fit, that doesn't imped others liberty, is the American dream. You will be wrong sometimes, you will fail sometime, some more than others, but that's the price if freewill. There is no equality or equity in outcome.

 

I agree with Backwoods-a person's salary should be theirs. I also give all my new teaching hires the advice of setting up a 403-teachers version of a 401-in fact I lecture them quite strongly about it. But following good financial advice should not be a requirement.

 

When someone has zero savings for retirement beyond SSC, they usually end up on some sort of state assistance. Especially so if they need more of a nursing home setting. At that age they can't get most jobs. The rest of us pay for that.

I see this mandating a 401K contribution as a long term attempt to help with that. Alternately, you mandate financial education in schools. But schools are big state/local affairs. You'd have to get every region on board with that and that's more difficult.

 

Yea, they'd teach deficit spending...

 

My kids have to take an intro to finance in high school. They learn how to write a check, balance a checking account, what's needed to apply for a credit card, apply for a loan, then what and how interest rates and penalties work.

People can memorize or regurgitate info during a class and not actually understand it.

My youngest hasn't taken the financial course yet. But he raises chickens and sells the eggs. He loans money to kids at lunch with interest due the next day. He buys a big box of little Debbie snacks and sells them out of his backpack. I believe he roughly triples his egg money at school. He gets how money works better than my 17 year old. The oldest just makes money and spends it.

You can educate the ignorant, but can't fix the dumb, stupid, and unfortunate.

 

If he'd start an ira now, he'd have 10m$ at retirement!