Here are my thoughts on 401K Plans what's your opinion, its just a corporate pay off. Do think I am on to something or am I missing the point?

[DaveJord]

Is it all just a corporate pay off?

Remember the days when you could get a job with a pension plan and then retire after 20 to 30 years of working?

Most those jobs where Union jobs back in the day, so what happened to the unions? The decline is due to may reasons. Primarily the decline in domestic manufacturing jobs and use of corporates influence within government to deregulate industries, promote international trade agreements and weaken labor laws. This means corporations out source jobs foreign countries, create tax havens for themselves and reduce labor costs because of NAFTA, AFTA and OPEC.

The Truth of 401K's!

today you have to take on the 401K contributions to get the matching funds from your employer. Employers only have to match up to 50% of what you put in up to 6% of your total salary. Say you make 40K annual that's only roughly $2,400 dollars. So you only have to put in about $200 a month to max out your your contributions for matching funds. Getting the maximum matching funds is really the only benefit to 401K plans.

Okay that's fine, but then your money is tied up for decades while these same companies are reinvesting your money and making millions while they are only paying you pennies on the dollar for your contributions and you still are getting hit for the taxes on it now or later. By the time you withdraw the money without penalties you're basically earned enough to match inflation on your investment. While these corporations just got a massive tax cut from Trump.

Why not just tax the corporations to pay and additional 5% into your social security on top of your pay check deductions and let you save and invest and spend your money how you like?

[AviatorTom]

Pensions worked well when people stayed with the same company for many years. Most pension plans require you to work at the company for at least 10 years to be vested, and most people today don't do that. Average time at a company is 5 years or less. A 401K plan, though not directly portable, can be transferred from one company to the next. Company cost per employee of old-time pensions vs 401K is about the same. A key benefit of 401K is that the employee can determine how much they want to invest, and where it's invested (subject to an annual maximum that many employees don't reach), and it's a tax reduction (uses pre-tax dollars), which a pension never was. One other 401K benefit is that the employee can use money in it (technically, via a loan to oneself) for certain allowed things, like house purchase, college expense.

[DaveJord]

But making them invest a percentage into your social security would follow you right? And increase your benefit later.

[AviatorTom]

@DaveJord That would require a fundamental change to the way social security works, where a retiree's benefit is based on their earnings over the years. It would also complicate things even more because spouses, ex-spouses and widows/widowers can collect SS benefits.

[DaveJord]

Yeah, the 5% contributions would be based upon our salary as well... 5% of your salary not 5% flat tax on the corporations it would be no more complicated then them putting a contribution into a retirement account..

As it is now spouse, ex spouse can get a percentage of your retirement accounts so that would really change nothing... they would get a percent from your SS which happens now anyway, when you divorce.

[AviatorTom]

Thanks for the mho.

[maximumpower]

401k is best thing you're going to find for post-retirement plan.
Don't even begin to think that social security will be enough.

[joeldalton]

Because when you tax corporations they push that tax onto consumers. So if you want to pay more for everything because it sounds good that’s on you.

[DaveJord]

Aren't they doing that anyway? I mean what are getting for our dollar?

[DaveJord]

What are * we

[joeldalton]

Yes. So taxing them more makes you pay more. Plus makes them less competitive in the world market.

[DaveJord]

I mean that's a standard argument but again they report record profits what are you getting on that investment?

[joeldalton]

If I own stock I’m getting a higher stock price when I can sell for a profit.

[DaveJord]

Right so you will continue to by stocks at low prices and sell at higher... that will not change.

[joeldalton]

And? I don’t see your point.

[DaveJord]

Counter argument would be that you will have more money in retirement and you will spend more so that will contribute tot he consumer based economy. So corporation will make more money and stack values will increase. Remember I am saying they should invest 5% of your annual salary into your social security as matching funds... not 5% of their corporate profits.