General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWe should encourage Americans to save more by using some sort of a 401K-style savings plan.
Last edited Sat May 9, 2020, 04:00 PM - Edit history (2)
Given that we've had two epic economic collapses within the past 12 years, as a country we need to do more to encourage people to save more. We should use our tax code to incentivize people to save money and allow businesses to provide matches like we do with 401-Ks. People should be allowed to save pre-tax of up to 6 mos. of their salary. We can incentivize through taxation businesses to match it a savings plan.
People should be encouraged to save 6 months of their salary into a regular savings account.
--On Edit--
I have highlighted a portion of my OP that some of you may have missed. The money for your savings would come to you pre-tax. IOW, this would be money that you would be paying out in taxes to the govt if you did not put it away in your savings.
--On 2nd Edit--
Something else that you have to consider. The govt, both federal and state, may not be there for you in another collapse. You cannot rely on UE, food stamps, healthcare, etc. when the next collapse comes.
JenniferJuniper
(4,510 posts)I'm sure everyone is able to get right on that....
Yavin4
(35,432 posts)those that are should. That would mean that when the next Republican president brings the next collapse, less people will be in critical need.
JenniferJuniper
(4,510 posts)likely have nice 401ks in place already.
The average American is living paycheck to paycheck or scrimping and saving small amounts. The notion that someone making 50k should be able to save 25k is pie in the sky thinking.
Rent, utilities, food, childcare, transportation all must come first.
The rich are getting richer and the non-rich are getting poorer at an astronomically fast rate. This virus will make this that much worse. Putting the burden on the non-rich to try to change this is not a realistic approach.
stopbush
(24,395 posts)save 6 months-worth of salary is as elitist and out-of-touch-with-reality thought I have ever heard expressed on DU.
Newest Reality
(12,712 posts)I think 401K has been a debacle and bane to pensions, etc.
I don't know who could afford to spare anything for something like who can't already. Really. People who save, can. The large numbers of people who struggle from paycheck-to-paycheck and even have negative net worth can't be incentivized to save something they don't have.
We need realistic, livable wages and other things in place before that's a factor and I think it has to be something new, effective and stable. I mean, just raising the cap on SS could make some major changes in retirement if there were a will to do so.
Doremus
(7,261 posts)401ks do so little for working people and a whole lot for the oligarchy who relish getting their hands on money earned by the sweat of our brow. With every economic collapse most 401ks lose much of their value, depending on the funds they're in, leaving the worker with nothing.
Defined benefit pension plans. The gold standard for the working class.
Happy Hoosier
(7,277 posts)The problem with defined benefit plans is they are no longer sustainable. They depend upon an ever increasing number of people paying into them and for a fairly short life expectancy after retirement. Not to mention, they depend upon companies honoring their commitment to them, and long-term employment with a single employer (not the usual model today).
I have been offered a defined benefit plan three times in my career. Of those, only one plan is still in existence... that's my Federal Civil Service pension. The other went toes up and offered a court-approved lump-sum payment of pathetic proportions.
Fortunately, in each case, except the Federal pension, I took the 401K with match option. I still have all my money, unlike all my colleagues who got their pittance of a payout.
Shermann
(7,411 posts)I could buy an annuity if I choose and get the equivalent.
401K's are a powerful tool available to everybody. Contributions are capped quite severely to avoid abuse by the elite.
JenniferJuniper
(4,510 posts)Also, hardly anyone is able to stay with a single employer for more than a few years now.
I've been in my profession for 35 years. The first 29 years were split between two employers.(13 years then 16 years.) In the last six years, I have had three different employers. And very thankful that I've had no gaps in employment like so many others.
Sgent
(5,857 posts)as currently structured are a terrible idea for both employer and employee. Even multibenefit plans which solve some problems have faced disaster in the last few years.
There are some insurance products that the Trump administration is starting to allow to be sold inside of 401k plans. In general they will cost you money but they will be safer options for those who are intimidated by the markets.
onecaliberal
(32,813 posts)What makes you think they could save 3 thousand a month. So completely out of touch. A lot of people do not have food, healthcare or a job. A LOT!
SammyWinstonJack
(44,130 posts)LakeArenal
(28,813 posts)unblock
(52,183 posts)Prices will go up if people know others have ample savings.
The idea of universal basic income or a comprehensive safety net is much better at making sure everyone has the security that 401k-type plan is nominally intended to provide, but which fails for a host of reasons. Mostly, such savings plan provide the biggest benefits to the people who need it least.
D_Master81
(1,822 posts)Having higher interest rates will incentivize saving as well. Having tax incentives is nice, but actually being able to make some money on your savings is the key. Part of the reason I think the stock market has gone as high as it has is because its the only place to put your money to make returns on it. Interest rates on everything are so low that youre basically just parking your money.
SharonAnn
(13,772 posts)Vinca
(50,255 posts)only comment was that these are people who don't realize a loaf of bread costs $5.00. Self-employed people, in particular, never get ahead. Up one year, down the next. The down years result in increased credit card use, so the up years are spent paying back for the down years. It seems whenever you do manage to get a few bucks put away there's some calamity and you end up back at square one. About all we can do (short of a rich relative dying) is tread water.
PoindexterOglethorpe
(25,839 posts)I've never paid nearly that much, although I last bought a loaf of bread about two weeks ago.
Vinca
(50,255 posts)If you're going to eat bread, you're better off making a healthy choice. This is especially good bread if you're trying to control blood sugar. It seems to have a low glycemic index, although it's not billed as anything special. I do buy a cheaper, 45 calorie bread, too, since I'm trying to lose some weight and I refer to that as Wonder Bread without the taste.
SammyWinstonJack
(44,130 posts)PoindexterOglethorpe
(25,839 posts)I'm content with regular store quasi-wheat bread myself.
Blue_true
(31,261 posts)But believe it or not, after having to forage for bread over the first month of the lockdown, I found that Walmart actually makes pretty good store brand bread.
madville
(7,408 posts)I bake a lot of my bread, costs about $1 a loaf
Wellstone ruled
(34,661 posts)if you are allowed to use you funds for investments outside of the Federal Guidelines. During my stint of two years on our Board. We had our hands tied as to what we could invest in. Usually some extremely low yield bonds or Treasuries. Reagan Administration was just plain nasty with their rules as to what we could do with our Employer Contributions. We did get a special rule for two years where we were allowed to take a small portion of our Assets and use a outside Brokerage firm as a test and if it was not for that one event,my guess is our Fund would have went bust in the early Thousands. Just received my Q2 Y OY statement Thursday. The Bean Counters claim we are good to go for the next five years even with the Trump Deprecation facing us.
Defined Pensions are at the mercy of the Powers that be in Washington especially if they are anti Labor.
gibraltar72
(7,501 posts)protections that were in place regarding fiduciary responsibility. You don't even have to work in the best interest of the client anymore.
Wellstone ruled
(34,661 posts)in the side. Friggin Churning and Churning of the Rolodex as it is called. Two Business Clients clued me in on that little known secret. Had a Broker pull that shit on us about fifteen years ago. Cost us several Thousands before we caught on to why our Print outs were not showing transactions. Nothing worst than someone Front Running Trades with your Stocks and Lying about it. Worse yet,using your stocks in Short Positions.
PoindexterOglethorpe
(25,839 posts)when someone complains that they can't possibly save a single dime and yet buy, meaning finance to the hilt, a new car every few years, take a couple of vacations each year, and eat out at least three nights a week, I have no sympathy when something happens and they don't have any savings.
I've been watching "Til Debt Do Us Part" on Amazon Prime, and it's incredibly how people are careless with their money.
I do think that one long term outcome of all this will be that virtually everyone will figure out how to save money, even if it's a couple of bucks a week.
No matter how little you make, keep in mind there's someone else not far away who's making even less.
llmart
(15,536 posts)I agree. We are now a country who thinks our wants are our "needs". What a lot of people want is their cake and eat it too and they want it ALL and RIGHT NOW. They don't know the concept of delayed gratification. Ever read the book "The Millionaire Next Door"? I believe it's from the 90's but still pertinent today. They showcase people who had/have very modest incomes but valued their time more than the number of things they owned and at retirement they had net worths of at least a million dollars.
Guess you and I are still pretty old school aren't we?
Blue_true
(31,261 posts)payroll deduction. The denominations were really small, like $25 for a Bond. Reagan largely killed that, took away the advertising and it has never gotten back to where it was.
I do remember reading that there are some really good Mutual Funds that allow individuals to invest as little as $50 a time. If people figuratively write that money off for daily expenses, after a few short years, they would have enough to get them through a tight pinch.
gibraltar72
(7,501 posts)I worked in the financial and securities markets. When I started in 1974 I didn't really have a clue. It just seemed better than working in a factory for 35 years. In my first year I went to a seminar and was stunned when the speaker said this generation will be retired longer than they worked. He was referring to great pension plans that unions had won for their workers. Changed my whole outlook and the way I looked at clients.
My observation was kids wanted what their parents had right now. I'm sure many of you didn't start out with your dream home, but worked your way up as I did. Easy credit has made it too easy for people to get in way over their heads. Many a night I'd come home and tell my wife the people I just talked to are in such trouble if either one of them misses a paycheck or two.
Perhaps this will be a come to Jesus moment for people regarding skating so close to the edge of destruction. I'm not sure it will be. People who have been caught in this cycle really don't have a way to live like they want and save money. I tried to tell people pay yourself first. Some listened some didn't, some said yeah as soon as fill in the blank I'll do that. Your mileage may vary.
Yavin4
(35,432 posts)There will always be UE or food stamps or welfare if I need it, and that's not true. The social safety nets have been shredded on a federal and state level.
No one is coming to save you.
gibraltar72
(7,501 posts)Not many of the clients I worked with thought welfare would bail them out. Most thought their jobs would always be there. They had no patience, wanted it all now.
See my response to Poindexter and get ready for an "OK Boomer" response also.
Most of us when we got married lived in a tiny apartment and saved every nickel we could for a 20% down payment on a fixer upper house. If we did move up to something nicer, it wasn't for many years or until the kids were on their own.
gibraltar72
(7,501 posts)madville
(7,408 posts)I have a military pension, will draw a federal civil service pension, have my federal TSP plan and a separate Roth IRA. And also social security at 62.5 at the earliest depending if I feel like still working full time in some form.
If I live until say 87, thats 30 years of retirement. I figure, depending on how I draw out of the TSP and Roth, Ill be bringing in about 80k a year in todays dollars in retirement. So thats easily 2.5 million just to fund my retirement, crazy to think about it that way since I have always lived very cheap, with little to no debt and modestly.
PoindexterOglethorpe
(25,839 posts)Not that more than half of all workers were ever covered by any sort of pension in the first place.
Which is something else I get impatient with: the idea that an earlier generation had great pensions, our dads all worked 30 or so years at the same place and retired with pension and perhaps health benefits. In reality, not that many people worked long enough at the same place to collect a pension. And then the pensions disappeared.
I worked 10 years for a company that had a decent pension plan in place. At the end of that ten years I was vested, but I never expected the pension to amount to very much. Good thing, too. Because around the time I would have collected, they declared bankruptcy, everyone's pensions were cut by 2/3. That really hurt those who'd been counting on it all along.
It is true that easy credit, especially credit cards, has made it frighteningly easy for people to "buy" everything they want, without thinking very hard about how they will pay for it.
Cars are the other thing people go into needless debt over. It's so incredibly stupid to buy a car and be owing more than it's worth. Or to take it as totally normal that you always have a car payment.
Blue_true
(31,261 posts)I went to college after you and even for me, it didn't cost that much. For my five years of college, I paid for the first four years total about 70% of what a student today pay for 1 year. The fifth year was costlier, but I had stipends.
It ticks me off when people talk about their good old days and try to compare it item by item to what kids face today. The world today is much tougher, computers, robots and AI have eliminated a lot of the really good paying jobs from yesteryear, hell, when I was about to finish high school I had a TA that was just about to finish teacher college. What did she do? One day she announced that she was taking a job as a bank teller because it paid more than teaching. Bank teller jobs have been decimated by AI, as have medical transcription jobs, real estate service jobs, ect. Kids today come out of school with a lot of debt and often take jobs that barely pay more than minimum wage, those people face a challenge even having a free and clear $50 to save each month.
Voltaire2
(12,995 posts)For the vast majority of these people this is not because they just feel like spending every dollar they earn, it is because they don't earn enough dollars to save any.
They aren't paid enough. It doesn't matter if, like 401ks, the savings are pre-tax, they they have no income to set aside..
If the government collapses your savings are going to be shit anyway unless you have put your savings into commodities that can be bartered.
Oh and all of these plans , IRAs, 401Ks, SEPs, they are all just ways to funnel a steady cash flow to wall street, take corporations and governments off the hook to provide defiend benefit pensions to employees, and put all of the responsibility on the individuals.
So like, no thanks, we don't need yet another crappy individual pre-tax savings plan.
Yavin4
(35,432 posts)Because another major collapse will happen in the near future. That is if we survive this one.
Voltaire2
(12,995 posts)False dichotomy much?
Yavin4
(35,432 posts)plan ahead for the next collapse or a dystopian nightmare.
Voltaire2
(12,995 posts)for the upper middle class to take advantage of. The other 40-60% of the work force, I guess they just get to have the nightmare. Doesn't seem like much of a plan.
obamanut2012
(26,064 posts)Autumn
(45,042 posts)Shermann
(7,411 posts)First, it doesn't really define what "living paycheck to paycheck" means.
The survey also claims only 25% do not set aside any savings each month. How can you set aside savings each month but also be living paycheck to paycheck?
What if you don't set aside any savings but blow all your income on discretionary spending? Is that considered living paycheck to paycheck as well?
Also is this survey limited to CareerBuilder visitors? That would be skewed towards a demographic actively looking for work.
This survey has been cited many times but seems to lack any rigor.
Marrah_Goodman
(1,586 posts)I don't have 2 nickels to rub together after the first week of the month.
Blue_true
(31,261 posts)when you need it? What's to prevent them from keeping your money, since there is nothing to prevent them from doing it?