Greased by lobbying and campaign cash, tax breaks for retirement savings are one thing Congress agrees on. But they also blow out the deficit and add to income inequality.
Five months before Congress faced a near-catastrophic standoff over the debt ceiling, with Republicans demanding restrictions to food and Medicaid programs to rein in spending, a bill that raised the cost of private retirement savings accounts to $282 billion per year was quietly signed into law.
In this era of deeply divided politics, the 2022 bill known as Secure 2.0 was hailed as a bipartisan success — a victory for average Americans. It had sailed through the House by a whopping 414-5 vote. It followed four other major bills passed between 1996 and 2019 that dramatically expanded taxpayer savings – all equally lauded as bipartisan victories.
But that rare issue that brought a divided Washington together also increased wealth disparities and the federal deficit. And the victory was most strongly applauded by the burgeoning financial services industry, for whom tax-advantaged retirement savings has transformed a $7 trillion retirement market in 1995 to a $38.4 trillion behemoth in 2023.
If you work for a company that has a 401k then you need to sign up for it. If the company has a match percentage then that is the absolute minimum you should contribute. And when you are younger you should set it up as a Roth so you pay taxes on it now.
This isn’t a thing you should do at a certain age. The younger you start the better. The money just comes out of your paycheck, same as taxes.
I do not work for a company that offers such a thing. And I never have.
This is what I’m saying about assumptions.
You can sign up for a Roth IRA then, there’s no need for anything from your employer to get one. As far as I recall there’s no minimum amount of money you need to put in at start.
I don’t know why you’re being down voted. I swear, some people would rather complain than make the smallest effort to help themselves. It’s good advice.
Even very small contributions to a retirement account can make a big difference in old age.
This is really good advice. There’s no minimum, but there is an annual maximum of $7K.
If your employer doesn’t offer a 401k or similar plan, the IRA limits are actually higher.
With what money?
The money your earn for working.
Yes, all the underpaid people having to choose between food and rent just need to bot spend money on either so they can invest it.
Yes, great insight!
You don’t need anyone to invest the money for you. You can get a free account, with free trades, and then just buy index funds.
Even 5 dollars a day can put you close to millionaire over a 40 years.
I love that you assume people who can’t afford both rent and food have 5 bucks a day just laying around.
I responded specifically to the claim that you need to hire a bot to do it for you. I made no assumptions about anything.
While I feel for people who really can’t save anything because their situation is so dire. But that’s not true for plenty of people and this idea that it’s too expensive to save is just an excuse to never do so.
If you’re absolutely scraping by, where you can’t even spare a few bucks a week on something like this, then yeah, maybe you just can’t do it. But if you can spare even a tiny amount, then it’s wise to do that small amount starting as early in life as possible.