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While all these suggestions sound wonderful, I'm not sure they'd solve the retirement problem. People tend to have a spending problem. They often spend far more than they make, and never bother planning for the future. Some can't, but most simply claim they can't. Fact is, they don't really want too. Even those that make 100k tend to do this, possibly to an even greater extent, and will end up no better off in the end than the person struggling to get by on 45k. I don't think a government can solve this simply because of the number of people living longer they'd have to tend too. The answer is education, once again, and though you can lead a horse to water, you can't make them drink it. There are finite resources and an increasing number of people that are becoming reliant on those resources, leaving less for everyone else. It's a complex problem, and I don't think a few simple changes in the tax code is going to fix it. Science is awesome, but it's also what caused the problem in the first place. People are living so long, the resources to care for them have been spread so thin they've moved into non-existence.

QUOTE (StrangeSox @ Apr 25, 2013 -> 09:44 AM) No, employers would drop 401k matching, but employees would be getting increased SS benefits. The impact on the employers should net out to zero or maybe even positive if they're not administering employee retirement plans in the long run (same is true but even more so for health care!) Wait, wait, wait. Are you suggesting the burden be placed on employers? And you think they'd actually just accept/swallow these losses and be ok with it? Because...well...I don't think they'd be ok with it, and they'd pass the costs onto their employees, or the consumers.

QUOTE (lostfan @ Apr 25, 2013 -> 09:37 AM) You get service with T-Mobile, it's just the kind of service you'd have gotten in 2007. So, no service then?

QUOTE (StrangeSox @ Apr 25, 2013 -> 09:35 AM) I don't see what economic impact would come from eliminating tax subsidies for businesses for 401k's. If they lost that subsidy, they'd most likely just stop offering 401k contributions. Which would be ok from the employee's perspective because they're getting increased benefits elsewhere. Because it would take FAR more than simply eliminating 401k subsidies to do what you're suggesting with SS. I'm betting it wouldn't do much of anything for the people, regardless of it's intention. They'd most likely benefit more off getting a paltry sum from a failed 401k strategy than they would if it was eliminated completely. I'm pretty positive our government wouldn't take that saved subsidy and give it back to the people.

QUOTE (StrangeSox @ Apr 25, 2013 -> 09:30 AM) Well, yeah, it's an article in a magazine, not a 500 report from Brookings Tax Policy Center or something. 401k's and IRA's are one way we subsidize retirement right now, but it primarily benefits the upper-end. Of course it does...this is what happens when every elected official in congress is rich. And they all are.

QUOTE (lostfan @ Apr 25, 2013 -> 09:24 AM) Verizon is, by far, the most difficult to get pricing for because they make you jump through hoops online but they are looking like the winner right now. Galaxy S4 (which comes out today) for $250 plus mail-in rebate. I pay roughly $100 right now, T-Mobile's unlimited talk+data for $59.99 plus a 2 GB data plan for $20, after insurance and various fees that's ~$100. It's $89 with my discount of 10% or whatever it is. Verizon's same plan (2 GB of data) is $60 per month plus whatever their dumb "smartphone line access" fee is of $40 so that bill will be about $106.99 if I'm ordering the same of everything I get on T-Mobile (plus whatever assorted fees they have). I think Verizon also gives a 20% discount for my job too. I always knew T-Mobile had an inferior network to AT&T and Verizon but the prices were always better, but now that the pricing isn't? Nah... what's my incentive to stay? Phone upgrades were part of that, now they're not. I also get a 19% discount from Verizon and AT&T. For me, it's one or the other...the sub-carriers just aren't an answer for me considering how much I find myself on back roads in the middle of no where throughout the summer...cell phone service can be a life saver. Only Verizon and AT&T have the coverage necessary.

QUOTE (StrangeSox @ Apr 25, 2013 -> 09:26 AM) Eliminating the payroll cap gets you half-way there. Even a 50% increase in benefits would make a huge different to the quality of life of millions of seniors to rely primarily on SS income in retirement. tangent Instead, we're talking about cutting the program because deficits, even though it doesn't affect the deficit at all /tangent It primarily benefits six-figure households and inflates home prices since many filers don't have enough deductions to itemize. I made an edit, but basically: That article basically fixes social security by ignoring the economic impacts of the changes it's proposing. Such as removing the business deductions for 401k's, or IRA's, and eliminating mortgage deductions. Right, because none of that would impact the economy whatsoever.

QUOTE (StrangeSox @ Apr 25, 2013 -> 09:18 AM) The linked article I edited in gives an estimate of $650b/year in increased costs and three steps to get there: raising the cap ($377b), eliminating business deductions for 401k's ($126b), and eliminating the mortgage deduction ($100b). That gets us to $603b. It takes a lot of fuzzy math and shifting of deductions to do something that it would never actually do. Also, eliminating the mortgage deduction is economic suicide. That article basically fixes social security by ignoring the economic impacts of the changes it's proposing. Such as removing the business deductions for 401k's, or IRA's, and eliminating mortgage deductions. Right, because none of that would impact the economy whatsoever.

QUOTE (StrangeSox @ Apr 25, 2013 -> 09:11 AM) The payroll tax cap is somewhere around $115k for an individual. Eliminating the tax subsidies for 401k's and IRA's (which weren't originally created to be the main vehicle for a majority of American's retirement income) wouldn't effect current income much now, and would do so very little or not at all for the many households under $50k who don't have 401k's as an option and don't have IRA's on their own. That still wouldn't come near to covering 2X current SS benefits for people. Keep in mind the investment rules for SS are locked into government backed securities, which are low yield, but very very very safe investments. The returns needed to increase benefits by 2X would require much more than a simple tax cap change.

QUOTE (StrangeSox @ Apr 25, 2013 -> 09:00 AM) Double SS benefits by some combo of raising the payroll tax cap and maybe reducing 401k/IRA tax subsidies, ensuring every American who puts in a lifetime of work (since your SS benefits are calculated off of that) receives a modest retirement. ...and who is paying for this? You'd have to increase income tax huge to pay for this, leaving people less money now for more money then. I'm not sure that solved the problem.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:58 AM) In your 8:38 post you literally said "5x what they paid for it," I think that's what ss2k5 is reacting to so strongly. Went back and saw that, I did say that, I did NOT mean to type that. That's incredibly dumb. I apologize for that. Sorry, SS, I see what you were replying too, and I didn't quite understand until it was pointed out to me. I said that in error. While 500% returns would be nice, they're not really a reality in the investing world.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:56 AM) Yeah probably not very accurate to compare people making more than twice the median household income to people making the median or the 50% of people that are making less. Even if we go down the "personal responsibility" narrative path, we still end up at "holy s*** there's an awful lot of people at or near retirement with little or no retirement assets, hope they can survive on $15k/year SS benefits that we also seem desperate to cut!" In engineering, a system that's designed well mechanically and electrically but keeps failing because human factors weren't taken into account is considered a bad system, even if the errors are the 'fault' of the operators and not of the machine itself. So, your suggestion to solve this is what? To complain?

QUOTE (southsider2k5 @ Apr 25, 2013 -> 08:53 AM) Counting your investment as a compounding investment deserves nothing better. I'm walking away from this, because this is just awful. This coming from someone who will argue about just about anything. I never said it quintupled in value without adding new money, but it DID with adding money and by the market value increasing along the way. That's how investments work. You don't simply buy into a 401k once, and hope it increases in value. That's moronic, and it's what you're basically trying to say. You invest in it, over time, and that's how you end up with a retirement fund. You buy shares at lows, you buy shares at highs, etc...and over time, the value rises. What you don't do is buy on the way up, and sell on the way down, which is what most people seem to have done. If they had just left it alone, and kept investing, they'd have it all back and then some. Whether you want to admit this or not is irrelevant. But it's true. I could have panicked and sold my 15,000$ 401k in 2008 and had nothing right now. Or I could have done what I did, stayed the course, continued investing and 5 years later have 5X that value.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:52 AM) that's not "5X what they paid for it," though. It's 5x it's former value. Of couse it's not 5x what they paid for it. That's f***ing retarded.

QUOTE (southsider2k5 @ Apr 25, 2013 -> 08:50 AM) Great comeback, failure.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:47 AM) You seem to be speaking mostly about middle-class-and-up professionals, not the majority of working Americans here who likely don't even have employer-sponsored retirement benefits let alone 5-10% of their weekly paycheck to put aside for 30-40 years from now because they've gotta figure out how to cover the bills coming next week. It's funny, but you know what I've noticed about most people, it doesn't matter what they make, they tend to spend more than that. Friends of mine take home 120k between them, and are up the ceiling in debt, despite having a mortgage that's half of what mine is. Meanwhile, I make far less than them, live on a single income, support a family, and still somehow have money to save! I know, I must be doing some sort of freaky magic, right? Most of that, across the board, is self inflicted. Let's examine what these people are spending their money on and I bet we can solve the problem, even if they're making 50k. There money is going somewhere, and believe me, it's NOT all going to living expenses. I bet a LOT of it's being wasted.

QUOTE (southsider2k5 @ Apr 25, 2013 -> 08:43 AM) 5X's? WTF? The SP bottomed out at about 700. What kind of math are you pushing here? You are also leaving out the inflationary differences over those 15 years, which means your original investment isn't worth what you paid for it anymore. When the S&P dropped by half, shares in S&P index funds also dropped by half, if not more. For example, my fund is selling shares at 102$ right now. Upon the collapse, and all the way back up, I was buying shares at a > 50% discount, then a 40% discount, etc...stockpiling the number. A few years ago I was able to buy 2 shares for what one costs now. Compound that over the years. In 2008, when the market collapsed my 401k was worth about 15k. It's worth almost 80k now. That's > 5X.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:40 AM) If people really can't handle investment swings and 40 year financial predictions, maybe we shouldn't have a retirement system based around the assumption that they can? Perhaps we should have one like Greece, or Spain, or Portugal? There are no easy answers, other than to educate yourself and plan for the future. I know, that's hard. Nobody wants to do that. Meanwhile, spend 2 weeks researching your next smartphone purchase, right? But f*** researching your 401k or retirement. Some people have bad luck, and I get that. People bankrupted by medical bills, or health issues, etc. We aren't talking about that. What we're talking about here is 100% self inflicted. They always have time to research granite countertops, or televisions, or cars they're going to buy, but they never bother researching their financial future. And somehow, that's my fault? Somehow, that's their companies fault? I don't think so. That's their own fault.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:39 AM) Or they'd have lost their job 3 years ago at the age of 60, been pretty much unemployable since then and drained their retirement accounts just paying the bills. They could always develop cancer too. Why all the doomsday scenarios? How come everyone has to lose their job? You do realize far more people are employed than not, right?

QUOTE (southsider2k5 @ Apr 25, 2013 -> 08:36 AM) Sure, and as long as your numbers come up in the lottery, you'll be fine. Right, because investing in the S&P500 is the same as winning the lottery.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:35 AM) I hear there were some great AAA-rated securities they could have moved to! Someone could have been 50 in 2000 and not expecting to retire for 15 years. Their entire pre-2000 S&P Index money will have seen zero growth. Even the automatic "target retirement" funds that are supposed to adjust for you have performed poorly on top of their expensive management fees. And if they had held it and kept investing in it they'd be MORE than fine right now...13 years later. Giving them 2 more years until retirement. And right now, they should be moving out of the S&P and into cash, or bonds. The problem with the market is, people can't handle the swings. What happened with these people is in 2000, when they had 15 years left before retirement, they sold their 401k at it's low, stopped investing in it, and here we are...stagnant growth. Had they simply stayed the course, they'd not only have every dime of their original investment back, but all the compounded investment they added too it over time would be worth 5X what they paid for it along the way -- correcting that, that's not right, my mistake. I meant to say that the value would have increased 5 fold had they stayed the course vs the low point it hit during the crash.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:29 AM) As I said, it's more than just what investment options you picked in your 401(k). Decades of stagnant wages with rising cost-of-living meant people had less and less to set aside for retirement in the first place. Plus a lot of 401(k) plans, if your employer even offers one, have s***ty options and high fees. Most of it is lack of education on how to invest. People simply don't know, because most simply don't care. They believe in what I call the Dr. Evil method of life planning. They put their money into highly elaborate schemes and simply assume "everything's going to work out in their favor". Yet they'll do research for weeks when buying a new f***ing television.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:27 AM) I understand dollar-cost-averaging. But that doesn't help the people who built up the bulk of their wealth in the years prior to 2000--those dollars still haven't seen any growth since then. Most "retirement calculators" give some lifetime-return-average, but I'd like to see scenarios run with actual annual (or even quarterly) return rates along with realistic lifetime contribution inputs. Probably would take a couple of hours to throw together in excel (just make sure you're summing the right cells!) Those people should have been doing what SS stated, and moving into cash or bonds, AKA "money holdings". You don't stay in the stock market when you're nearing retirement. What messed those people up was greed. They saw their portfolios increasing in value, so they stayed in the market DESPITE being near retirement, instead of moving their money into cash or bonds. I'm no fan of cash or bonds for investing purposes, but I am for holding purposes, and when you're set to retire, you want to start holding value, not increasing it with risk.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:21 AM) Well the 401(k)-in-lieu-of-pensions experiment has been a spectacular failure for a majority of people, but there's a lot more to that than just what your mix of investment choices were. Not for those that cared enough about their money to learn about it, it wasn't. The point is, most people don't care, they have no idea what they're purchasing, or why...and they also have no idea of the fees they're paying, or why. Who does this? I simply cannot understand why a person doesn't take a more active approach with their own damn money. I guess what they say is true...a fool and his money are easily parted.

QUOTE (StrangeSox @ Apr 25, 2013 -> 08:19 AM) FWIW we only recently crossed back over the 2000 peak, so that was 12-13 years of essentially no growth for any of that money before taking inflation into account. That's not quite how an investment into the S&P500 works, though. You see, the way it actually works is this: An index fund sells you "shares", as these investments go, over time, just like buying a stock. So, during the peak, and after the peak, I've been buying shares, at high points, at mid points and at low points. So when it crashed, it actually benefited me (and anyone else that didn't panic sell), because now you're buying cheap shares. Now, as the market begins to rise again, and those cheap shares are no longer 12$, they're 50$, then 102$, etc. It compounds their value over time. It's not like you simply stopped investing in it when it crashed in 2000, and waited all the way until now to get back to where you were. If you did that, you should exit the market, because you don't belong here. You can't look at it in line with the actual value of the S&P500. Just because it's back at the same level has nothing to do with how a 401k compounds. As a matter of fact, that's the exact WRONG way to look at investing with a 401k.