We Had To Tax The Retirement Plan In Order To Save It

Duncan (He can't be Sirius) Black, the econ degree holder formerly known as Atrios, explains in USA Today that baby boomers face a retirement crisis which can only be solved by raising both taxes and Social Security benefits. Really:

Recent and near-retirees, the first major cohort of the 401(k) era, do not have nearly enough in retirement savings to even come close to maintaining their current lifestyles.

We need an across the board increase in Social Security retirement benefits of 20% or more. We need it to happen right now, even if that means raising taxes on high incomes or removing the salary cap in Social Security taxes.

People want need (!) a more generous retirement plan and they want need someone else to pay for it! Hmm, one might have thought that means-testing of Social Security benefits would tie in here somewhere, if Social Security is really going to be re-imagined as a full welfare program for the elderly. And I assume that even though the cap on taxable earning may be removed, the cap on benefits will not be.

Fuzzy math is a key part of the argument:

According to the Center for Retirement Research at Boston College, the median household retirement account balance in 2010 for workers between the ages of 55-64 was just $120,000. For people expecting to retire at around age 65, and to live for another 15 years or more, this will provide for only a trivial supplement to Social Security benefits.

Hmm. Assuming a zero real return, $150,000 spent evenly over fifteen years is $8,000 per year. And what are Social Security benefits?

And that's for people who actually have a retirement account of some kind. A third of households do not. For these people, their sole retirement income, aside from potential aid from friends and family, comes from Social Security, for which the current average monthly benefit is $1,230.

Well, $1,230 per month is about $14,760 per year. Is $8,000 really a "trivial" supplement to that amount? Would $8,000 be a "trivial" supplement to double that amount, i.e., $30,000 per year? I encourage folks who think so to make a trivial donation here.

Moving the goalposts on the objective of Social Security is also part of the 'logic':

If the consensus is that we need policies in place to ensure that the vast majority of people have at least a comfortable retirement, then we need to adjust our current failing policies. Expecting people to save sufficiently for their retirement, even if those savings are subsidized by our tax code, is unrealistic.

"At least a comfortable retirement"? The long-stated goal of Social Security is to keep the elderly out of poverty, not necessarily living in comfort. Let's flash back to 1939:

"It is impossible under any social insurance system to provide ideal security for every individual. The practical objective is to pay benefits that provide a minimum degree of social security—as a basis upon which the worker, through his own efforts, will have a better chance to provide adequately for his individual security." -- From the Report of the Social Security Board recommending the changes which were embodied in the 1939 Amendments.

In other words, if people want comfort, they can get it on their own dime.

Finally, we are treated to a long exposition explaining that college grads and advanced degree holders are burdened with debt, so how can anyone be expected to save for their own retirement? The suggested answer is to raise taxes on someone else.

One might think that focusing on policies that promoted growth and employment would be the way to secure our future, but evidently, taxing the rich is the only way forward. In Atrios' world.

To be fair, this is a dreadful time to be retiring, with both housing prices and 401(k)s wiped out by the Great Recession. But raising Social Security benefits and taxes indiscriminately and forever is an overreaction, and a misdirected one.

Comments

[Rob Crawford]

do not have nearly enough in retirement savings to even come close to maintaining their current lifestyles

Well, there's you're problem. You're expecting to have no net income and maintain the same lifestyle.

How about living a bit more frugally? Or figuring out a way to bring in some income?

[Rob Crawford]

And, as another question -- WTF is anyone doing paying attention to hAtrios?

[Old Lurker]

Two worlds, Rob, two worlds.

[lyle]

Wasn't there some bint proposing government confiscation of 401(k)s a few years back? I belive she testified before the congresscritters. OK, she might not have used the word "confiscate," but that was the, er...thrust, I believe. Don't worry, though, it would be for the glorious collective good, comrades.

[Steve Schubart]

You know, I've been accustomed to a certain level of lifestyle myself and lowering mine to pay for someone else's doesn't sound, like, fair.

[LBJAY02]

SS is a defined benefit plan. How's that working out?

[daddy]

Screw Duck penis envy. Now I want to be a Great White Shark---they have 2 johnsons, each a foot and a half long!

Page 54 ...In fact this is one of the best ways to gauge maturity in sharks. If, for example, you wanted to determine the age of a male Great White Shark (Carcharodon carcharias), and you happen to be clinically insane, you could swim up to one and cop a feel of his claspers to see how stiff they are; maturity occurs...when the claspers have reached a size between 1.3 and 1.5 feet...

Plus, unlike ducks, they're into the Missionary position!

By maturity the claspers are capable of full rotation from their bast to face forwards, allowing the fish to mate face to face with its partner.

And don't get me started on the Holocephalon variety of Shark. ...Holocephans have the accessary sexual organ called the tentaculum on the heads of males.

I wonder if Atrios is a Holocephalan?

Anyhow, can't wait till I get to Chapter Seven: "Doing the Dirty in the Devonian", but I'm off to work now. Bye.

[Anthony]

Perhaps we could tax some of those California government employee pensions to help out the 401(k)-impaired.

[ThomasD]

Yes, this is nothing more than a continuation of the effort to turn people off from owning their own destiny and trading in their 401-k securities in exchange for government promised 'security.'

[Sanity Inspector]

I am eternally grateful to my parents for setting me up as a child with some DRIP investments. I don't know how I managed to keep my hands off of them when I was younger, but they will be a godsend if Social Security goes TU by the time I retire.

[M Subroto]

Oh ye of little faith! The Grand Poobah Obama has it all figured out. Why do you doubt the fearless leader?

Its all based on the analysis that old people get sick, get sicker quicker and recover very very slowly. As soon as Obamacare is implemented the death panels will take over and make the decision for us painlessly.

Hey you, you have $120K in your IRA, that means you only get to live 4.5 years. After that you are a drain on the state and this here death panel says so.

Hey, you don't have an IRA. Well see how long you can stay alive and if you get sick well that's why we have death panels.

And how do we pay for all of this? Well we tax your IRA and cut Medicare because we get to decide how long you live.

[Jim Eagle]

daddy,

The Great White's package of junk is nothing compared to the Green or Leatherback Sea Turtles we have in Florida.

How's 30cm's sound to you for a little bity guy compared to a Great White.

The Terrifying Sex Organs of Male Turtles

[SteveAR]

I see two takeaways with this.

1) Black (Atrios) is near retirement age and his investment strategy is a failure and he's nearly out of money.

or

2) Black doesn't pay into Social Security so the increases he calls for don't affect him.

Remember, Democrats like Black are the greediest scum.

[Rick Ballard]

*
TM,

I noted Black engaged in an even more obvious bit of sleight of hand in the quoted paragraph

And that's for people who actually have a retirement account of some kind. A third of households do not. For these people, their sole retirement income, aside from potential aid from friends and family, comes from Social Security, for which the current average monthly benefit is $1,230.

Black is drawing the $1,230 number from the SSA Retired Worker (singular> table rather than for the much more appropriate Benefits Paid by Type of Family table. $8,000 is still non-trivial when added to the $24,660 average income for a husband and wife household but, more importantly, the combined average of $32,660 is 235% of the current poverty threshold for a retired couple.

He's really not a very good liar, even for a prog working with numbers.

*Second attempt - Typhuspad ate the first.

[Kevin M]

States should put a windfall tax on public employee pensions over a certain amount and funnel the proceeds back into their retirement systems.

Why not experiment here, first?

[Ignatz Ratzkywatzky]

--Expecting people to save sufficiently for their retirement, even if those savings are subsidized by our tax code, is unrealistic.--

I wonder if part of the problem might be that people have a hard time saving sufficiently when 15% of their income is devoured by a program which returns them, on average, a mere $1200 per month.

[indianink]

naw, that can't be it.......

[sbwaters]

Daddy, who chooses your reading material?

[AliceH]

The $120K figure is a) from 2010 and b) 401K/IRA dollars only. It does not include other retirement income sources such as Pensions or Private savings. It does not include assets such as homes, businesses, etc. c) it is the median between two age cohorts that have (presumably) widely different savings averages.

Page 9 of the report has a nice chart showing (among other things) the 2010 median 401K/IRA savings of the 45-54 age group is $70K, and that of the 35-44 age group is $35K. Suggests to me that the 64yos probably have at least $200K. Indeed a table on page 2 shows a asset breakout that I cannot quite reconcile back to that $120K number at all; it comes up with $582,100 including $287,200 Social security.

Elsewhere, the report notes that the median figure for 2007 was $118K.

[Dantes]

Great deal for us old farts, you young Obama voting fools. You work, make less money, and let us retirees take cruises to the French Riviera on your dime!

I like this Obamanomics. Free beer...for us social security types anyway.

[Chubby]

((I am eternally grateful to my parents for setting me up as a child with some DRIP investments.
))

DRIPS are the greatest long term investment strategy there is, imo. They work like compound interest; the number of shares increases even as the dividend rates increase annually or sometimes more than annually. I didn't start DRIPS as a child, but they can do pheonomenally well in a relatively short period of time. Even five years can add a large number of new shares and increase dividends substantially.

[Gus]

Public school teacher retire at 55 in Wisconsin. They RIOTED last year because they were asked to contribute less than 6% of their retirement pay.

Is this fair? Is this how we ALL should be paid?

Discuss.

[Jim Eagle]

SteveAR (at 1:06),

You forgot:

3. He doesn't know what he is talking about, and

4. He is a prog idiot.

[AliceH]

I seem to be an outlier on this. I think it's a FANTASTIC time to retire. :-)

[Beasts of England]

Retirement? What's that?

[MarkO]

But, really, what difference does anything make?

[NK]

TomM-- snarky post, but you were too polite to this lying fraud "Atrios". I did like the sly AmeriCares plug, though. Congrats on the InstaLanche.

[anonymouse]

I randomly met Black a few years back in person, and I'm not kidding when I say I'm surprised he hasn't killed himself by now. He's empty inside, all he has is his hate for anyone who isn't absolutely lock step and focused on his politics. He's a very disturbed man.

[D-man]

Well said, Tom.

[Gus]

Anonymous. He did kill himself. He's dead to me.

[AliceH]

I suppose it's also worth mentioning that if you were 64 in 2010 (the year of the stats), you have 2 more years - not 1 - before reaching Social Security "full retirement".

[Jane: Mock the Media]

Daddy,

What do they do with the 2nd Johnson?

[lyle]

He's empty inside, all he has is his hate for anyone who isn't absolutely lock step and focused on his politics.

Hmm...describes the bulk of the Democrat party pretty well, I'd say.

[AliceH]

*had* not *have*

[Frau Libby Krimi]

Left-over from previous thread.

Libby and his quaking aspen leaves reference: After reading his only work of fiction-- Apprentice which is set in 1903 Japan--it seemed to me to be an expression of his artistic side that he chose to display in his communication with Miller.

[Frau Libby Krimi]

Nobody ever told me I should be able to live on my SS which is a good thing since all I got was my lousy CA teacher's pension. We were not allowed to pay into *both* systems. My husband was. I am a kept, but happy, Frau who also worked to save and invest for these gold-plated years.

Who keeps perpetuating Why keep perpetuating the SS=retirement pension carp?
/rhetorical question

[Bruce]

For a long time, SS was sold as a retirement plan with a small welfare portion. And, this let it be sold, and made it fairly safe from real pilfering. Everyone had a piece of it, so it was safe.

Now, though, there seems to be a move afoot to move it more towards welfare, where a lot of people get benefits that they really haven't "earned". That is good for the left, because they have more people invested as "takers" in their welfare state, but bad because when the ax finally falls, as it must, on federal spending, then Social Security will be far more vulnerable.

[AliceH]

--these gold-plated years--

Love it!

[Old Lurker]

Lyle that lady did indeed testify about the seizure of private 401K and IRA type funds that were unfairly accumulated by rich people who were able to avoid taxes on that money at much higher rates than can lower earning folks. The idea is very far from dead in DC and more than a few Dems have noted that there are trillions of dollars there for the taking. I recall even Hillary Clinton looked favorably on the concept, so you know what Obama must think about it.

Personally I have no doubt this crowd will go in that direction if they are allowed to stay on the path they are on.

Since my wife and are old enough, we are drawing down our accounts as fast as possible since those are the only funds the government knows about officially and gets reminded every year where they are deposited. So we spend those dollars first and bank the cash flow we would have spent first but for this concern.

[Beasts of England]

Jane@2:04 - Foreplay. Pun intended...

[Beasts of England]

O/T: My first visit to JOM was in re: Trayvon Martin, and now the Martin family lawyer has lawyered-up. Looking like affidavit DeeDee is a Fig Newton of Crump's hallucination. It's getting exciting folks!

[Rob Crawford]

What do they do with the 2nd Johnson?

From what I understand, it rides bikes and occasionally plays in the background of jazz albums.

[Frau Libby Krimi]

Be still my heart, Beasts.
JOM will light up like Chernobyl.

[Rob Crawford]

Looking like affidavit DeeDee is a Fig Newton of Crump's hallucination.

Pardon? Link?

[Old Lurker]

Translation???

[Thomas Collins]

Reading from the bottom of this thread, I notice references to a DeeDee, Fig Newton and Johnsons. Dare I continue to read up this thread? :-))

[marlene]

My fellow New Englanders---hope you are preparing for the big snowstorm! Because it usually doesn't snow in February in New England. : )

[narciso]

Think this LUN is part of it,

[Caroljeanne11ty]

So, I bust my ass saving because I got a late start, at 64 got things looking pretty good (if I work to 70), and now they want to screw it all up.

and how can they tell how much people really have saved...I have 401k and IRA both.

[Thomas Collins]

Who knew, marlene? Winter snow. Must be caused by . . . GLOBAL WARMING!

[narciso]

It actually begins over here, in the LUN. the other link is just the topping on the pie

[Beasts of England]

Figment of Crump's imagination. (sorry for being corny)

Discussion found at the Conservative Treehouse.

[duncanator]

My 401k would be much bigger if I could deposit that 15% the government takes from each paycheck for Social Security.

[Old Lurker]

Thanks Narc...I read as far into that trash to where they said they spoke for 400 minutes on the day he got shot?

[narciso]

I heard that early on, OL, it's a wonder how big a scam this is, and how obvious it was for anyone who really examined it,

[Old Lurker]

spoke on the phone...

[Squid]

I love this little throwaway phrase: "...aside from potential aid from friends and family..."

Maybe these poor impoverished souls should look toward forcing their own children to support them, before they come stealing from mine. Just a thought.

[Melinda Romanoff]

OL-

The new twist is Cordray saying just last Friday that private retirement accounts may not have been properly invested or advised upon and may need government supervision instead.

For their own good.

They're just looking for the right language to make it work.

[narciso]

Now, you're not being helpful, Chuck;

http://www.weeklystandard.com/blogs/hagel-refuses-detail-foreign-funders_700336.html?nopager=1

[Old Lurker]

Right you are Mel. They are just test driving the terminology.

[TXW]

I think you meant to say "$120,000 spent evenly over fifteen years is $8,000 per year" (not $150,000)

[anonamom]

But O'Meara still doesn't have the cell phone records, and the judge said the trial is going ahead as scheduled in June, denying his request for a delay.
Gee, maybe there aren't any cell phone records to be had?????

[Old Lurker]

That's one heck of a cell phone that has battery life for a 400 minute call. And one hell of a usage plan that makes that affordable.

Oh wait. Maybe it was an Obamaphone.

[Beasts of England]

Obamaphones have solar battery chargers, so the 400 minutes is doable.

[lyle]

The new twist is Cordray saying just last Friday that private retirement accounts may not have been properly invested or advised upon and may need government supervision instead.

He of illegal appointment infamy?

But anyhoo, how is this fundamentally different from this old dictum? To wit:

From each according to his ability, to each according to his needs!

[narciso]

Yes, but the plans are only good for 200 minutes, they have Jack Bauer's battery though.

[henry]

private retirement accounts may not have been properly invested or advised upon and may need government supervision instead

right, like the government managed govt worker retirement plans with no money in them and massive losses from investing in Fisker Automotive bonds.

[Old Lurker]

Well the government could use the same team that managed the Indian's money, right?

[Jack is Back! (On his iPad)]

Both of these two recent subjects: Pensions and Zimmerman, only show how the State is all powerful and disregarding of anythig and anyone who wants to challenge it. DOOM.

[derwill]

Wouldn't the government's seizing of 401Ks crash the stock market?

Unexpectedly, of course.

[NK]

TC/OL-- likes like an old fashioned blizzard to hit Central/Eastern NE friday-saturday. Get your prep started!

[narciso]

Well the media set the template, JiB, and then
the government, including Bondi, who really can't come across any more clueless can she?

[Rob Crawford]

Wouldn't the government's seizing of 401Ks crash the stock market?

Dunno. Gun, ammo, rope, and tar companies would probably prop it up for a while.

[NK]

"looks" like...

[Jack is Back! (On his iPad)]

narciso,

Yeah what a disappointment Scott, Bondi, et.al. have been. Even his fool's teacher's raises is a head scrather.

[cathyf]

Obamaphones have solar battery chargers, so the 400 minutes is doable.

Cool how that works in the dark in the rain!

[Old Lurker]

Darn. Rob stole m y line at 5:13 and Cathy at 5:19...

[Old Lurker]

Thanks NK...but I am in DC this week so will not be shoveling snow on Nantucket. TC and Jane might need us though.

[Rob Crawford]

Folks, in honor of the guilty plea of the left's latest politically-inspired would-be murderer, have Chik-Fil-A tonight.

[lyle]

Cool how that works in the dark in the rain!

Silly. These solar batteries run on the sun-like emanations of their omniscient god-king. Neither the dark of night nor the penubmbra of the clouds shall block his goodness.

[Janet]

This at Weasel Zippers - Congressional Black Caucus Asks Obama To Appoint Dem Rep. James Clyburn Transportation Secretary…

Just a reminder that on March 20, 2010 Reps. James Clyburn along with Andre Carson, John Lewis, Emanuel Cleaver & McClatchy News slandered American citizens that were protesting the healthcare bill.

[NK]

Here in one CHART is the political fight for the rest of the Bam years-- ZeroHedge is kind enough to give us a Fed Gov't SPENDING chart-- NOTE the Chart is by QUARTER-- there you are ladies and gents $3.4TRILLION Dollars for FY13, $1.7T approx for entitlement transfer payments 50% of all spending--- $600+B for defense, $600+B for interest on the debt, $500B for the rest. $600B/ year has to be cut to bring the budget into 'rough' balance. Suggestions? http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/01/Spending%20Q1%20TBAC.jpg

[Dave (in MA)]

Acc. to Breitbart, the high yeller Hispanic is a supporter of El Douche.

[Old Lurker]

NK is it not double the $600B to balance? I know the Dems try to exclude interest from their definition of Balanced but that makes no sense to me.

Anyway, easy peasy. Make that first $1.7T more like $500B.

Done.

[lyle]

Acc. to Breitbart, the high yeller Hispanic is a supporter of El Douche

Zimmerman?

[Porchlight]

Yes, Breitbart has a story today -
Zimmerman's brother is saying that Zimmerman is an Obama supporter. Or that he was one back in 2008. It's not completley clear, but the Obama support seems to be only described in the past tense.

http://www.breitbart.com/Big-Government/2013/02/06/Zimmerman-brother-voted-Obama

[Thomas Collins]

"Get your prep started!"

I'm on it, NK. The shovels are out, and the supplies of scotch and red wine have been checked!

[Dave (in MA)]

Good point. "was a supporter of the very president who would later slander him by innuendo" There's no indication what his thoughts were during the last election.

[narciso]

probably he was a Hispanic democrat, in the I-4 corridor, no big surprise there, then again his protests against the previous police administration, didn't help him either,

[narciso]

My fishwrap has whole new Vizziniesque terms for blackmail, I know it's AP;

http://www.miamiherald.com/2013/02/06/3220623/obama-seeks-to-reset-relationship.html

[centralcal]

just got released from jury duty and saw this on Twitter (maybe already discussed on this thread, which I haven't yet read0:

Greta Van Susteren ‏@gretawire

just read in Politico Sen Scott Brown may be coming to Fox News Channel as a contributor ...what do you think about that? tweet

[Rob Crawford]

Narciso -- I wonder if they're going to get that old "Reset" button out again?

[narciso]

Yes, I kind of figured she was bad news;

http://dailycaller.com/2013/02/06/obamas-pick-to-head-dept-of-interior-gets-the-nod-from-environmentalists/

[Jack is Back! (On his iPad)]

I use Google Maps myself but then I'm not a deranged left-wing gun nut with a hard one for Chick-fil-a.

Our friends at SPLC.

LUN

[narciso]

It seems he was a bit mixed up, here,

http://freebeacon.com/the-world-according-to-rand/

which solution to AQ would he have preferred after September 11th

[centralcal]

Thinking about Greta's tweet - just who would Scott Brown represent as a FNC pundit du jour?

Not a conservative righty. Not a lefty loony liberal. Just a mediocre squish who played the muddle middle. Can there be much demand for his opinion on anything?

[lyle]

Can there be much demand for his opinion on anything?

Good question. Are centerfolds typically sought after for their...opinions?

[Chubby]

Flipping the bird to the judge

You Tube @ LUN

[Jane - Mock the Media!]

Scott is a nice guy. I can vouch for that. His wife is also in TV so he's got some experience - or at least knows what it entails. An offer like that may explain why he decided not to run.

Anyone think Brennan will get derailed?

[narciso]

Et Tu, Sam;

http://news.yahoo.com/u-high-court-stays-obama-recess-appointment-issue-230951145.html