Retirement Account

Have any of ya'll heard about this? I don't think it will ever happen, but....

Dems Target Private Retirement Accounts
Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs

By Karen McMahan

November 04, 2008

RALEIGH — Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts — including 401(k)s and IRAs — and convert them to accounts managed by the Social Security Administration.

Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.

The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.

Rep. George Miller, D-Calif., chairman of the House Committee on Education and Labor, in prepared remarks for the hearing on “The Impact of the Financial Crisis on Workers’ Retirement Security,” blamed Wall Street for the financial crisis and said his committee will “strengthen and protect Americans’ 401(k)s, pensions, and other retirement plans” and the “Democratic Congress will continue to conduct this much-needed oversight on behalf of the American people.”

Currently, 401(k) plans allow Americans to invest pretax money and their employers match up to a defined percentage, which not only increases workers’ retirement savings but also reduces their annual income tax. The balances are fully inheritable, subject to income tax, meaning workers pass on their wealth to their heirs, unlike Social Security. Even when they leave an employer and go to one that doesn’t offer a 401(k) or pension, workers can transfer their balances to a qualified IRA.

Boo!

Did I scare ya?

Boo? Is the Cellar haunted??

After the recent market changes, I think my IRA is worth roughly $37.29. I'm thinking about paying the penalty and taking it out. I wouldn't want the Dems to get hold of it. Hmmm, I might invest in Iraqi Dinars. They seem to have a budget surplus

I don't know what to think anymore.

I want to invest privately but my mattress seems safer these days.

Sarge, what news source was this from

So I didn't scare ya Sarge?

UT - you did! The sky is falling. The sky is falling

Okay, and now the truth of the matter.

After the credit crunch, a House subcommittee held a hearing on how it might be possible to make retirement accounts safer.

They invited this academia bitch (from the "New School for Social Research") because she wrote a book called When I'm Sixty Four: The Plot against Pensions and the Plan to Save Them.

When it turned out her Plan was, not to confiscate them, but to replace them with a vomitorious new government-backed 3%-earning retirement plan, I'm sure most members of the subcommittee gave her the pleasant 20 minutes or whatever they allot at such things, and that was that. No indication that they then proceeded to hold even more subcommittee meetings with her to fine-tune the details, or draft a Bill or whatever it is the members would do at that point.

Political bloggers, looking for red meat to offer their hungry minions, presented that information with the very worst possible narrative ("Democrats are coming to confiscate your life savings!").

This shitty little writer -- working for not a prominent daily newspaper but a monthly political journal -- read the blogs, read other shitty writers who copped the blogs, and proceeded to scare the living shit out of her readers.

Undertoad;501863 wrote:
They invited this academia bitch (from the "New School for [size=6]Social[/size] Research")

[size=6]SEE! SEE!!!! SHE'S A SOCIALIST!!!!! OMFG!!!1!! THEY LET HER IN THE CAPITOL!!!!111!!![/size]

Undertoad;501863 wrote:
This shitty little writer -- working for not a prominent daily newspaper but a monthly political journal

Sponsored by the John Locke Institute.

*smiles* this thread shows the fundamental cultural and political difference between myself and most Americans. I read that article and was reassured on behalf of workers whose pensions have reduced due to the financial crisis, that their future income was to be secured by taking into government hands and away from the private sector which is rapidly shrinking their worth. lol. Just talking about instinctive reactions.

*smiles* Her little plan was to earn 3% annually... how it earns, we are not told. The market earns people 7% on average, and more than 3% even if they buy at the top and sell at the bottom, and how it earns is well understood.

lol. Not by me. I have just heard a bunch of scary sounding stories about people's pensions becoming seriously devalued recently. What I don't know, is whether this is like with house values and shares, in that it's only really going to affect people reaching retirement and seeking to live on their investments right now, or if this is value that is wiped off the pensions witbout likelihood of being returned. I have no clue on this stuff. I was talking about my gut response when i first read it. It is interesting to me that I instantly saw the positive in government taking control of it, as this is probably a very different gut response to yours :P

As people get closer to retirement, they are advised to move money out of the stock market and into safer investments. Most follow this advice, but some don't. They are the ones who always seem to make the news, having lost all their savings.

Well, I admit I might be better off it the government took over my IRA. I had moved everything into a World Growth Fund (aggressive) and for a few years I was getting double digit returns. But, we all know what happened to the foreign markets. I'm letting it ride and should recoup my losses in 5 to 10 years.

A quickie then. Figure that the average person spends 45 years working and 15 years in retirement. The average retirement fund money is in the market for 30 years.

Pick any 30 years on this chart. This is the Dow Jones industrial average, a set of average stocks that is often tracked. We are now at the bottom of a very volatile market, so hell, pick the last 30 years if you like. This is the average retirement investment. If people cash out now, completely, they are only going to make a small fortune and not a huge one. If they can hold off cashing out big for 4-5 years it will be a huge fortune again.

This chart does not even include the results of reinvestment of earnings, compounding interest or making smarter than average investments. My momma, for example, took all her retirement funds out of the market in 2007, because she is a brilliant investor.

Undertoad;502163 wrote:
This chart does not even include the results of reinvestment of earnings, compounding interest or making smarter than average investments.

Chart also would be far more useful to the lurker if its verticle axis was logrithmic - not linear.

Undertoad;502141 wrote:
*smiles* Her little plan was to earn 3% annually... how it earns, we are not told. The market earns people 7% on average, and more than 3% even if they buy at the top and sell at the bottom, and how it earns is well understood.

Inflation at 5% would pretty much ensure that her plan would fail. Either way, they are going to find a way to come after the earnings and savings of others to fund the multitude of programs and promises made in the last 6 months.

DanaC;502121 wrote:
*smiles* this thread shows the fundamental cultural and political difference between myself and most Americans. I read that article and was reassured on behalf of workers whose pensions have reduced due to the financial crisis, that their future income was to be secured by taking into government hands and away from the private sector which is rapidly shrinking their worth. lol. Just talking about instinctive reactions.

Future income in insured but not panicing and leaving your money right where it is until the market recovers. That is unless you are investing in individual stocks and bonds, then you better take hard look at where you money is and move it before some of these places go belly up. GMAC bond comes to mind.

Undertoad;502163 wrote:
A quickie then. Figure that the average person spends 45 years working and 15 years in retirement. The average retirement fund money is in the market for 30 years.

I don't know anybody that's average. :headshake

When creating retirement plans I need to plan for at least a 30 year retirement or I haven't done my job. Unless you can tell me with certainty what day you plan on dying.

All I can say is that I am glad I am not near retirement and that the market is so low that it allows me to buy some 40% more stocks than I have in the past.