Covered at Reason 24/7: Obama Wants To Limit Retirement Accounts

Reason 24/7ReasonComplaining that "some wealthy individuals are able to accumulate many millions of dollars in these accounts," the Obama administration announced a plan to cap the total sum of any individual's retirement accounts at $3 million. Stashing cash beyond that point, the administration insists, builds sums "substantially more than is needed to fund reasonable levels of retirement saving." The administration's argument seems to be based on the use of the word "million," implying that only nasty rich people would want to accumulate such a hoard. But is that true? How much is enough for "reasonable levels of retirement saving."

As it turns out, that's one of the toughest questions to answer for retirement planning. Many advisors suggest you base your retirement savings on something like 70 percent of your pre-retirement income, multiplied by how many years you expect to live. So ... Just when do you plan to kick off? As one article on retirement planning puts it, "basing your retirement needs on income is like basing your fuel needs on the size of your car’s gas tank. What really matters is how far you have to go and what kind of gas mileage you get." Part of that "gas mileage" for retirement planning includes inflation. By the time you retire, will $3 million buy luxury? Or a sandwich?

From Bloomberg Businessweek:

President Barack Obama’s budget proposal would cap multimillion-dollar tax-favored retirement accounts like the one held by Mitt Romney, his Republican rival in 2012.

Obama’s budget plan, to be unveiled April 10, would prohibit taxpayers from accumulating more than $3 million in an individual retirement account. That proposal would generate $9 billion in revenue for the Treasury over the next decade, according to a White House statement released today. ...

Brian Graff, executive director and chief executive officer of the American Society of Pension Professionals and Actuaries, said his group will “vigorously oppose” the idea.

“It is a ‘plan killer,’” he said in an e-mailed statement. “As business owners reach the cap, they will lose their incentive to maintain a plan, and either shut down the plan or greatly reduce benefits. This would leave workers with a greatly diminished plan or without any plan at all.”

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  • NeonCat||

    It's good to know that even though people are living longer and longer, Obama is able to divine that they're not going to need all that money anyway.

    I wonder how the AARP is going to take this?

  • Fatty Bolger||

    DEATH PANELS

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  • GILMORE||

    Seriously. Retirees are a political powerhouse.

    Then again, he'll sell it to them by saying,

    ..."oh, not YOU! I'm going to rape the savings of the *currently employed* in order to fund all the Medicare Candy I give to you! Besides, I need you to be rich to donate to my campaigning! The young? Fuck em! What did they ever do except elect me?"

  • CE||

    He's just doing what Dems always do -- 95 percent of voters never save over 1 million, so 3 million sounds like a lot. If those who do vote against him, it's because they would have anyway.

  • Rights-Minimalist Autocrat||

    My first thought was, "Fuck off, slaver."

    My second was

    I wonder how the AARP is going to take this?
  • rts||

    I was hit with quite a sense of Poe's Law while reading this.

  • Loki||

    SF'd the link.

  • rts||

    Doh!

    Poe's Law

  • NeonCat||

    And all for a (comparatively) measly $9 billion. You'd think that letting people accumulate money and then robbing them via estate taxes would generate more income.

  • GILMORE||

    Don't worry, they're lowering the estate-tax trigger as well. Little here, a little there, and they will bleed the country dry.

  • BakedPenguin||

    Well, Episiarch, you called it. For a prize, you get a passport from Dominica for the low, low price of $50,000.

  • ||

    Thank you, I will accept my prize while I'm being marched off to the camps for being prescient.

  • BakedPenguin||

    They might deign to keep you alive so long as you keep having ideas they like.

  • ||

    We can only hope. Shit, I just watched Brazil again a few weeks ago. Maybe Michael Palin can torture me.

  • LTC(ret) John||

    Would you get a crack at Kim Greist first?

  • Scarcity||

    I might be wrong, but I think you're referring to predictions of balance confiscation/taxation, right?

    This would be a limit on the amount one could save tax-deferred, not a confiscation or limitation of total retirement savings.

    If that's the case, I agree with Epi that it will happen (a balance tax) at some point, but this isn't it.

  • ||

    Basically, I predicted that they were going to find some way to fuck with people's retirement savings. This is fucking with people's retirement savings.

  • Paul.||

    You say "fuck with", Obama says equitably redistribute to the pockets of Federal Employees.

  • BakedPenguin||

    What will happen if someone "accidentally" goes over? What will happen to current plans that are over? They'll probably be "grandfathered in" - for a time. Then some other crisis will occur.

  • ||

    I might be wrong, but I think you're referring to predictions of balance confiscation/taxation, right?

    This would be a limit on the amount one could save tax-deferred, not a confiscation or limitation of total retirement savings.

    If your balance is already over $3M, this is going to end up being balance taxation.

  • Scarcity||

    We'll see how that plays out. I would expect some grandfathering, then balances above $X have to be rolled into a non tax-advantaged plan and income taxes paid. So it will cut into your balance, but it's really more forcing you to pay income taxes earlier than you expected (since you would be taxed when you withdraw the money eventually)

    That said, the real problem is that this attempts to establish the idea, coupled with a concrete dollar amount, that there is a maximum amount of retirement savings that is "proper". Once people come to accept that, balance taxation/confiscation gets a hell of a lot easier.

  • ||

    Not only that, but it will give people that much less of a reason to think they should be saving quite a fucking lot of money for retirement. And that much more reason to rely on Uncle Sam to take care of them instead.

  • Scarcity||

    Excellent point as well. I mentioned the 4% rule of thumb elsewhere. Ask the average person what income they want to live on in retirement. Then estimate how much that will be in future dollars for them (at even 3% inflation prices double every 24 years). Then tell them they need to have TWENTY times that saved up in order to have that income in retirement. Do the multiplication for them since average joe can't, and watch heads explode.

  • Adam330||

    What happens when your balance grows to over $3M through appreciation/dividends, etc.?

  • John||

    Remember during the election when all of his shit head supporters claimed that only crazy racists could think Obama was a socialist?

  • John||

    And don't think for a fucking moment these assholes are not coming after your 401K.

  • JW||

    I fully expect it. Their protestations to contrary are a bit transparent.

  • ||

    Did I not call this? Oh my, yes I did.

  • John||

    Yes you did. And I have never doubted it. You can see the slobber running down their chins at the thought of all that money sitting in people's 401Ks.

  • Scarcity||

    Pretty sure this is not a balance tax. It's a cap on the amount that could be accumulated on a tax-deferred basis.

  • John||

    So what happens to the money above $3 million that is already there? It gets confiscated or the person has to withdraw it and take the huge penalty.

  • Scarcity||

    See my reply above.

  • John||

    They may or may not grandfather. But they certainly mean to get people used to the idea that only so much money is fair.

  • Bingo||

    It's not only the idea that "only so much money is fair"; their basic premise is that you don't own anything, you get to keep what the government allows you.

  • Bingo||

    In other words "we're gonna tax everything above this level" which is actually a balance tax on accounts above a certain amount in all but name.

  • Scarcity||

    It's an acceleration of the tax you were going to pay when you withdrew it.

    When I talk about a balance tax, I mean: "you now owe us 0.5% of the total balance of your account" and most likely followed by "every year".

  • Restoras||

    $20T sitting in retirement savings.

    They will take it. Every penny.

  • WTF||

    I figured you were right, I just didn't think you would be right so soon.

  • Irish||

    I thought you were right, I just didn't imagine it would happen so quickly.

  • Irish||

    I thought you were right, I just didn't imagine it would happen so quickly.

  • ||

    I thought you were right, I just didn't imagine it would happen so rapidly.

  • ||

    I thought you were right, I just didn't imagine it would happen so rapidly.

  • ||

    I thought you were right, I just didn't imagine it would happen so rapidly.

  • LTC(ret) John||

    This speedily, I did not think it would be occurring.

  • LTC(ret) John||

    This speedily, I did not think it would be occurring.

  • LTC(ret) John||

    This speedily, I did not think it would be occurring.

  • LTC(ret) John||

    This speedily, I did not think it would be occurring.

  • Bingo||

    B-b-but you crazy anarchists have such a utopian worldview! How could your crazy insane unreasonable viewpoint possibly reflect the reality of government??????

  • ||

    Yeah, you "called" it like a week after a bunch of us were talking about it, but since that happened in the morning you get all the credit. Whatevs. Maybe you should learn to predict something useful, like what I'm going to have for dinner tonight.

  • ||

    Carbs. Now what do I get beotch?!?

  • ||

    I know you're just trying to get me to not eat carbs by using desire to spite you. That may just work...

  • ||

    Look. Either I'm right, or you don't eat carbs. Which do you want more, to shut me up or to have some pasta?

  • ||

    I already realized you had set up a perfect trap, okay? Just revel in that for a few hours while I agonize over which path to choose.

  • ||

    Have carbs for lunch (not covered by prophecy) and a steak in a brown-butter garlic sauce for dinner with a salad on the side.

  • ||

    Ignore jesse. What you want is the cheapest sheet cake that money can buy, garnished with chocolate-covered Twinkies and jelly donuts.

  • ||

    Shut up, Warty. nicole does what I say. Right nicole?

  • ||

    Shut up, bro. I get to order her around, bro. Don't make me assault you and make her sexually aroused by my violence, bro.

  • ||

    Nobody believes that you assaulting Epi would be of the battery kind.

  • ||

    Don't make me mount you to prove my alpha-ness, brah. Or give you a Gibbs slap. Brah. Unless you want me to.

  • Irish||

    Now I'm getting aroused. Violence really is an aphrodisiac!

  • ||

    All nicole knows is that she was officially declared abandoned property the other night and no one has come to claim her. I think it was Irish who said the first one to bundle me into a van wins.

  • ||

    I figured we'd just kind of share you as we saw fit. I mean, you are a total whore. If one of us took possession of you, well, we'd then be responsible for you, and who wants that? We just want to use you, nicole. Can't you be happy with that?

  • ||

    Yes, yes I can.

  • ||

    In all fairness, she was told that Warty had "been dispatched" so she's probably already made peace with incomprehensible horror.

  • ||

    jesse remembers, and he's right.

  • Restoras||

    Does the type of van matter?

  • ||

    You'll have to ask Irish; girls don't make the rules.

  • Irish||

    The type of van doesn't matter, so long as it's windowless, has some sort of shag carpeting in the back, and has a pair of felt dice hanging from the rearview mirror.

    I don't make the rules.

  • ||

    Mac: (driving the van) Guys, why aren't the brakes working?

    Charlie: Because I cut the brakes! Wild card, bitches! YEE-HAAWWW!

  • SugarFree||

    I think you should eat whatever you want, woman. As long as it dies screaming.

  • ||

    what I'm going to have for dinner tonight

    In my mind's eye I am seeing some combination of fats, carbohydrates and proteins...

  • ||

    Cake?

  • ||

  • ||

    I imagined you were right, but I just didn't think it would happen in such a short time.

  • Tulpa (LAOL-PA)||

    They're not taking your 401K, they're just helping you with investment planning.

  • Paul.||

    Obama's not going to come after your guns, you redneck Rush Limbaugh Ditto Head.

    /2007

  • Tulpa (LAOL-PA)||

    They're only trying to help

    The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.

    “That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in an interview. He didn’t provide additional details.

    The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, according to three people briefed on the CFPB’s deliberations who asked not to be named because the matter is still under discussion.
  • ||

    Fuck their help and fuck them

  • Paul.||

    Slow down now, these are baby boomers, quite possibly the most retarded generation ever.

  • ||

    The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams

    Yes, they want in on the action.

  • LTC(ret) John||

    Hey, "bureau director Richard Cordray"...

    Fuck off, slaver.

  • Fatty Bolger||

    "In today's financial news, the CFPB released a statement today recommending that all retirement account funds be invested in U.S. Treasury securities... sorry, mandating. The CFPB released a statement today mandating that all retirement funds..."

  • CE||

    Someone has to be forced to buy the Treasuries that aren't worth the paper they're printed on, to keep the rates low!

  • db||

    Ho-lee shit. I figured it was coming, but thought it might be years off. This is the first trial balloon lofted by someone at the Presidential level, but mark ye, it will continue.

  • JW||

    That proposal would generate $9 billion in revenue for the Treasury over the next decade, according to a White House statement released today. ...

    What's $9 Billion in gubmint time...a quick dump on the White House toilet?

  • John||

    It will cover Moosha and Soosha's spring break trips for the next three years.

  • Drake||

    How does a cap generate revenue?

  • Scarcity||

    Of course it doesn't in the real world, but since people will pay taxes on more income than was predicted in the "baseline", then VOILA!, revenue.

  • Irish||

    Here's how Obama imagines this playing out:

    1. People are limited in the amount retirement account can hold.
    2. People put less money in retirement account.
    3. ???
    4. WEALTH GETS SPREAD!

    Here's what will actually happen.

    1. People are limited in the amount retirement account can hold.
    2. Rich people find other ways to achieve the same effect, since they're rich and have the best lawyers.
    3. Obama and liberals feel good about themselves while accomplishing nothing.

    Of course, point 3 above pretty much applies to every belief liberals hold.

  • Bingo||

    You forgot

    4. Everyone else gets fucked

  • John||

    I would imagine he thinks they will spend more and that will stimulate the economy. See, these people are just hoarders.

  • Zeb||

    I got the impression that it's all about the tax revenue.

  • tarran||

    I bet that shithead Warren Buffet is behind this. Because investment income within permanent life insurance policies aren't taxed.

  • Michael S. Langston||

    4. When revenues generated less than predicted, call this an "unexpected" result.
    5. Claim those people still saving "significant" amounts without penalty through other tax shelters are "unAmerican" for FOLLOWING the current law.
    6. Use #5 as proof original law isn't strong enough.
    7. Repeat entire process with new law to fix flaws in original.

    Do this often enough, and viola - 80K pages of tax code!

    Now so confusing, politicians no longer need to make arguments about changing it in odd and weird ways.

    This is a feature of course - it's much easier to sell favors through tax code when know one has any clue what's in it.

    Combine this with the spending spree we're on, it's now much easier to pay people off directly. Unlimited funds to be spent at the executive's discretion and a tax code code with corruption built in.

    & yet many will claim the solution to this problem is greater regulation/control.

    What they fail to see is that control is just the other side of the corruption coin.

    One side the carrot - tax favors, breaking bankruptcy laws, funding crap...

    The other side the stick - also in the tax code, but far more punishment mechanisms come from new regulations/legislation and through the courts.

  • Voros McCracken||

    Is it worth asking which of the enumerated powers the Federal government is granted in the constitution that would authorize such a thing?

  • Art Vandelay||

    HAHAHAHAHAHAHAHAHAHAHHAHA

    So you're a statistician AND comic?

  • db||

    It's in the Commerce You, That's Why Clause.

  • John||

    Necessary and Proper bitch!!

  • WTF||

    Commerce Clause, since the courts have held that it basically nullifies the rest of the Constitution.

  • Bingo||

    General welfare, necessary and proper, interstate commerce.

  • Restoras||

    Dude, come on. It's in the Fuck You, That's Why clause, supported by the precedents of Go Ahead And Try To Stop Us.

  • The Late P Brooks||

    sums "substantially more than is needed to fund reasonable levels of retirement saving."

    I seriously would like this motherfucker to tumble down the gangplank of Air Force One and die of a blunt force trauma head injury.

    And no, Biden would not be worse. How the fuck could he be?

  • John||

    No Biden wouldn't be worse. I have never gotten the idea that crazy Joe could be any worse than the village idiot.

  • fish_remote||

    Ah John don't be naive. The people who the thinking for President Hollow Chocolate Bunny are the same people who would do the thinking for President Shotgun Joe Biden...and he would be every bit as earnest when he would say "These plans are substantially overfunded for what is a fair and just retirement."

  • Loki||

    Biden would not be worse. How the fuck could he be?

    The sad thing is I'm beginning to come around to this conclusion too. So much for the idea that Joe Biden is assassination insurance.

  • ||

    Seeing as Biden is just a garden-variety idiot (which is something Terry Michael called me in an email once, so I know!), he'd be way better than the current megalomaniac-in-chief. When you think you're a demi-god, you tend to do really fucked things.

  • Scarcity||

    which is something Terry Michael called me in an email once

    The humble brag

  • Brandon||

    He really does think he knows best for all 300 million of his "children," down to the last detail. And he has the sophistication of an infant. "It's not fair, you have to share!" screams the retarded egomaniac.

  • ||

    Holy shit, this is the beginning of the end. The line absolutely must be held here, or it's anything goes. But I can't see how this proposal is anything other than DOA. And Obama is a piece of shit for suggesting it.

  • BakedPenguin||

    2.5% is a reasonable long-term interest rate for relatively safe assets, like the ones you might invest in in your retirement. $3,000,000 invested at 2.5% would return $75,000 a year, hardly anyone's idea of luxury. And if you need to touch your capital for any reason...

  • ||

    Luxury? Why should you have luxury when the government has SEQUESTER AUSTERITY?!?!?

  • BakedPenguin||

    You're right, nicole. There's not an ounce of fat left to cut. Not. One. Ounce.

  • JW||

    TO
    THE
    BONE

  • ||

    I mean, mean HH income is still only around $46k, right? And you will be old, unable to do fun stuff, and probably won't have to support any kids anymore, so you can't possibly need more than $35k. You will be almost three times as rich as you need to be. You should be grateful to Obama for saving you from the scourge of overplenty.

  • Irish||

    I believe mean household income is closer to $50,000.

    So, if anything, you'll be so ensconced in your money pit when you retire that you won't even notice if the government takes some of it away.

  • BakedPenguin||

    He should create a new government ministry: Ministry of Overplenty.

  • ||

    I like it because of the acronym. MOO!

  • Scarcity||

    Yeah, a common rule of thumb is that you can withdraw 4% of your principle per year and maintain adequate income throughout retirement. That would be $120,000/year.

  • Scarcity||

    principal, goddamit

  • John||

    That is assuming you don't live too long. And if you die at just the right time, you leave nothing for your heirs.

  • Bobarian||

    Because fuck my heirs, that's why.

  • Scarcity||

    Heirs are overrated. If they get anything from me when I die, I suffered a freak accident or I did it wrong.

    I'm spendin my own money biatches!

  • John||

    Good for you. And you should be allowed to make that choice, not forced to by the government.

  • John||

    And don't forget, that is before taxes.

  • Loki||

    Obama’s budget plan, to be unveiled April 10, would prohibit taxpayers from accumulating more than $3 million in an individual retirement account. That proposal would generate $9 billion in revenue for the Treasury over the next decade

    Ooh, 9 billion dollars over the course of a decade! Wow!!! Let's see that's an average of $900,000 per year of additional tax revenue. Now, let's the current deficit stands at ~$1,100,000,000,000 (1.1 trillion). 1,100,000,000,000-900,000 = $1,099,999,100,000. Wow, that's some really effective deficit reduction right there!

    Fuck this piece of shit.

  • Bingo||

    Lmao, you and I both know this has nothing to do with maintaining fiscal sanity. This is about control.

    Because Fuck You, That's Why.

  • EDG reppin' LBC||

    Bingo!

  • JW||

    You heartless bastard. I suppose it better that the White House calligraphers and the Senate toe-nail clippers go to the poor house?

  • Loki||

    That's not to mention Obama's human chess set or his royal piss-boy.

  • JW||

    The royal piss-boy is off limits. OFF LIMITS.

  • Loki||

    Fuck, math fail!

    $9 billion averaged over is $900,000,000 per year, not $900,000. So it should be 1,100,000,000,000-900,000,000= 1,099,100,000,000. Oh well, point still stands: it's next to nothing. And fuck this piece of shit (it bears repeating).

  • Scarcity||

    I would like to throw out that, while this is social engineering via tax code and some retarded shit, the IRA / 401(k) tax benefit is itself social engineering via the tax code. Better to get rid of it and lower taxes broadly, say on investment income.

  • John||

    Good point. How about letting everyone save money and keep the interest it earns. I hate 401Ks because I can't get to the money until I retire without the government raping me for the pleasure.

  • Loki||

    But it's NOT FAIR!!!! that someone, somewhere may be able to save more for retirement than the absolute minimum amount needed to make ends meet while others aren't.

    Mark my words this is just the beginning of the push to consfiscate people's retirement accounts and redistribute the wealth therein. Because FAIRNESS AND EKWALITEE 4 ALLZ!!111!!

  • ||

    Administered by the New (thousands of jobs created) Department/Agency for Fair, Unbiased, Consistent Regulated Savings = DA FUCRS

  • Tulpa (LAOL-PA)||

    If you want to get rid of retirement-supporting social engineering, the place to start is Social Security and Medicare, not 401k's.

  • Scarcity||

    Well sure, but I was specifically talking about social engineering via the tax code, not about spending programs.

    My point was that we shouldn't fall into the "Keep your government hands off my federal income tax deduction!" trap, or to pretend that current tax code is somehow a good and proper thing that should be defended.

  • CE||

    Better to scrap all taxes, starting with those on income, savings, investment, property and sales. Then every penny you earned would be yours, and everyone would be better off.

  • Zeb||

    And the people who's careers are based entirely on spending tax money are going to vote for that when, exactly?

  • CE||

    Abolish voting too.

  • The Late P Brooks||

    2.5% is a reasonable long-term interest rate for relatively safe assets

    The ten year Treasury wa at 1.74 on this morning's "crawl" on Bloomberg.

    And Janet Yellen went on record in the past couple of days saying inflation be damned, the Fed needs to "boost employment". How the fuck does that even make sense?

  • EDG reppin' LBC||

    Shut up and let your betters boost employment! It's pretty complicated, and you wouldn't understand it anyway.

  • Brandon||

    So has he actually started using the word "Hoarders" yet?

  • Aresen||

    How about "kulaks" instead?

  • fish_remote||

    And where the fuck is our resident class warrior T o n y S o c k p u p p e t on this topic?

  • CE||

    The money's just sitting there, not helping the economy or the government!

  • JW||

    The punch line is how much the witless drones in the citizenry will be all behind this, because it will only affect those fucking rich guys, who are hoarding everything and won't share.

    Wait until it trickles down to the prole level folks, just like the AMT. Then, it will be a crisis, but too late to do anything about it.

  • Brandybuck||

    This cap not only affects the MIDDLE CLASS, but if you take inflation into account, middle aged folks in the middle class today will be forced to retire POOR.

    This is the progressive definition of fairness: making everyone equally poor.

  • The Late P Brooks||

    you can withdraw 4% of your principle per year

    Obama's account is overdrawn.

  • Scarcity||

    Lots of questions after reading the article. It only mentions a cap on IRAs, but at one point refers to the total balance in all tax-advantaged retirement accounts. Also, inflation-adjusted, right? A $3M account will be middle class in a couple-few decades.

  • Brandon||

    A $3M retirement account is middle class now.

  • Drake||

    Pretty much - maybe the upper end depending on where you live.

  • Night Elf Mohawk||

    There's no way in hell that A) much of the middle class has a $3 million retirement account or B) a $3 million dollar retirement account is anywhere near the median.

  • Scarcity||

    Y'all are deluded. That's in the neighborhood of what middle class people SHOULD have, but far from what they DO have.

    The median retirement savings balance is $120,000 for those between ages 55 and 64.

    Read more: http://www.bankrate.com/financ.....z2PcYK0NlF

  • Night Elf Mohawk||

    Yes, it's deluded to think that $3 million in retirement savings is anywhere near what the middle class has.

    What do you consider middle class and how much should such a person save and what rate of return would be necessary to end up with $3 million in savings as someone in the middle class "should" have?

  • Scarcity||

    IDK, is $60K middle class?

    If so, say a guy makes $60K and is 45. In 20 years assuming 3% inflation, $60K = about $110K. Using the 4% rule and assuming he can live on 75% of his pre-retirement income, he'll need about $1.7M in savings.

    This ignores SS or other pension income.

  • Scarcity||

    Average SS benefit is $1,300/month currently.

    So his inflation adjusted income, reduced for inflation-adjusted SS, would be about $80K. By the same rule as above, he would need $1.2M.

  • Scarcity||

    He could get there saving $11K/year for 35 years at 6% ROA. Or $7K/year with an 8% ROA.

  • Night Elf Mohawk||

    Counting on 7% and 8% is a lot of what fucked pensions. Real returns are more like 3.5%.

  • Scarcity||

    I adjusted for inflation in the income requirements, so using nominal returns is correct.

  • Night Elf Mohawk||

    We weren't talking about income requirements, we were talking about account size.

    To get to a $3 million account size, in real dollars, would take $24K invested per year from age 22 to age 72.

  • ||

    Who the fuck has that kind of scratch?

  • Scarcity||

    OK, that's our disconnect. I was saying that for a middle class person, $3M is not wildly out of line for what they should be targeting for retirement savings. (Based on the above, it's maybe double what a 45 year old making $60K should be targeting.)

    So I was talking about a future account balance, taking inflation into account. $3M in today's dollars would provide about $120K/year in retirement income (in today's dollars), so that would be firmly above middle class.

    That said, a person making $120K/year absolutely should and can be saving $24K/year. If they "can't" then they, like our betters, should cut spending.

  • sgs||

    "Real returns are more like 3.5%."

    Lol, no, just no...

    You're not even close. Not even remotely close.

  • ||

    Already putting away almost 30% of my income at 26 it sickens me that I'm probably going to robbed to pay for these assholes who haven't bothered to save anything.

  • Virginian||

    Don't put it away in the financial system. Buy tangibles, and especially precious metals. You need, at this point, 4 or 5% ROI just to break even against inflation. At best, you're running in place.

    Buy fucking gold. Not paper gold, get actual fucking gold coins and stash them somewhere safe. To lose money on physical gold would mean the Fed decided to embark on a program of radical deflation and dollar strengthening. What do you think the odds of that are?

  • Night Elf Mohawk||

    It would take 50 years, investing $24K per year at 3.4% (the approximate real return of stocks in the US over the very, very long term), to have a real $3 million in retirement savings.

    I wonder how many in the middle class can save $24K a year.

  • Scarcity||

    A hell of a lot more than currently do. QUIT BUYING SHIT.

  • ||

    Median household income is 50k. There is no way that the middle class has half of their income to put away into retirement, even if they aren't buying shit (other than you know food, shelter, and gas).

  • Scarcity||

    See my comment above (5:42PM). $24K is more like what a person making $100-120K/year should be saving.

    The problem is talking about "middle class" - as soon as I say a "middle class" person should be able to save $24K/year, somebody throws out a median income. I did not mean everyone should be able to save half their income. It all falls apart if we don't define "middle class". If middle class includes the middle 60%, then that ranges up to about $100K/year, at which point I would say you absolutely should be putting $24K/year toward retirement (including employer contribuions).

  • sgs||

    "3.4% (the approximate real return of stocks in the US over the very, very long term)"

    Nope, that's still a bullshit number.

  • Brandon||

    Ok, what I should've said was "the expected income from a $3M retirement account would put you squarely in the middle class now."

  • Night Elf Mohawk||

    $120K puts you in the 84th percentile of all filers and 97th percentile of single filers.

    $43,564 is 50% percentile for all filers.

  • Scarcity||

    The middle class is not limited to the precise median earners. It's a squishy term that leads to imprecise debate.

    You can at least agree that $120K/year is not a wildly wealthy person, right? The impact of this would hardly be limited to Mitt Romney 'n' Friends.

  • CE||

    The average 401k balance is around 40K.

  • Drake||

    If I understand correctly, retired POTUS receive a pension of $200k annually. Obama will be 55 in 4 years when he goes into retirement. He can expect to live another 30 years. 30 x 200k = $6 million.

    Since that is twice what the Administration says is "needed to fund reasonable levels of retirement saving," I say we cut that Presidential pension in half right now.

  • Brandon||

    Fuck that. Put him on SS.

  • derpules||

    NO.....FUCKING......WAY........

  • phandaal||

    Sure, invest your surplus income exactly how the government says you should. What can go wrong? Oh, right.

    To each according to his need.

  • sarcasmic||

    All he's trying to do is force the rich to pay their fair share which they obviously have not paid by virtue of the fact that they are rich.

  • mr simple||

    That proposal would generate $9 billion in revenue for the Treasury over the next decade, according to a White House statement released today.

    Much like knocking over a jewelry store generates revenue for a thief.

  • phandaal||

    No no no, it's revenue, just like what a business makes! That's what revenue means!

  • ||

    This is entirely consistent with their game plan, which is to destroy savers/creditors and promote debt accumulation. The moronic college kids with $100k student loans are a long way away from even starting to save for retirement, so they don't care.

  • ||

    I care, I just don't have the money to do it right now.

    Of course I gave up all hope of retiring when I was 15 and saw how piss poor a job the government was doing then.

  • sarcasmic||

    Right now our government is eying Cyprus and wondering how they can get their hands on our savings.

  • Bingo||

    It's pretty obvious that this is something the US Gov would loooooove to do but wasn't sure if it could. They've been masturbating over the pornography of Cypriots getting fucked and now want to try it in their own bedroom.

  • The Late P Brooks||

    Still think your Roth is safe?

  • ||

    What if I already didn't?

  • sarcasmic||

    Diamond Dave?

  • derpules||

    First the came from the IRAs..

    ahhh fuck it, i'm outta here

  • Bobarian||

    I'm beginning to believe my Roth will be worth about $4700 in current dollars, so, 'Meh, who cares?'

  • Rights-Minimalist Autocrat||

    I knew better. I've seen The Godfather.

  • Drake||

    I have an interview for a pretty decent sized promotion next week. Other than the old work-ethic thing, I wonder why I care. Will I see any of my raise? Will I get to retire and enjoy what I scrapping to put into my 401k? Maybe a quick death in the next revolution is the way to go - my kids will avenge me.

  • Virginian||

    Only if you order them to through the wire of a concentration camp.

  • Drake||

    I'll fucking scream it!

  • CE||

    You can spend more now though, and help the economy in the short term.

  • Tulpa (LAOL-PA)||

    Is he also calling for a $3 million cap on pension payments for government workers and office holders?

  • Brandon||

    How dare you talk about our selfless public servants that way?!

  • Mesteve||

    Stashing cash beyond that point, the administration insists, builds sums "substantially more than is needed to fund reasonable levels of retirement saving."

    Stopped reading after this point. Couldn't control the RAGE!

  • mr simple||

    Yeah, I love how he calls every one of his stupid, thieving, unconstitutional ideas reasonable, sensible, common-sense, etc. Always has to get a dig in about how stupid he thinks his opponents are. The worst part is the lap-dog media and sycophant followers who just eat it up and go along with it. Fuck any one of his brain-dead followers.

  • phandaal||

    Now, let me be clear. (while pointing his sideways fist at the audience)

  • Tulpa (LAOL-PA)||

    President Barack Obama’s budget proposal would cap multimillion-dollar tax-favored retirement accounts like the one held by Mitt Romney, his Republican rival in 2012.

    WTF does Romney have to do with this? Tens of millions of Americans have tax-favored retirement accounts.

  • ||

    Invoking his name frames the proposal to look like it only affects the ultra-wealthy while leaving most Americans untouched. Obviously.

  • Irish||

    Romney's account was also close to 100 million dollars. So if you were going after the hyper crazy rich, you could set the limit at 50 million.

    Setting it at 3 million has shit all to do with Mitt Romney, beyond the fact that his name signals to the Democratic base 'you should be in favor of this.'

  • Caleb Turberville||

    This is literally the goofiest policy proposal this administrator has dreamed up this month.

  • Caleb Turberville||

    *administration

  • Bobarian||

    You really believe they dreamed it up this month?

    I think they've been waiting to spring this on us for years...

    All part of the master plan.

    BWAH-HA-HA-HA!

  • Restoras||

    Yep. All we need is a stock market crash. Then the hand-wringing and pearly-cluthcing will begin in earnest. You can see it now. Retiremtn savings have been decimated! People have worked thier whole lives and now they can't retire! They were duped into risky assets! That money should only be in perfectly safe Treasuries! Say, why not the US governmetn invest that money in treasuries for you!

  • Public Citizzen||

    'Perfectly safe Treasuries" - - -
    until they can't sell any more worthless bonds and the FRN finally collapses under the weight of accumulated corruption.

  • The Late P Brooks||

    I am trying to only invest in assets which will not show up on anybody's balance sheet but mine. This is just one more reason.

  • Bingo||

    The "invest in gold/silver and take physical delivery" "crazies" are looking more and more like the only sane financial people.

  • ||

    One of my coworkers is investing in having lots of guns and is flipping many of them. I'm starting to think he has the right idea. Guns are always worth something, even in a zombie apocalypse. Gold, not so much.

  • Tulpa (LAOL-PA)||

    Why is he flipping them now instead of waiting for the zombies?

  • ||

    Because he keeps some and flips the ones that make the best profits, as a way of generating money now. Money is money.

  • Virginian||

    A few gold coins are nice to have around for big purchases. But junk silver is the way to have some money that's actually spendable.

  • CE||

    Ever tried storing 3 million in silver? It's heavy.

  • Bobarian||

    So, MREs and bullets in a hidden bomb shelter?

  • yonemoto||

    The conservative sandwich portfolio wins!

  • ||

    (eats sandwich)

    Oh, I'm ruined!

  • Ron||

    Sound like he's making an argument to confiscate peoples money just like Cyprus did.

  • AlmightyJB||

    And on that note it's time to start drinking.

  • LTC(ret) John||

    I am with you, JB - I think I need to further ponder this under the influence of Irish Single Malt.

  • Night Elf Mohawk||

    If they did this, you'd be losing tax deferral. You'd be investing and paying taxes as if there were no 401(k)s. It will complicate planning, but it's still better than if there were no 401(k) at all.

  • GILMORE||

    In terms of most tax deferred accounts, there are maximum contribution limits in any case =

    (1) $17,500 per annum under age 50, (2) $23,000 for Age 50 or older

    I believe its the same in 401Ks and Traditional IRAs, but may be different for 403Bs or 427s....

    But WTF. Even if the account appreciates into the 'millions' = the @#*&$ money is still taxed up the wazoo (as regular income) when it comes time for Required Distributions.... THEY'RE TAXING IT EVENTUALLY ANYWAY. He makes it sound like fucking retirees are pulling some fucking huge scam on The Man, when its more like a Leech complaining that the host needs to drink more fluids because its getting harder to drain you.

    I hate shit like this, like how D.C. is always characterizing people who live off Dividend Income as being 'tax evaders'.... when dividends have already been Taxed TWICE or more by the feds by the time they reach an investor.

    Scum. They are no bounds to their mendacity.

  • ||

    There are no bounds to their thievery either.

    Just wait; there will be more. Just wait.

  • LTC(ret) John||

    STOP BEING CORRECT!

  • Ska||

    The contribution limit for self-employed SEP IRAs, defined contribution profit sharing plans (including 401(k) and 403(b)) can be 50K, or 55K for age 50 and older when you include employer contributions (which for a small business owner means contributing to myself).

    Defined benefit plans can have 200K in contributions I think (again, imagine self employed person with a plan designed specifically to maximize their retirement savings).

  • Ska||

    But yeah, you're right that it's just tax deferral, not complete tax avoidance.

  • Caleb Turberville||

    OT: http://maddowblog.msnbc.com/_n.....econd?lite

    Magazines...Clips...What's the difference?

  • Caleb Turberville||

    Also, apparently some commenters have suprised even Benen by pointing out the instantaneous speed at which skilled gun users can switch out magazines.

  • fish_remote||

    Ya know I read the comments at Maddows blog and after my head stops hurting I think, "...maybe it's good that the government is taking their fucking retirement money!"

  • Ska||

    I feel the need to assault someone now.

  • Trash Hauler||

    And here I was, worrying about inflation. It never occurred to me that they would skip the niceties and just take what they want.

    FTS.

  • ||

    Like some kind of overgrown goddamn honey badger.

  • CE||

    It's easy to say 3 million is too much when you're guaranteed 300K a year for life, adjusted for inflation, plus a personal security detail and lucrative speaking opportunities. Try living on the 1.6 percent interest on 3 million in savings (hint, it's 48,000 a year) when the Fed destroys the dollar to pay off Obama's overspending.

  • OldMexican||

    the Obama administration announced a plan to cap the total sum of any individual's retirement accounts at $3 million.


    Ok, the milestone has finally been reached.

    Congratulations, you gringos: You now oficially live in a Third World country, governed by a Third World politician.

  • fish_remote||

    If I didn't like you so much I'd call you ...well something....can I get back to you with an insult?

  • OldMexican||

    Take your time. The century is still young.

  • PRX||

    that would mean calculating the value of government employee defined benefit pension packages and cutting those things down to size.

  • buybuydandavis||

    Just the beginning.

    See Cyprus for more details. Or FDRs confiscation of gold at $20.67/ounce and subsequent devaluation of dollars to gold at $35/ounce, Executive Order 6102. The Left's *hero*.

    Retirement accounts will be nationalized and robbed. Probably multiple times. Inevitable.

  • ||

    I really don't understand this thread at all. You'd think that libertarians would be generally in favor of abandoning IRAs altogether, given that they are simply another form of social engineering via taxation.

    It's a stupid idea politically, but it has almost no substantive impact otherwise.

  • Tulpa (LAOL-PA)||

    It's the same debate as with right to work laws. One type of social engineering mitigates the negative effects of another; must libertarians support getting rid of the good stuff while leaving the bad stuff intact?

  • Enjoy Every Sandwich||

    Libertarians support getting rid of the whole fucked-up system.

    Besides, it's not as if Obama is doing this to advance libertarian principles. He's doing it to steal, pure and simple.

  • Homple||

    So what do you suppose the $3,000,000 nominal limit will be worth in real terms in, say, 2028? I expect the $3meg figure will never be indexed to Quantitative Easing, er, inflation.

  • Public Citizzen||

    "some wealthy individuals are able to accumulate many millions of dollars in these accounts,"
    Obummer should know. The public really doesn't know how many millions he personally has put away in "retirement accounts". Perhaps the accurate disclosure of that information would raise some [to put it delicately] "embarasing" questions of how the funds originally were generated.

  • Randy Marsh||

    He's so awesome, he's so perfect and AWESOME!

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