- Biden: Kill SEC's Crypto Accounting Policy, Ethereum ETFs, hiring a meme manager.
- Biden: Open war on hidden "junk fees" like airline and bank fees.
- Biden: Blind on Iran's sanctions, Iranian oil reaching Europe freely.
Biden can't tackle the INFLATION, so the path of least resistance is obvious: Do whaterver he can to get the votes, even though it's insignificant to solve the problem.
This is my learn note on the podcast. Follow me to get more. reference:
The 401k is a dominant retirement plan in the U.S. This year, 4.1 million Americans turn 65 years old, but 49% of people aged 55-65 have nothing in their 401k account, and 10%-20% of retired people live in poverty. Why does the 401k not work as expected? And why is this a problem that will damage belief in the capitalist system?
Before the 401k, in the 50s to 70s, the U.S. had a pension system in the private sector. People would work in a company for 30 or more years, and the company would guarantee a fixed retirement income for the rest of their life. It worked well against the backdrop of lifetime employment and people not living as long as they do now.
The 401k came about by accident. It began when companies wanted to reward their executives, so they created a tax-deferred account to pay bonuses to their executives. The managers could get the money when they retired or left the company. There was a risk whether the IRS would tax the money, but in 1978, Congress passed a law to make it legal. That's how Section 401(k) came about. A retirement specialist, Ted Benna, found this law and used it to create a retirement plan for his company. He provided a matching contribution to his employees. If employees put money in the 401k account, the company would match the same amount of money. It was a win-win situation. The company got rid of the responsibility of the guaranteed pension system, and employees got extra money, tax benefits, and investment growth.
Why did the 401k become dominant in the U.S.? 1) The auto and steel industries declined, and a lot of corporations regarded pensions as a problem. 2) Reaganomics advocated individual responsibility, and the 401k shifted the responsibility from the employer to the employees.
Who can benefit from a 401k? Those who are high-income, disciplined, and have good investment knowledge. They don't need retirement money to live. But who falls out of the system? Those who are low-income, whose company didn't provide a 401k, or they didn't know how to invest, or they had to withdraw the money for an emergency.
The 401k reinforced income inequality. The rich get richer, of course, that tool was first designed for rich people. And normal people benefited from it due to government legislation. That is a common American model, normal people benefit from the elite's move. But the inequality still exists, millions of people falling through the cracks of the retirement system make the country driven toward socialism.
How to solve the problem? There is a plan called the Thrift Savings Plan. It's a retirement plan for federal employees, and Congress is considering expanding it to all Americans. When a company can't provide the matching contribution, the government will provide it.
Will it reduce income inequality? We still don't know, but one thing is clear, in the U.S., a comfortable retired life relies on the individual to make it happen. Retirement is a privilege, not a right.
This article is my learn note on the podcast. Follow me to get more. https://www.nytimes.com/2024/05/20/podcasts/the-daily/401k-retirement.html