Obama Goes Against the Grain of What America Represents
So only 100,000 people today would no longer be able to increase the assets in their 401k beyond $3 million, and they would only be allowed to take out $205,000 annually for living expenses. I’m sorry, but this sends a terrible message to ambitious Americans who need to cover living and health expenses in retirement, who are faced with $50,000 a year in college tuition for their children — and who know damn well that more cuts are coming to Social Security and Medicare. At the same time the yield on the safest securities are yielding less than 2% over the next decade.
What kind of a signal is this proposal to Americans who are only saving at a rate of 2.5%, rather than 6.5%, who have seen defined pension plans phased out, and who are frightened about how they are going to be able to afford the last 20 years of their life?
Why go after 100,000 401ks with more than $3 million when Uncle Sam has no plans to limit the extent of deferred compensation in the many millions for most leading corporate and bank executives. Not to speak of the trillion or so that corporations are holding abroad without paying Uncle Sam any tax at all? The whole thrust of this recommendation goes against the grain of becoming self-sufficient, taking care of your own finances rather than depending on handouts. Don’t harm anyone’s self-created safety net at this time.
Better to do something positive for the average 401k holder who has only about $75,000 in his 401k. The real crisis is how to keep safe and sound the average American saver with not much more than $25,000, according to Fidelity Investments . I don’t know how this huge cohort of the population is going to survive.
I’m perplexed, because this proposal will outrage a good many more people than myself. It is a terrible, ridiculous non-starter that makes Obama look like he is out of touch — that he’s dreaming of some utopia where he can retool the the system of tax benefits that were set up some time ago. We want Americans to be self-sufficient — and yet we are signaling that the rules of the game can be changed at any time. Like the 45% tax on estates over $3.5 million that will take away half the proceeds of a small business or professional man on his death that was meant to give his children a nest egg, and his grandchildren at least part of the wherewithal to be educated and acquire that starter home.