Instead of strengthening the ability of families to provide for their own retirement, the GOP reportedly proposes to slash the amount workers can save in their 401(k) plans.
And it’s not just a “cut” that’s proposed, it’s an amputation. Instead of saving, on a tax deferred basis, $18,000 a year allowed by current law, individuals would be limited to $2400 a year.
I calculated that saving at that rate for 40 years would result in $235,000, more or less, at retirement. That’s less than the $240,000 estimated out of pocket medical expenses for retired couple.
What about the balance of a retirement budget?
I don’t need to repeat the findings of every study of the preparation of most Americans for retirement: all too many people have saved nothing.
What kind of message does making saving one’s own money, tax deferred, for one’s own needs in old age, more difficult send to individuals?
Since the news of this proposed tax change leaked out, a coalition has formed to push back: Save Our Savings
Today, at least, the President says he’s against changes to 401(k) plans. Who knows about tomorrow?
So, be alert. Be heard by your Congressional Representatives.
And put some money away for your old age. You do want to live a long while, don’t you?
