Quote:
Originally posted by sgtclub
That is a reasonable objection. Would you also support increasing the 401(k) and IRA limits?
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Yes.
The retirement system was supposed to stand on three legs -- private savings, employer pensions, and the social security safety net.
I think we should increase the IRA limits to encourage more of the private savings leg. The truth is, though, that there are many other avenues towards tax-advantaged private savings -- I'm embarassed to say how much I put away tax-free for retirement last year, and how much more I put in tax-advantaged accounts (529s are really for education but it leaves me more money for retirement, so six of one....). Most of these accounts are only available to people who have a certain level of income -- but people below that level generally don't take full advantage of the 401(k) and IRA options already available to them (a fact that gives me some reason to doubt that notion that PRAs will really benefit a lot of people).
Employer pensions are rapidly becoming ancient history, though that is somewhat offset by employer contributions to 401(k)s. As you've said, the government invests in the market -- but it does it as part of this "leg".
SS is the one "guaranteed" portion. We shouldn't open that portion up to market risk. Period. Raise the retirement age, impose a means-test on benefits if need be. But don't cut holes in the safety net, and for god's sake don't take on huge new debt in order to allow people who have other avenues to private savings to have a little more.
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