Obama expands workers' retirement savings options

[BlueJessamine]

Source: Associated Press

WASHINGTON — The government is trying to make it easier for Americans to save for retirement, President Barack Obama said Saturday, as he noted the toll the recession has taken on extra income and savings accounts.

One initiative will allow people to have their federal tax refunds sent as savings bonds. Others are meant to require workers to take action to stay out of an employer-run savings program rather than having to take action to join it.

"We know that automatic enrollment has made a big difference in participation rates by making it simpler for workers to save," Obama said in his weekly radio and Internet address. "That's why we're going to expand it to more people."

The new federal steps, which do not require congressional action, include:

_ Making it easier for small companies to set up 401(k) retirement savings plans in which all workers are automatically enrolled unless they ask to be omitted. Employers can set default amounts of each worker's pay — perhaps 3 percent — to automatically be deposited into the accounts without being taxed. Workers can raise or lower the contribution levels, and they choose how to invest the money. They will pay taxes on the money only when they withdraw it as retirees, when their tax rates are likely to be lower than when they are working full-time. A similar process would apply to savings plans called SIMPLE-IRAs.

_ Allowing such plans to automatically increase the amount that workers save over time unless the workers object.


Read more: WASHINGTON — The government is trying to make it easier for Americans to save for retirement, President Barack Obama said Saturday, as he noted the toll the recession has taken on extra income and savings accounts.

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More @ the link.

[izquierdista]

1. I wonder

What kind of bullshit outrage will this spawn? :shrug:

[ccinamon]

2. since it was a DEMOCRAT who proposed it....a lot of faux outrage

will seen and heard....if it was a republiCANT, there would be praise.

[BumRushDaShow]

3. The greedy capitalists

don't want people to save. They want them to spend (to give the top tier a maximum amount of profits) and they'll do everything they can to make it so. This morning in the radio address, the Prez. noted that the savings rate had gone to "0". We know that by 2007, it had reached a http://www.cbsnews.com/stories/2007/02/01/business/main2422489.shtml">negative 1%, the lowest since the depression years of 1932, 1933.

Hope that the idea of "saving for a rainy day" doesn't get twisted around and torpedoed in favor of a meme that Americans must "spend" to speed the recovery. This is the catch-22 of the whole thing.

[MindPilot]

6. The greedy class don't have a problem with Americans saving

As long as they have access to the money

[JDPriestly]

11. Why save when the interest rate is from 0.5% to 1.5%

in banks, and you can easily lose all your money if you put it in the stock market? Normally, if you want people to save more, you increase the interest rates.

Besides, right now, no one is spending either. If folks aren't saving or spending, it probably means they aren't earning. We cannot save or spend money we don't have.

This is stupid. It sounds wonderful in D.C. but won't help anybody.

[CountAllVotes]

13. you nailed it

Trying to lure people back into the stock market again - this worked before when the rates were so low that no one had anywhere else to put their money.

We saw the results.

This will happen again, mark my words.

I loath the stock market personally and strongly prefer having my money in CDs in a bank/credit union.

This 1% interest is total crap and that is why no one is spending.

Not everyone can be enrolled in a 401K and not everyone wants to be enrolled in a 401K.

This is kissing the asses of the Wall Street whores once again.

We will get fooled again?

:kick:

[mopinko]

then opt out.

nobody is making anybody do anything. jeebus.

[mopinko]

18. then opt out.

nobody is making anybody do anything. jeebus.

[JDPriestly]

24. Thanks CountAllVotes

[Iowa]

26. Yep, this is something Wall Street would love.

I invest in stocks and a wide range of other things. I don't share your fear of the stock market. And I have done well enough to retire very early on a middle class wage. But it took literally hundreds of hours of intense study to separate all the bogus information from the relatively small amount of good information so that I could understand how to navigate the system without getting whacked. So as one who has done very well, and who shares the administration's enthusiasm for the benefits of investing (it literally changed my life), there are several things that are terribly wrong with this:

--First, most employers don't know shit about investing, so they tend to buy whatever some salesman is pushing. Consequently, they buy into high expense, mediocre crap that nobody who knew what they were doing would touch with a ten-foot pole. The widespread ignorance of employers has real consequences for their employees (most of whom don't know much about investing either). So it is a terrible move to prod millions of people into crappy investment products without first ensuring that they understand what's crap and what's not.

--There are TONS of shitty investments out there, yet we have the President essentially shilling for Wall Street by making the 401(k) system opt-out instead of opt-in - as if anything is better than not saving at all - as if it's all good. It's dishonest. There is a lot of junk being peddled in a lot of 401(k) plans, and this sets up employees to be fleeced. A better solution would be to just eliminate the entire 401(k)/403(b)/SIMPLE system and get employers out of it altogether. Set up a single tax deferred plan that any individual can set-up utilizing earned income... one that combines the best features of all the existing plans, and allows people to choose their own investments. Prodding people into the existing system, without reforming the system, is like leading the lambs to slaughter (unless they opt-out of being slaughtered). That's not the way we should be doing things.

--Going to opt-out (instead of opt-in) utilizing the existing system, and without regard to the widespread ignorance about investing, displays a callous disregard for the long-term financial well-being of workers and their families. It is a hand-out to Wall Street at the expense of workers who don't really understand the system. There are those who will defend just about anything this administration does, by saying things like:
"then opt out. nobody is making anybody do anything. jeebus."
Survival of the fittest... Every man/woman/child for himself... and all that good stuff. This will work just fine for those with the intellectual, financial, and educational resources to evade the predators, but then there's the real world - the world with people who are too overwhelmed with life to read all the fine print, or don't have the intellectual ability to grasp what's at stake, or who choose to trust the system because their president says it's OK, or who work for disorganized employers (or assholes) who won't provide the opportunity to opt-out...

This is a gift from Obama to Wall Street at the expense of the most vulnerable.

[TwixVoy]

50. Why not put it in short term AAA bonds?

You can get 5% back extremely safely.

[salguine]

4. of course, if they're really serious about it, they need to bring all the jobs back here so that

more people can actually earn some fucking money to save in the first place. Tinkering with banking and tax rules so people can "save more" is like making people buy health insurance so that everyone has health insurance—it doesn't do anything to address the underlying problem.

[JDPriestly]

25. Good point, salguine

[Iowa]

31. Well said. I agree.

[Demeter]

5. Obama Puts the Cart Before the Horse--Again

In order to get people to save for retirement, they need JOBS, so they have some spare income for old age, and something to retire FROM!

This is as foolish as LOOKING FORWARD, BEFORE all the traitors and war criminals are prosecuted.

[fascisthunter]

10. looks good as a Headline, doesn't it?

I was thinking the same thing.

[llmart]

16. However, let's not forget......

that when times WERE good, say during the Clinton years, how many people saved money? I believe the savings rate was in the negatives back then too, but I don't have any hard and fast figures.

During those years, times were very good for my husband and me and we saved, saved, saved. Now we are both without jobs, older. I had the foresight to save. It's the old tale of the grasshopper and the ant.

Case in point: Here in the heart of auto country (metro Detroit) back in the early '90's employees were getting huge (I mean HUGE) annual bonuses. The local papers and news were interviewing people on what they were going to do with the money. Most responses were, "Go on a big vacation/cruise. Buy a boat. Buy two Skidoos." I was asked and I said, "Save it for retirement." We were in the minority for sure.

[Demeter]

17. The People Who Saved Lost It In the Stock Market Frauds

Enron, WorldCom, Lehmans, AIG, Citigroup, any of that ring a bell? DotComs, Savings & Loans, Keating 5, and the Greenspan bubble factory. Entrepreneurs dying for lack of customer base as the world economy collapsed.

The only thing is those who spent it may have better memories to cherish in their old age.

[llmart]

40. Well, I guess if they weren't very savvy......

about money, they saved it in the wrong vehicles then. I had mine in fixed income. Sometimes old-fashioned notions are best. Too many people are lemmings and fell for the line that "the stock market is the best place to have your money long term". I'm not a follower. I do what my gut instincts and experience tell me to do, not what the mass media tells me to do.

[JDPriestly]

45. I have a very elderly friend who asked me to look at her broker's statement to her

some months before the crash. My friend is not only elderly, she is a little confused and very naive. She is not at all savvy about investments. She wanted my advice as a professional on a tax matter, but technically, she was not my client. I was horrified to see that her broker had placed all of her money in specific stocks, but since I am not trained as a financial advisor, I could not give her advice. All I could do was to ask her why all her money was in stocks. She told me that she had just changed to a broker who had placed the money in the stock investments. I told her I thought she ought to get a second opinion, but she felt that she couldn't change again.

There was nothing I could do, but I have thought about her so often since last fall. A lot of people can't balance a checkbook much less analyze investment information.

Must be nice to be as smart and well informed as you. I guess you have got a good reason for being so arrogant and indifferent to the problems of others.

[JDPriestly]

27. You ask who saved in the good years? The people who lost money

in the recent stock market crash that's who. The people who are getting 0.5% to at most 3.9% interest on their savings right now, that's who. Lots of people saved -- maybe not a lot of money, but what they could. They are the people that the banks and hedge funds harmed the most. And they are the people who will never benefit from the bail-out.

The people who bought stuff can at least sell the stuff they bought at a yard sale and walk away with a little money for milk and veggies. But the people who invested or saved or bought homes? They lost.

[llmart]

41. See my response to Demeter.

Oh, and we used it to pay down our mortgage too. We've owned our house free and clear for several years now. It's not a McMansion or furnished out of Pottery Barn, but it's ours.

[Cha]

20. And, something the admin has been working on ..

but, that wouldn't work into your bitch bitch bitch, would it?

[Honeycombe8]

34. Despite high unemployment, fact is...most adults are in fact working.

Life is going on more or less the same.

This failure to save in the 401K has been talked about for a few years now. It's worse now, though, because people are not saving their usual amounts because of fear about the economy.

[704wipes]

44. heh, so unemployment is not a prob until 51% unemployed?

nice fantasy world you have there....

[Honeycombe8]

48. I didn't say that. Fact is (facts are pesky little things, aren't they? Hard to

argue with, so posters resort to snide comments, like your post.)

But the FACT is...most adults who regard themselves as being in the workforce ARE employed. About 90% of them, as a FACT.

They need to SAVE for their future.

So the govt is looking into ways to encourage that.

Your position is, it seems, that as long as there is one poor person in the country, we can't do anything for anyone else. We can ONLY take steps to help that one poor person, and nothing else.

Glad you're not in charge of the economy.

[KoKo]

7. People need to make some interest on Safe Savings Accounts not the Wall St. Casino

This sounds like a gift to the Casino operators (Wall St.) rather than a boost to those who want to have safe savings for retirement. Leave Wall St. to the speculators who have money to lose. Give the rest of us back our ability to save with some decent interest that can compound.

[LibDemAlways]

8. I'm with you. "Decent interest" is the key. The

shitful 1-2% being offered today is a joke.

[JDPriestly]

29. You can put your 401(K) money in a CD, but you won't get much interest.

And you had better be certain that the account you put your money in is FDIC insured or the equivalent. "They" will also trip us up on that one.

[Honeycombe8]

35. Not in most 401K's, I think. Certainly not in mine. Unless you pay extra to have a "side" account.

in your 401K. I do. But I'm not sure I can get a CD. I get access to more mutual funds, and can buy individual stocks (at a high broker fee). I don't recall seeing CDs or savings accounts listed. There's a cash account, of course...but it pays almost no interest. It's intended for temporary stashing of $.

[Sgent]

42. You should be able to buy treasury bonds

if you can buy individual stocks.

[Honeycombe8]

47. Maybe. (but who wants THOSE at this time?) I'll look into it, though. nt

[harun]

51. I'll take investments over usary any day. All usary does is make money

worth less (inflation) and encourage money hoarding.

[newblewtoo]

9. why does this remind me of

what happened to a friend not that long ago. She has worked for a small company and enrolled in the company 401. The money was 'wisely invested' in the company stock which fell like a rock during the last great market slide. She still cries when she tells how she wanted to be able to put money into bonds but kept getting the run around from HR until it was way past too late. Sad part of the story she was recently diagnosed with cancer, can no longer work, took a huge loss in her retirement "savings" and will end up with a disability retirement and no insurance.

Until I learn more about this I am very skeptical. I can see real problems with small and medium size companies doing auto deductions.
:scared:

[CountAllVotes]

14. a woman I know works for a bank

they were (note that word "were") matching her contributions to the magic 401K by 50%. After the crash it is now 25%. She has lost approx. 1/3 of what she had saved in this 401K for retirement.

Before it crashed to its low, she attempted to get out of it and move the money into bonds.

However, she tried and tried to do this but no one would answer the phone where the money was located because they were "so overwhelmed with business at the time". :puke:

So now she is hoping it will come back more and she plans to bail out of the 401K as soon as she gets some of her money back. She has gotten some back, yes, but not enough. That is the problem right there - it is NEVER ENOUGH!

:kick:

[curlyred]

15. employers are not allowed to tell you where to invest your 401k

They may strongly encourage you to invest in company stock a la Enron, but investment choices are always the employee's.

[CountAllVotes]

19. my entire retirement acct. was held by Fidelity

I had no power over this. It was the company that opted to select Fidelity to handle their pension monies.

When the time came, I grabbed it away from Fidelity. I could not get it until I was 50 years old, I know that much.

When I got the money, my bank tried to get me to invest all of it with another stock market type of investment being "a great rally is going on right now". It was not necessarily Fidelity however.

[varelse]

21. In this case, there appears to have been no direct way for the woman to change her investments

she had to go through HR to do it, so all they had to do to stop her was stonewall her until it was too late.

By contrast, employees of the company I work with can log in to their own 401K savings accounts and adjust allocations online.

In theory, neither employer is actually telling employees where to invest. In practice, the plan our company chose makes it pretty much impossible for company management to indirectly influence how and when we choose to change our investment.

[Sgent]

28. Not neccessarily

although company's are not allowed to tell you how to invest YOUR contributions, their matching contributions can be made with restricted company stock -- at least this was true during the Enron period.

I'm not sure if this is still true, as their was a movement to change it.

[Honeycombe8]

36. I seriously doubt there is any 401K in existence that requires investors to invest

in the company stock.

My brother invests in the company stock in his 401K, but that is one of a number of options.

The problem with 401Ks is that the investors are not investment-knowledgeable, so they really need guidance from a 401K plan handler, and there needs to be some sort of automatic "conservative" vs. "aggressive" portfolio, so investors can have their $ put in automatically, where it's divided up among investments that equal a "conservative" or "aggressive" portfolio.

Bonds are not often offered in 401Ks. But bond mutual funds are (they are safer than bonds).

[ipaint]

12. Frontline did an excellent piece on 401k's and retirement.

http://www.pbs.org/wgbh/pages/frontline/retirement/

"…The 401(k) experiment is coming into its own now. More and more, employees will be asked to cover it all themselves. That can be good news in a rising stock market. That can be good news if you don't get really sick when you get old. That can be good news if you don't live very long after you retire. But all of those risks on each individual worker.

The way I look at is ... that all the little boats out in the harbor were linked to each other, and if one sprung a really bad leak, the rest of them kind of held it up. That was what defined benefit pension plans were like. Now ... all those little boats have been cut loose from each other. If one sinks here and one sinks over there, ... they just sink. If you happen to be on a boat that floats, you'll do fine, but if you're not, you drown."

Elizabeth Warren

http://www.pbs.org/wgbh/pages/frontline/retirement/interviews/warren.html

[Shireling]

22. The problem with 401K's

is that you don't know what you are investing in (supporting). What companies? Do they condone slave labor? Do they hurt the environment? etc. etc.

[Honeycombe8]

37. They usually offer a plate of mutual funds. Every investor gets a prospectus

when investing in a mutual fund. It lists the major companies it invests in, the expense ration, etc. If you don't want to read that, you can find that info very easily on the internet.

[PSPS]

23. Savings? People have to earn more than they need to save.

People have had the illusion of wealth for the last thirty years thanks to the availability of easy credit and using bubbled housing value as an ATM. Those days are all gone, which is good. Now we need to have an economy where people can earn an income that exceeds what they need to live a decent lifestyle. Then they'll have something to save.

In other words, this is just more meaningless tripe from U-bama. Trillions for his bankster buddies, platitudes for the rest of us.

[JDPriestly]

32. This is great for the crowd that earns lots of money.

Useless for the rest of us. Obama fools himself into thinking he is handing people bread when in fact he is just throwing crumbs at us.

Am I bitter? Yes. We waited 8 years to get Bush out of office. And now we are treated like this. It is disgusting.

No trigger. We want a robust public option now.

[Honeycombe8]

38. You have to pay yourself first, then spend.

You have to be mighty poor not to be able to have one penny of expendable income that you can't squeeze out. Most Americans are not that poor. Some are. But most are not.

A lot of people don't know how to be frugal, is part of the problem. I was once very poor without an extra penny to my name, so I can relate to that. But most people are not in that situation. We can't run a country on the basis that we don't do anything for the middle class because the country has poor people.

We have a lot of middle class people who could save, but who don't. It's okay to try to encourage them to save for their retirement years (if any of us ever gets to retire). That's a good thing.

[bemildred]

30. Talk to me about lots of new, good jobs.

Then we can get somewhere.

[high density]

33. We need 401k reform

Let people choose their own investments. There is no reason for these to be tethered to employers the way they are today.

[Honeycombe8]

39. It's because the owners participate, also. And the plan handler (the investment co.)

bases its fee structure on the amount of $ in the plan.

We do need reform, though. It's impossible to know exactly the amount of fees being charged each participant in the plan.

[704wipes]

43. Yeah right, like one can save shit when one is making shit

Does any FUCKER (R or D) in Washington NOT KNOW we are in a 30 fucking year wage DEPRESSION???


Tell me how this is not Republican Lite.

Tastes great, less filling/ as usual.

I so wish I had left this country when I was young, all young people should....
it is so fucked up. Irretrievable.

[burrowowl]

46. Many workers use their refund to

pay some bills, buy clothes for the kids, etc.
Like what fucking money does the average worker have to put aside!
Out of the 30 industrialized countries, the U$ of A is in the last 3 with respect to distribution of wealth, we ARE better than Turkey and Mexico!
Gee! if the U$ of A tries harder harder, we can be Numero Uno and have the worst distribution of wealth! Come on Laissez-Faire Capitalism, YOU can do better!

[Honeycombe8]

49. The individual bears SOME responsibility. How many people have you known

who complain about not having enuf money for this or that really important thing, and yet they had $ to spend on a late model car, a laptop, a cell phone, computer games, a CD player, and maybe a flat screen TV?

I've known quite a few over the years. A friend of mine recently got a raise and paid off her car. Married, two kids, struggling financially, no retirement savings, husband not paid much and recently gotten a job after being unemployed. So I'm thinking...great! She will finally have some extra $$$ on hand for school clothes, etc.! But she went right out and traded in her car and bought a brand new car (with a hefty note), AND a 50-something inch flat screen TV with a surround sound system! OMG!

To some people, having a few extra dollars every month doesn't mean they can build a nest egg. It just means they can buy more stuff.

By contrast, I make considerably more $ than my friend. And yet, I drive a 13 year old beat up car that I paid off early, and I still own an old tube 32 inch TV. I also don't have a laptop yet. Two years ago bought my first (cheap desktop) multi-disc CD player for my bedroom. Several years ago I bought new speakers and a new stereo receiver to replace my 1978 system. But even though I have don't have the latest stuff, I DO have a decent amount of $$$ stashed away in retirement accounts. (BTW, I didn't always have expendable income. I once was very poor, and I come from a family where I knew I had no one to rely on to help me. So....I learned the hard way to save my $$$ for the rainy day that will inevitably come. There will be absolutely no one else to help me, besides me.)

Priorities.

People in the current generation don't seem to have learned how to be frugal or handle money wisely. Some are learning now, the hard way.

I'm reminded of old folks in years past who were extremely frugal because they had lived through the Great Depression. Stuff is just stuff. It breaks down, or gets stolen or lost. It's fun to get and use stuff along the way, for sure. But you have to prioritize.

This isn't always the case. But I've seen it so much that I do think it is somewhat widespread.