Joe Biden Wants to Change 401(k) Plans

Wanderer
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A little over two weeks ago, Joe Biden was projected by every major media outlet to become the 46th president of the United States. Predictably, the current occupant of the White House and his supporters took it super well, taking to the airwaves to claim he won the election and challenging the results in court, alleging massive voter fraud.

All of that sound and fury, however, has so far resulted in nothing. Over thirty lawsuits filed by the Trump administration have been thrown out because they have not shown any evidence of voter fraud affecting enough votes to sway the election. Trump has refused to concede, but as multiple election experts confirm, the incumbent conceding is not required for the election winner to take office. Legally, Biden becomes president on January 20th. The only choice Trump has in the matter is whether he leaves on his own power or is dragged out by his ankles by Secret Service.

So barring some unpredictable black swan event between now and January, it looks like Joe Biden will be sworn in as president.

I wrote in the last article about some of the effects a Joe Biden presidency would have on the FIRE community. Amusingly, the comments section devolved into a food fight, but the gist of it was that unless you were earning above $400k in your day job, you were unlikely to have your taxes materially affected, and might even see your post-FIRE health care options improve.

One of the more curious aspects of his tax plan that I immediately zeroed in on is his proposed changes to the 401(k) (and Traditional IRA) plan, which immediately perked my ears up since a fully funded 401(k) is something we recommend for everyone trying to get to FIRE. Specifically, his proposal eliminates the tax deductability of 401(k) contributions, instead replacing it with a 26% refundable tax credit.

Hmmm…interesting…

Now what the Hell does that mean?!?

Deductions vs. Credits

When you make a contribution to a 401(k) plan, you’re doing it with pre-tax dollars. Those contributions can be subtracted off your taxable income, which has the effect of reducing your tax bill. This means that the benefit of making that contribution is equal to your marginal tax rate, or the incremental tax rate you pay on the last dollar you earned.

If we were to look at the federal tax brackets for 2020, if a single earner makes $200k a year, they would be in the 32% tax bracket. So if that person makes a $10,000 401(k) contribution, they would get a check from the federal government equal to $10,000 x 32% = $3,200.

If another single earner made $20k a year, they would be in the 12% federal tax bracket. If that person made a $10k 401(k) contribuion, they would get a refund equal to $10,000 x 12% = $1,200.

Clearly, the benefit from making a 401(k) contribution is not equal, and depends on how much you make. If you make more, you get more money from making 401(k) contributions, and if you make less, you benefit less. If we were to plot the tax refund you’d get from making a $10k contribution and compare it to your earnings, the chart would look like this.

Joe Biden’s proposal is to turn this into a flat tax credit. Rather than deducting the contribution on your income, you’d simply get a credit on your tax return equal to 26% of your contribution.

This makes the tax benefit of making a 401(k) contribution no longer dependent on your income. This is what Joe Biden’s campaign meant when it refered to “equalizing the tax benefits or retirement plans.” The person earning $20k a year would get the same refund as the person earning $200k a year.

If we were to add this new proposal to the chart above, it would look like this.

What Are The Effects Of This Change?

As you can see in the above chart, the two lines intersect at the $163k level. What this tells you is that this policy splits taxpayers into two groups: Those earning below $163k (as a single filer) and those earning more.

For those in the first group, your benefit from making a 401(k) contribution will go up. In the $84k to $163k earnings bracket, the benefit will be relatively little (24% to 26%), but it becomes dramatic at lower income levels, potentially jumping from 10% all the way up to 26%.

And for those in the second group, your benefit will go down, with the people in the highest earnings bracket of $510k+ seeing the biggest decline from 36% all the way down to 26%.

As for the federal government, they won’t notice on balance. They’ll hand out smaller refunds to the $163k+ crowd, but hand our bigger ones to the $163k and below crowd. The policy was designed to be revenue-neutral for the government, with the 26% level chosen so that the change in refunds from one group balancing out the other.

Why Would The Government Make This Change?

There’s a few different ways to understand the rationale behind this policy change. One is the more “social justice warrior” school of thought, which states that because 401(k) plans benefit higher earners the most, a 401(k) plan is therefore a tool of inequality an should be changed to benefit everyone equally. I don’t really like this way of looking at it, because it can be seen as “punishing” higher earners by taking away some of their tax breaks. Whenever you start punishing success, all sorts of unintended bad things happen, like professionals deliberately working less hours to pay less taxes.

Another way to look at it is that the Joe Biden government wants to encourage more people, especially at the lower end of the earnings spectrum, to save for their retirements. I think that’s an admirable goal. It’s just that they also wanted to do it in a revenue-neutral way, which unfortunately means handing out more refund checks to some people will need to be offset by smaller refunds in others.

Should People Change How They Save?

Depending on how much you earn, yes.

Under the current system, if your earnings are in the 10% to 12% level, it really doesn’t make much sense to contribute much to your 401(k). The refund you’d get out of it just isn’t that much, plus you’d have to worry about the tax rate you’d pay when you take it back out. If the tax rate at withdrawal is about the same as the tax rate on contribution, then you really don’t get much benefit, and in those cases it made sense to contribute to a Roth IRA instead.

Under this new system, it makes much more sense to fund your 401(k) before your Roth IRA.

For higher earners, however, the reverse isn’t true. Just because your benefit is less for 401(k) contributions doesn’t mean you shouldn’t make them. A 26% credit is still better than 0%, so this change shouldn’t incentivize you to skip making contributions each year.

Nor does it make sense to shift your 401(k) contributions towards your Roth IRA. Remember that even though withdrawing from a 401(k) is taxable while withdrawing from a Roth is not, because you’re still getting a 26% credit with you contribute, as long as you’re paying less than 26% tax when you withdraw, you still come out ahead with the 401(k). And paying 26% tax on withdrawal would require you to be making more than $163k in passive income in retirement, and that would only happen if your projected retirement portfolio is in the $4 million+ range.

That being said, we’re not saying to ignore the Roth. While it’s difficult to come up with a scenario in which contributing to a Roth instead of a 401(k) makes financial sense under this system, the real goal for everyone reading this who’s still in the accumulation phase of their FIRE journey is to max both out.

But whereas before when the advice was to prioritize the Roth at lower earning brackets, now under the new system the advice is:

  1. Fill up your 401(k) to the max
  2. Then fill up your Roth IRA to the max, possibly using Backdoor Roth IRA contributions if you earn too much.

Conclusion

So that’s the Joe Biden presidency’s proposed changes to the 401(k) plan. There are still some details to be ironed out, and remember that a proposal doesn’t necessarily mean it’ll become law (after all, we still don’t know which party will control the Senate), so it’s entirely possible that what gets implemented looks very different from what I’ve just described, but on a whole, I think it encourages more people to save for retirement, which is a Very Good Thing.

What do you think? Do you think these policy changes are a step in the right direction? Or is this just Exhibit A in the Democratic party’s insidious slide into Socialism? Let’s hear it in the comments below!


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61 thoughts on “Joe Biden Wants to Change 401(k) Plans”

  1. If this incentivizes more lower-income people to save, hopefully cushioning some of the mess that Social Security is shaping up for in a decade or three, I’m fully down. Our household income means it’ll be a net gain for me and my wife but frankly we’ll be fine regardless; I’m more concerned about folks who are saving like 5%-10% (if that) and need the impetus to stash away a bit more so they aren’t eating cat food at 70.

    Hell, just the fact that people are talking about this means that maybe it’ll catch in the brains of some folks who need to hear it.

  2. One issue with the math here… 401k contributions are capped at $19,500 per year, which means you really can’t reduce your tax by more than about $8,000. I can’t imagine that Biden will actually give a 26% refundable credit to… anyone, since that’s more than most people actually pay in taxes, even if they make six figures. I’m sure that’s the highest rate for low income earners, and it will rapidly phase out for higher earners. It’s all moot anyway, unless the Democrats win both senate seats in Georgia – otherwise, with a split congress, Biden will make exactly zero changes.

    1. Not necessarily. Since current 401k contributions reduce taxable income, these contributions can make a taxpayer’s income lower so they may also qualify for certain income based tax credits they wouldn’t otherwise, such as child, childcare or earned income credits, that can make the total taxes paid under each plan a greater difference.

      1. I was just coming to mention this. The last few years I based my contributions to FSA and 401K on what I needed to reduce my income by to qualify for EIC. With this, it effectively takes away a legal loophole that greatly helps those in the 20-25k category get ahead. So adding this back in, say I put 2k in 1 year, 26% would be just over 500. But I also have to pay taxes on that money with the new rules, so about half of that is gone, and 3500 is a far better return with EIC than 500 with this plan.

    2. Correct, but with a 26% tax credit, the max benefit you’d be able to get is $19500 x 26% = $5070, not $8000.

      And yes, it’s all dependent on what happens in Georgia on Jan. 5. Man, this election just keeps going, doesn’t it?

      1. Ohhhhh! Thanks for the clarification, Bryce! I completely misunderstood how this was going to work. I’m with you now!

  3. The plan sounds good to me. I hope it passes. It’ll give lower/medium income folks more incentive to save for retirement. High-income earners don’t need as much help. They probably have all kinds of deduction and help from a tax expert.

    1. I do not believe this will encourage more people to save for retirement so it feels like a punishment to high income earners. High earners pay ridiculous amounts of tax already and there are no secret loopholes unless you own a business, farm, etc. People either save or they don’t. If you feel like you can’t afford to save for retirement, a tax credit in the future won’t be enough incentive to change your ways.

      1. Well unless I’m reading it incorrectly, the top marginal tax rate in the USA is 37% and comes in at an amount in excess of $500,000 in taxable income. In Ontario, Canada, where I’m from the top marginal tax rate is 53.53% and that starts at $220,000 Canadian (call it$170,000 $US). Most democracies have similar tax rates. Do I like it? NO. But its the price to be paid for living in a civil society. Hey – this year I am going to pay $600,000+ in tax so I know what I’m speaking about. I’m not revolting because I am basically ok with the price that I am paying.

        So I wouldn’t complain too loudly about your tax rate.

        1. I agree. Tax brackets in the rest of the developed world are much higher than the US, and they have healthcare embedded in their system. Americans think they are lucky, unless they add their expenses for medical coverage and realize they are paying waaaaay more than Canada, Europe and the other countries that have hefty healthcare systems.

      2. Jen,
        Actually, IRAs (and later 401Ks) made a big difference in the percent of Americans saving for retirement. It changed the landscape of American savings rates.

      3. If I understand correctly, it is even a current tax credit. Low income earners don’t typically save refunds. They will think they put 100 dollars in 401k which was really only 88 after taxes, and then get knocked out of EIC if they have been on the upper edge of it, so will get a smaller tax refund. Which typically around me gets spent frivalously. I choose to lice in a trailer park. Tax season is like second Christmas. People thought I was horrible for using mine to do things like pay gor a roof instead of buying my kids stuff or upgrading my car.

      4. I agree. If I thought it would move the needle in lower income people saving for retirement, I’d be all for it. But it won’t. The only way you’re going to do that is to have universal 401k plans where the employee is enrolled automatically and the individual has to fill out some paperwork to tell their employer not to take the money out. The federal government could do this pretty easily if they wanted to. It could be modeled on the TSP plan it offers its own employees. It really should be pretty easy to roll out. But the federal government never does anything sensible, unfortunately.

    2. “High-income earners don’t need as much help”, I agree, but don’t tell it to the folks who worked hard to move to that bracket. What may help though is to say helping the lower income earners help themselves now will help fend off social-ills later.

      As for “…Democratic party’s insidious slide into Socialism?”, Trump counties pay 29% of all federal income taxes, wouldn’t Biden’s proposed 401k change benefit the non-Bideners a whole lot?

      1. “insidious slide into Socialism?” I’m genuinely interested in what you imagine your life would be like under what you term “Socialism”; can you share these thoughts?

    1. Jen,
      Actually, IRAs (and later 401Ks) made a big difference in the percent of Americans saving for retirement. It changed the landscape of American savings rates.
      Brandon,
      No, this is not wealth redistribution. Nothing is “taken” from the wealthy. But this is using the tax code to encourage changed behavior. Much of the tax code encourages/discourages behavior that is socially positive or negative.

    2. Maybe, or you could also argue that it’s making a program that unfairly benefited high income earners in the past more equal. Which side of the debate you’re on depends on the size of your paycheck.

  4. It’s not a punishment to high-income earners any more than wearing a seatbelt was a punishment to free-waisty drivers, although I’m sure it felt like that to some! Speaking of feelings, if it feels like wealth redistribution, it’s a rather mild form of it, and I prefer the term miswealth correction — after all, the rest of the country has been effectively subsidizing high bracket folks’ tax deductions. And as for correcting, correcting an imbalance (c.f. rich guy check=$3200, poor guy check=$1200) in a fair (income neutral) way has stand alone merits, whether it encourages the poorer to save or encourages the richer to work harder to skirt the law and avoid the change, or not. Spoken as a beneficiary of the high rate deduction, who thinks taxing the wealthy at 32% is completely unfair… as unfair as the loopholes that let folks get away with paying less than the rate they owe (I for one, pay my rate; it’s the least I can do for my country).

  5. I wonder how many in that 10 and 12% tax bracket are like me and don’t have access to a 401k and can only put a maximum of $6000 a year in a tax advantaged account? I’m guessing quite a bit. Also I wasn’t able to find any info on changes to IRA contributions so it doesn’t sound like the 26% applies to that. Seems like half hearted attempt to me with out doing something to get more employers to offer 401k plans.

    1. Why are you wed to a job that keeps you in the 10-12% tax bracket? Find another job that offers a 401k and as a side benefit you may even make more money.

      1. Ok full disclosure I am a little bit above the 12% tax bracket, but once I max out my IRA and HSA it puts me back in the 12% bracket. I’ve only worked in two fields in my life, the mental heath field and restaurants. Restaurants pay quite a bit more, even without benefits, and are much less stressful. I’m pretty sure if I take an entry level job in any other field I’d be taking a pretty big pay cut. I also kind of like having my health insurance and retirement independent of my job (that was especially nice when all restaurants had to close down for 2 months earlier this year). I don’t feel like I’m asking for the world here, just that people who don’t have access to a 401k should be able to contribute more than $6000 a year to an IRA.

        1. That makes complete sense and like you have good reasons for doing what you do. In your first post it sounded like a job with a 401k was a big priority to you, but after you explained better I see that you have decided against a job with benefits for a myriad of reasons. It is strange why the contributions limits are so different. It would make sense to allow people without access to a 401k/403b/457 to contribute the $19,500 limit to an IRA and people who do have access to have the $6,000 limit.

          Obviously under this proposed change it would make a huge difference, but under the current system you aren’t losing much by not being able to contribute to a 401k. At your low tax bracket you may be better off with $6,000 in a ROTH and the rest of what you can contribute in a taxable. If you save enough you would likely being withdrawing money in a higher tax bracket than what you avoided now.

          1. The point I was trying to make with my first post is that there are a lot of workers who don’t have access to a 401k. One article I found said that 50% of American workers did not have access to a 401k. I would guess that most of those workers without access are in the tax brackets that would benefit the most. So unless there are some more changes we don’t know about yet, this does not seem like a great way to get lower income people to save more for retirement. You said that I might be better off contributing to a Roth IRA now cause I might be in a higher tax bracket when I am withdrawing the money. As of now my plan is to max out my traditional and then do a Roth ladder conversion. When I crunched the numbers I found that I save about $700 year on taxes by maxing my IRA. I’m curious how I might be in a higher tax bracket when I retire since my income will be tied to my spending, and I don’t plan on spending more in retirement, if anything less.

  6. How will this 401K tax credit affect the income brackets as they pertain to dividends and capital gains in taxable investment accounts? If a person previously maxed out a 401K and then that pushed them into the 0% tax bracket for dividends/capital gains (long term capital gains in a taxable account), how will the Biden tax credit affect those numbers?

    1. Unclear. It’s possible that 401(k) contributions could still be factored into the calculations for MAGI, but that’s something that would need to be shaken out in legislation.

  7. I think the math in your example below is not quite correct:

    “If we were to look at the federal tax brackets for 2020, if a single earner makes $200k a year, they would be in the 32% tax bracket. So if that person makes a $10,000 401(k) contribution, they would get a check from the federal government equal to $10,000 x 32% = $3,200.”

    32% is the marginal tax rate not the actual/ effective tax rate. The effective tax rate will be lower. 32% applies only to the amount of income between ~$163K and ~$207K.

    1. If a person makes $200k and makes a $10k contribution, then the $10k contribution would be deducted at the $163k and $207k bracket, which puts it at the 32% marginal tax rate.

  8. Has there been any mention of whether 403b’s and/or 457b’s will be included in this change to tax deductibility? I can’t seem to find any mention of that on the inter webs.

  9. An important correction regarding Roth IRA contributions discussed in this article: The max contribution applies to the TOTAL of your Roth and Traditional IRA contributions ($6000 total per person in 2020). There is not a separate limit for Roth and Traditional IRAs. So if you are prioritizing pre-tax contributions in your personal financial situation, the direction should be “Fill up your [pre-tax] 401(k) to the max, then fill up your [pre-tax] TRADITIONAL IRA (not post-tax Roth) to the max.”

    After filling the 401k and Traditional IRA, you cannot contribute to your Roth IRA.

    …and if I’m wrong about this please let me know, as we would love to double our total IRA contributions for me and my spouse from $12k to $24k for 2020!

    Quote from the article below, for reference:
    “But whereas before when the advice was to prioritize the Roth at lower earning brackets, now under the new system the advice is:

    Fill up your 401(k) to the max
    Then fill up your Roth IRA to the max, possibly using Backdoor Roth IRA contributions if you earn too much.”

    1. If you have access to a 401(k), typically the amount you can contribute and deduct to a Traditional IRA is severly limited, so if you max out your 401(k) your only option is to make non-deductible contributions to your IRA, which might as well be a Roth instead of a Traditional IRA.

      That being said, we still don’t know what effect this change will have on contribution limit rules to IRAs, so I’ll update this advice if/when this plan comes to pass.

  10. I”m wondering about unintended consequences. A million years ago, I worked in a Radio Shack in Monterey, California and had a lot of wealthy customers from Carmel (Clint Eastwood was once the Mayor!), Pebble Beach, and Pacific Grove. Uncle Sam created a “soak the rich” luxury tax on yachts, expensive cars, etc. I recall that a customer told me that he could damn well afford a new Rolls-Royce and used to buy one every year, but that now, he was madder than Hell about being attacked for being successful! His solution: no more yearly Rolls purchase until President Clinton left office or maybe beyond. He made the point that this Luxury Tax wasn’t hurting him, but rather, it hurt the salesperson who wouldn’t get a commission, the person who cleaned and waxed the cars, and all the rest of the Little People that were supposed to be helped by Robin Hood on the Potomac.
    Something similar happened with a wealthy friend who wasn’t happy about some Obama-era taxes. He simply lived off his extensive savings and produced nothing and waited Obama et al out. He is in real estate, so I guess clerks, sign-makers, maybe guys in construction, etc. were hurt by this, but not him.
    My Crystal Ball doesn’t tell me if this Latest and Greatest will have similar unintended consequences, but I do know this much: Scrooge McDuck didn’t get that swimming pool full of gold and greenbacks in the basement of his mansion by being a dimwit.
    As Forrest Gump would say: …and that’s all I’ve got to say about that!

    Dan V
    Taipei, Taiwan

    1. Oh sure, unintended consequences always follow any policy change. The intent of this policy is to encourage lower earners to save more, while not necessarily discouraging higher earners from saving as well. Will it shake out that way? Who knows.

      Also, I miss Taiwan 🙁

  11. I know you guys most likely know my political leanings based of my past work.

    But I view the policy idea differently.

    1st Biden has proposed immediately ending the Current tax cuts. The result is the immediate loss of lower tax burdens for middle to lower income people.

    2nd, The proposed idea encourages people mainly in the higher end of the middle to upper income earners to invest giving them (a smaller number) of more well off individuals ways to shield their money from Uncle Sam. The flaw of this is He Biden Doesn’t have the votes to pass his plan, only the ability to destroy what’s there.

    If we wanted to talk about real plans for savings, if people are in the lowest tax brackets a for low income earners they should propose a pretax investment and a no tax withdraw to bring people out of poverty and to free them from dependency.

    But I also believe people should be able to opt out of Social Security and instead be able to substitute the same dollar amount into a broad based index fund. Also incentivizing lower income earners to save by pre-tax IRA and 401K investments.

    Tax is taking not giving, therefore Uncle Same shouldn’t victimize his own Citizens. Just a personal belief.

    1. Hey Chad! Great to hear from you!

      First, I believe that Biden’s plan reverses tax cuts for individuals above the $400k level, leaving the rest of the tax brackets alone.

      And second, I agree. What he proposes and what gets enacted are very different things. We’ll see come Jan 5 what happens in the Geogia runoffs for a clearer picture on what he can actually pass into law.

      Stay safe, buddy!

  12. Adding on to JC’s point of funding a Traditional IRA instead of the Roth IRA, I believe anyone with kids in college reaps an extra benefit by maximizing tax deductible contributions (403b, Traditional IRA, and HSA in my case) to lower their taxable income since the Expected Financial Contribution is tied to taxable income. At least for me, it’s a major challenge to max these contributions out while keeping enough cash flow to keep the lights on. The other conundrum is that I’m funding retirement accounts at the expense of taxable accounts, so having enough cash flow for FIRE before 59 1/2 is dubious. I’d love to see a post or more insights on this subject actually; I’ve not seen anything elsewhere about how to most efficiently tackle paying for college while also working toward FIRE. Creating a Roth conversion ladder sounds great but requires more cash flow than I have available to pay the taxes incurred (and this impacts EFC for college as well…).

    1. I can only speak from my experience but if your kid(s) are above average and plan to go to college have them start early. Mine have and one still is taking classes at the community college. He will actually have his associate degree before his HS diploma. Get all the prerequisites and other stuff done at this level and transfer to a 4 year institution (sometimes you can finish a 4 yr. degree at the CC through university partnerships). If you can’t complete the bachelors degree at the CC have your kids go to a local university while they can still live at home. Tuition near me is about $10k/year but room and board is $12+. If your kid wants to go away they should strive for scholarships and other financing. My oldest asked what his education total cost would be for his 4 yr. degree and it will be in the $35-40k range with books. He even changed majors and will graduate in 4 years. It isn’t where you start-It’s where you finish! I hope this helps.

  13. I don’t get it. Why so many people here are all mad about “punishment of success” or some bull stuff like that. How did you miss out on the deep and abiding peace of mind that comes from spending less than 50% of your paycheck? Did that not wash away any sensation of financial worry? Do you just not have any friends who are poor?

    Okay, so it will take me an extra three to six months to reach my number now. But wealth redistribution means I will have fewer friends who are in deep financial distress. Seems like a fair trade to me.

  14. I’m surprised at the naiveté (or lack of cynicism) of so many the the responses thus far. Anyone who pays attention to US politics knows that the 401K, much like Social Security and Medicare, is a political “third rail”….touch it and you die !!

    …I can already envision the multi-gazillion dollar ad blitz by the finance industry and political opponents, accusing Biden of wanting to starve seniors, throw them out of their assisted living, and forcing them to eat dog food……or even worse…much much worse…forcing them to move in with their children !!

    For better or worse, it’s safe to say there will be no 401K changes in the foreseeable future. For Biden to do what he wants, he’ll need to come up with an entirely new program that’s geared strictly towards working class and sub-six figure earners.

  15. I’m more concerned about TESLA being add to the S&P in January.
    Tesla PE at > 1000, can you believe?
    It will burst inside the SPX next year and take us all index investors with it….what a terrible decision to include this balloon in the S&P

  16. My spouse and I have benefited to an amazing degree with the current 401K in the US and we are FIRE and we are happy and the new rules will no longer apply to us because we no longer earn an income from an employer.
    Having said all of that, I have always believed, even as I was benefiting, that the deck was stacked very highly against most people. First, I had my own s-corp with an individual 401K and could contribute from my salary the max each year (tax deductible to me) PLUS my corp could contribute (tax deductible to the s-corp) to 25% of my salary (there is a cap). Second, spouse happened to work for a company offering a 401K plus a match for the first 6%. PLUS when we turned 50, we got to contribute more.
    Now, what if I didn’t have my own corp? I would not be eligible to contribute as much so my savings rate in that vehicle would be lower and taxes would have been higher. What if my spouse’s employer chose not to offer a 401K? He could contribute to an IRA but not as much. Again, higher taxes, less savings. What if, as in my son’s employer, they decided to stop matching? Lower contributions impact the rate of build up. What if one of us were not working because we were caring for family or writing the great American novel or whatever? Even if we could afford to contribute based the equivalent of two working incomes, we would have been constrained and not allowed to save as much.
    The current American tax system is one in which the more you have, the more you get.

  17. You guys sure know how to make others feel super well who don’t agree with you. Oh, wait, you were trying to make others feel bad? Oh, OK, yes, I guess you did that great. Nothing like alienating your readers. In soccer they have a concept called “good sportsmanship” where you don’t rub it in if your team won the game. But I guess you guys must have never played team sports before.

    Regardless if there was no fraud or if there was (and yes, there was some fraud there always is in elections because, you know, in the 21st century the government still can’t seem to eliminate fraud – it just matters if it was enough to change the election which isn’t looking to be likely even in this very close election), we should treat each other well. I’m just sad the American people did vote for the first president that didn’t start a new war in the last 50 years. Oh, well.

    1. I write about issues that affect our readers, and the policies of the incoming US president affects our readers. If anyone feels alienated by reality, I can’t help ya.

  18. My concern with any proposed changes to 401k, etc are the unintended consequences. From reading the comments so far, many are not considering that those not saving properly (individual specific amount to each person or family) have more to do with how they are living, or the career path they chose. I have many friends, and still see many of my children’s friends going to college to ‘have fun, etc’ and they’re going into massive debt for a degree that will not bear any fruit. **Obviously, they should read your book. The government should consider calling out our Higher Learning Institutions (liberal or otherwise) to push out degree fields that are relevant to our modern society. That seems to rarely get brought up, as a main cause for many’s low savings rate. I fear, blaming the Rich (whoever they are), does NOT address the root cause for the various inequalities that come up weekly. IMHO, root causes are poor choices for college degrees, poor college choices themselves, purchasing the newest iPhones or Galaxy phones, driving/leasing a new car every two to four years…these prevent many folks from proper savings, not the group of Rich, etc, that is making over 250K or 400K per year, etc.

    1. Oh sure, I agree that tax changes won’t automatically fix lower income savings rates. Will someone making $20k be able to put $19,500 into a 401k regardless of the tax benefits? Of course not. It’ll be interesting to see whether this actually moves the needle or not though.

  19. Obviously people who have a higher income will have more money to save for retirement.
    I see a lot of people who voluntarily stay in low paying jobs, because it is their “passion”.
    Anyone can change their job or career if they want to and make more money.
    If you say higher income people effectively get a bigger tax break because they are in a higher tax bracket , one way to solve that is to have a flat tax. I do think tax sheltered retirement plans should be available outside of your employer, just as health insurance should be available independent of your employer.

    1. I disagree with you that anyone can change their career into a higher paying one and that people who are staying in lower paying jobs are doing so cause its their passion. I’m sure there are some people who are passionate about their low paying jobs, but I doubt anyone is passionate about mopping floors, flipping burgers, or washing dishes. I do agree that tax sheltered retirement plans should be available outside your employer and they are, but there is a big difference between the two. You can contribute up to $19,500 a year to a 401k and $6000 a year to an IRA.

  20. I gotta be honest…this blog is one of the very few that still cares about the FIRE movement….
    It makes me really sick to see all these FIREs on the internet bragging about how great their lives are….
    GCC just wrote about a fancy and exclusive club he got in…1500days about how nice his Tesla is.
    Most FIRE guys lost the essence of the movement. It’s a shame, a real shame!!!

    1. Aww thanks! I knew about GCC’s country club thing, but I didn’t know Mr. 1500 bought a Tesla.

      I’m going to have to remember to make fun of them the next time I see them. 🙂

  21. The only choice Trump has in the matter is whether he leaves on his own power or is dragged out by his ankles by Secret Service.

    ———

    One can only hope he chooses the ankle dragging.

    “social justice warrior” school of thought

    ———

    Shit! They have a school for that now?

  22. Dang, but it still takes 60 votes to get anything through the senate so just keep that in mind while ponder everything JB and crew wants. It is just like T wanting a tiny 30B for a wall, it wouldn’t pass the senate (like it or not). Tiny considering 2020 deficit was 3 something trillion.

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