Hacker News Reader

Comment by toomuchtodo | Hacker News Reader

> Ideas include allowing your savings to follow you wherever you go or however you work

IRAs (which should replace 401ks entirely)? Wage increases so workers can afford to save for retirement (and not need to raid their retirement accounts for emergencies)? Also seems like a submarine piece for annuities.

401ks are underwhelming as a product. Congress should provide IRAs the same creditor protection, allow employer contributions, and incentivize a streamlined onboarding process (just as you provide ACH routing and account number for your checking account rontour employer, you’d provide the same for your IRA). This ensures portability, low costs (lots of competition in the IRA space), and also prevents junk fees from 401k administrators since you’re not a captive audience.

View on HN

>401ks are underwhelming as a product...

Agreed. It wasn't too long ago that The Crash[0] wiped-out a large portion of people's life-savings.

>Congress should provide IRAs the same creditor protection, allow employer contributions, and incentivize a streamlined onboarding process...

Couldn't agree more but what you're - essentially - describing is no different than the pensions as exists in Europe [1,2,3,4].

This isn't meant to be an affront but, for some reason, Americans have grown adverse to the idea of pensions; even though previous generations of Americans enjoyed the fruits of that very same labour.

[0] - https://www.cbsnews.com/news/retirement-dreams-disappear-wit...

[1] - https://www.revenue.ie/en/jobs-and-pensions/pensions/tax-rel...

[2] - https://www.deutsche-rentenversicherung.de/Allgemein/en/Inha...

[3] - https://www.island.is/en/senior_years/pensions_and_benefits/...

[4] - https://www.pensionsmyndigheten.se/content/dam/pensionsmyndi...

I'm sorry I'm not sure I understand. How is a retirement account that you control, and whose investments you direct, the same thing as a pension?

I always thought that a pension was defined as:

"Contribute $A/month for X years, and we'll pay you $B/month for Y years after you retire - and don't worry about how it happens, you're guaranteed this money if you qualify."

Is that not how pensions in Europe work?

Not in the UK, not anymore and those that do still exist are remnants that don't accept new members.

Work place pensions now are like investment accounts, except you have some degree of matching from the company and the government tops you up an extra 20% of what you contribute (it gets more complicated when you get into higher tax brackets, like getting 40% top up on portions, but getting it back by raising your untaxed income level instead of directly into the account. And very high earners it gets more complicated)

As an individual you can also open a SIPP which is a personal pension investment account, get all the government benefits but no company match of course.

What 401k were “wiped out”? The selling price for the assets in the 401k was only down for a few years, and then they were reinflated and tripled within 10 years.

And defined benefit pensions and 401k are invested into the same assets, the government doesn’t have a secret stash of risk free 8% return investments. What they do have is the ability to fudge the numbers by setting inappropriate assumptions and buying government employee votes with crazy promises 30 years into the future, backed by the power to tax everyone into oblivion.

Reply on news.ycombinator.com