The wealthy years of the 20th century (driven by ludicrous amounts of fossil fuel exploitation) are an incredible anomaly in human history anyway. We're just reverting back to the mean when the vast majority of people never retired. It was good enough not to die of hunger.
This is going to continue until we start decoupling more of the economy from fossil fuels.
Not every single problem in society is fixed by getting off fossil fuels. "Decoupling" the economy from fossil fuels will not be a magic solution in this case.
(the contribution limit this year is ~$20,000, which hey, good for people that can set that much earned income aside, but I'm not sure they are "the wealthy" that you mean. Even the considerably higher overall contribution limit for catchup contributions doesn't seem like something "the wealthy" would be worried about for tax sheltering)
https://news.ycombinator.com/item?id=29780629
https://www.bogleheads.org/wiki/Mega-backdoor_Roth
https://www.washingtonpost.com/outlook/2022/04/20/retirement...
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3997927
https://www.epi.org/publication/retirement-in-america/
https://www.census.gov/library/stories/2022/08/who-has-retir...
Roths aren't even vaguely related to the origin of 401ks, so I guess no need to look at those.
If I didn't believe my thesis was on a solid foundation of facts, I wouldn't have asserted it.
If I didn't believe my thesis was on a solid foundation of facts, I wouldn't have asserted it.
401ks were absolutely initially designed as a tax shelter (a way to defer taxes on income). It may have been a "loophole" at the beginning, but regulation and legislation quickly embraced it.
My contention is that a tax shelter that is subject to relatively modest contribution limits was not initially designed for the wealthy.
Defined benefit plans are great for the recipients, but we have also sort of proved that we are terrible at properly funding them. Making the future pay for present day promises isn't likely to be sustainable.
From my last link:
> The median value of 401(k)-style accounts was $30,000 and the median IRA or Keogh value was $30,820 — not statistically different.
> The median total amount employees contributed in 2020 to their own IRA or Keogh account was $2,514. The median amount they contributed to their 401(k)-style accounts ($3,599) and pension plans ($3,257) was slightly higher. Future research will examine employer contributions in combination with employee contributions.
Come on, based on available data this isn’t a functioning asset accumulation system for worker retirement, it’s theater to keep the hoax going. Outliers are going to trot out their six and seven figure account balances, but they are just that: outliers.
I'm not actually arguing that 401ks are a solution to retirement though. I'm arguing that they weren't initially designed as a tax shelter for the wealthy.
I'm not sure what an improved system looks like. Probably something like a pension where the employer is not allowed to be the entity responsible for paying out the benefit (so that present day promises can't be funded with future contributions).
Similar to college costs, the amount of total capital required to retire comfortably is accelerating away (due to underlying cost inflation, compressed future capital market returns, and longer expected lifetimes) from the capability of the mean worker to accomplish the necessary level of wealth accumulation during a work lifetime. Very few levers to pull besides earning more or finding somewhere to live that costs less.