WTH???? Most Americans want to end IRAs and 401Ks, if it means more take home pay?

Photo above - 85% of people polled want to end IRAs and 401Ks. And 40% of people believe lottery winnings will be a significant source of income after retirement.

At last – America’s dubious public education system has caught up with us. Per the link below, an astonishing 85% of Americans were willing to kill off retirement accounts if it would mean a few extra bucks in their paychecks. This is a semi-legitimate poll. It was a collaboration between the Cato Institute - which has cred - and YouGov, the email spam/online survey organization that pays anyone 10 cents (in loyalty points) whenever they tale a poll. Those opinions are clearly worth about . . . 10 cents.

There are a million reasons why these survey results are BS. I’ll just recap the most obvious ones:

1. Only half of Americans even have an IRA or 401K.

2. The other half are too ignorant about taxes to understand that you wouldn’t get more take home pay in a post-IRA world unless you were actually having 401K/IRA deductions from that paycheck in the first place.

3. 80% of Americans report living paycheck to paycheck.

4. A lot of those living paycheck to paycheck are retirees. Their struggling with inadequate monthly social security checks. They could care less what happens to people who HAVENT retired yet. They don’t realize that killing IRAs won’t mean higher monthly checks.

5. Also among the 80% living paycheck to paycheck: welfare recipients; single moms dependent on alimony and child support; waitstaff and gig workers like door-dash and uber drivers, who don’t report their cash tips as income anyway.

6. Federal workers who legally CANNOT have 401K accounts. This includes millions of clerks, postal workers, uniformed service members, etc. None of them can have a 401K under the current rules.

7. Teachers are excluded too, even though they are state/local government workers. Most of them are in TIAA/Cref retirement plans.

8. 40% of soon-to-be-retirees expect “lottery winnings” to be a significant source of retirement income. The survey did not disclose how many of these are public school teachers.

I was part of a team which organized a similar survey, more than a decade ago. Actually, I was the only team member who objected to the focus group and tried to stop it. It was a series of panel discussions to discover why airline frequent fliers were sitting on hundreds of thousands of air-miles but never seem to cash them in for free flights. My objection was that anyone who would drive all the way over, then waste couple of hours just for a free sandwich, chips, and Pepsi wasn’t a reliable source of information. This really happened.

No one expected the US Department of Education to do financial education competently. The DOE is a subsidiary of the same Federal Government which racked up $37 trillion national debt - $300,000 for each American family. The government that spends twice each year what it collects in taxes. Public schools can’t even teach kids how to balance a checkbook or make change from a $20 at the cash register. One nearby high school instead has a vocational course in how to operate a credit card swipe terminal. Parents no doubt insisted on modernizing the curriculum with “relevant skills”.

But I don’t know how many of these parents expect lottery winnings to be a significant source of their own retirement income.

I’m just sayin’ . . .

Survey: majority of Americans favor repealing IRA to extend Trump tax cuts

Retirement Account Statistics 2024 - NerdWallet

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Roundandroundwego · 61-69 Best Comment

Maybe it's complicated and you can't just sustain everyone's welfare. Not by law.
Complicated for Dems!

SusanInFlorida · 31-35, F

@Roundandroundwego

i'm marking this "best comment'.

its impossible for the government to dole out "free everything", of acceptable quality, based on taxes, no matter how convoluted you make the tax code.

the second part of the problem is that people from 3rd world nations will continue to arrive in the USA by the millions, because our "near poverty level" of public benefits is still 3X as good as what they endured back at home.

ArishMell · 70-79, M

How popular are private pensions - which are essentially protected investment plans - in America?

Though I doubt anyone on a very poor wage paid by an employer offering no company pension, could afford to establish one anyway.

The idea that nearly half of those polled (so only a representative sample of the whole population) imagine they are going to retire on huge lottery winnings suggests they have never been taught the basics of combinations, permutations and probability. (Probably not the difference between hazard and risk, either.)

I gave up on the UK's National Lottery firstly on finding it is not UK-owned, but then when it raised the stake from £1 to £2 at the same time as raising the draw from 6-from-49 numbers, to 6-from-50. That vastly reduced the chances of winning even a very modest prize. (By 50 times I think, but I forget the formula.) Even in its original form, I never really expected to win the jackpot!

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ArishMell · 70-79, M

@MethDozer Thankyou.

I was nto clear what a 401(k) Pension is so found an on-line tax-advisor that explained it. I had thought it is a State Pension, not a company one; but do all employers offer them?

Do you have any sort of State (i.e. National) Pension?

Like many people here in the UK I have a bit of mixture of State, company and private pensions; but Income Tax is levied on the total above a certain limit. So when any of them is increased you don't actually end up much better off! The State Pension is not ever so generous and if it's your only source of income you won't starve but have to lead a very limited life.

Many large institutions here, including the Civil Service, used to offer Defined Benefits pensions but these can be very expensive for the employer so have largely been replaced by Defined Contributions plans with 'Additional Voluntary Contributions' by the employer. As with the National Insurance (a tax originally intended to fund the national health and welfare systems) and Income Tax these are usually taken from your pay by your employer, but I don't remember if before or after the taxes..

.

SusanInFlorida · 31-35, F

@ArishMell i think pension plans are more popular with workers than with corporations.

industries with strong union workforces are more likely to have pensions.

most corporations are working on finding a way to phase out pensions (defined benefit plans) and replace them with defined contribution plans: accounts where they automatically deposit a sliver of your gross pay into a tax deferred fund, and match it (sometimes 50 cents on the dollar).

social security is a defined benefit plan, depends on "breakage" to succeed. Breakage means having a critical mass of recipients to die early enough NOT to bankrupt the system with their decades long entitlement to those benefit checks. This is the same as corporate pensions.

ArishMell · 70-79, M

@SusanInFlorida You raise there the awkward problem with all corporate and state pension plans, that irrespective of the plan type they are becoming increasingly expensive because we will insist on living longer than our great-grandparents generation tended to do.

And there are more of us retired types to look after, without necessarily more (in proportion) of you younger people to prop us up through your taxes.

No-one wants to be left to sink or swim of course, nor should they be; but it does show why large companies are moving to Defined Contributions with voluntary additional contributions.

I don't know the US equivalent but the UK DB, final-salary pensions for the Civil Service and Local Government staff used eightieths; so in theory you would retire after a full forty years uninterrupted service with a pension of half your final salary.

Which does sound a very high total bill but over the years fewer people put in forty years service, and the higher the salary the fewer the number of people earning it anyway. In fact most staff were on lower salaries than those of many of their equivalents in industry.

I don't know if they still use the final-salary method.

Oddly the UK's State Pension is taxed, before it's paid - I've never really understood that concept, since the SP is from tax in the first place! If your total pension income is above £12500 / year you pay Income Tax on the surplus, so an increase in any of them does not make much difference to you. The pension administrators pay it for you. Income from shares dividends is also taxed.

Another way companies reduce their pensions burden is by hiving off parts of themselves to their subsidiaries. The British supermarket chain, the Co-op, set up the NISA chain to do so; hardly in the spirit of the Co-operative Wholseale Society as it was called when founded in the 19C, in which its customers were also private shareholders (hence the name). It was established because at the time, a lot of industrial town shops were also owned by the industry owners, so tended to be expensive.

It is a difficulty for many corporations and countries, and one hard to see being any easier in future.

One way countries are tackling it is by gradually raising the retirement age to keep up with the gradually rising longevity.

BrandNewMan · M

OMFG .. 🤦🏻

Federal employees are covered by the Federal Employees Retirement System (FERS), which includes a Thrift Savings Plan (TSP), similar to a 401(k), and a Basic Benefit Plan. They can also have personally funded IRAs if they choose.

There are 403(b) plans that are primarily offered to employees of public schools, certain tax-exempt organizations, and some ministers. These people can also have an IRA account.

Anyone with the sense and money to do it can have and invest in an IRA.

We have a serious issue in this country with people not preparing themselves to have employable skills or the ability to handle money. It is not the responsibility of schools or the government to do that for you .. or the rest of us to support you if you don't.

People who have kids need to get off their duffs and be responsible adults/parents. Teach kids the value of an education or entering the skilled trades. Practice and teach financial management to kids.

We have far too many people in modern society who have completely abdicated the responsibilities of being an adult on every level.

SusanInFlorida · 31-35, F

@BrandNewMan its a good thing the creators of this survey didn't include "federal employee thrift savings plans" as part of the question about whether these should be made illegal.

the poll results might have been reversed, at least among government workers.

PicturesOfABetterTomorrow · 41-45, M

This poll is is actually pretty important but probably not for the reasons you think. It shows that older Americans in particular know that retirement is more and more a pipe dream and so called pensions have not kept up with the costs of the real world so it have sent many either into survival mode and or cynical to the point of believing winning the lottery is the only realistic situation where they would even be able to retire.

People used to joke that the Freedom 55 ad where you have a person walking down a tropical beach somewhere was their broker, not the client.

All this points to a systemic level problem.

SusanInFlorida · 31-35, F

@PicturesOfABetterTomorrow a comfortable retirement has always been a pipe dream, in every era.

people who don't recall their grandparents running out of money, and having to live with one or more of their better off kids simply weren't paying attention.

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wildbill83 · 41-45, M

federal and state employee TSP's are better than 401k's anyhow, accumulates much quicker due to better investments (one of the things I miss working for state, aside from benefits of course)

SusanInFlorida · 31-35, F

@wildbill83 better investments is a subjective idea.

the major rule about corporate 401Ks is that they CANNOT allow (or encourage) workers to put all their contributions into company stock. most offer at least a couple of stock mutual funds and bond funds.

anyone who picked a fund other than the "S&P 500 ETF index fund" (like symbol SYP) is probably unhappy when they compare their own results to the index of any reasonable time period - 5 years, 10 years, 20 years, etc.)

Virgo79 · 61-69, M

Wow, one would starve waiting on a scratch off winner.

SusanInFlorida · 31-35, F

@Virgo79 there's a closed circuit tv system at the Newsstand/smoke shop near my mom's house. it has continuous updates on winning numbers/contests over the past hour or so. retirees sit at tables, drinking sodas, watching the live updates, and buying more tickets. occasionally they go outside to have a smoke, then come back in.

there's horse racing/slot machine park not too far away, also. same deal. retirees wandering aound with cups full of quarters or tokens, trying to guess which machine will pay out next.

Virgo79 · 61-69, M

@SusanInFlorida oh i know, there's a few people i see buying tickets every pay day.
I think they spend most their check.

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Thinkerbell · 41-45, F

The biggest crisis in the US is its public education system.

Not only does it produce mostly ignoramuses, but it graduates them with grades that have inflated at least as fast as the dollar has.

SusanInFlorida · 31-35, F

@Thinkerbell i'm in favor of a national high school literacy/math test to get a diploma. it would allow states/counties to control their local education systems, take varying approaches to religion, evolution, and school libraries/bathrooms, but hold all of those schools accountable for things like:

1 - people have to read at a MUCH higher level than 5th grade average

2 - they have to know that the earth orbits the sun, and not vice versa

3 - They have to be able to name the 3 particles that comprise every atom, and name at least 10 elements on the periodic table, with their abbreviations.

4 - have to be able to add 4 + 7 in their head. Add and subtract every two single digit number, in fact.

5 - Be able to tell time with both an analog clock and a digital clock

6 - be able to write their full name, address, phone number, birthday and social security number in English

7 - have not filed for bankruptcy before age 18

8 - not currently be serving time behind bars

9 - be able to name the current president, the governor of their state, and at least one senator or congressperson

10 - be able to tell the difference between a rhinoceros and hippopotamus (this question - with picture - famously stumped a sitting president not too long ago)

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