What’s comical about members of congress attacking individual incomes? What’s comical about members of congress talking about taxing 401K’s at a higher rate?
It doesn’t show that, though. The only thing in there is a quote from McDermott’s press secretary saying such ideas are “intriguing”, and a quote of dubious origin regarding stagnant savings rates despite the tax breaks afforded to those investing in 401(k)s. The second quote is alternatively attributed to Miller or McDermott, depending on what newsblog you read.
Wouldn’t “legislative desire” amount to laws being proposed? Can you cite any proposed law that would change the tax status of 401(k)'s?
No, I only submitted that legislators discussed it. When you consider the rate that the national debt is growing there will be a point when politicians begin to seriously focus on large taxable assets. Currently we’re looking at debt of over $45,000 per person. for each additional trillion in debt it goes up $3,000.
I’m not trying to be an alarmist but debt can’t continue to climb indefinitely and something will have to give.
fruitbat’s post (#25) is great. One other type of annuity that is getting attention recently is the delayed or deferred annuity. For example, an annuity that you buy at age 65 but that does not start paying you until age 85. These are generally quite cheap to purchase, as (1) the annuity provider gets to invest and grow your purchase price for 20 years, (2) you might not live until 85, and (3) even if you do, you might not live much past 85.
So, why the heck would you want to buy such a product? Because it solves the problem of an uncertain lifespan. Let us say you buy an deferred annuity that pays enough money to live on once you reach 85 (and lasting until you die). As mentioned above, the cost will be relatively low (vs. an annuity that starts paying at age 65). Your remaining wealth can be spent in its entirety over the intervening 20 years. It is much easier to plan for a fixed time frame than an uncertain time frame, and you will typically be able to enjoy a much higher standard of living as a result.
The downside is that you may die before age 85, in which case your heirs would have been better off had you not bought a deferred annuity. In that sense, the deferred annuity is insurance to protect you from the “problem of living too long” (yes, economist do use this phrase), and like all insurance you lose money if you never use it. Of course, your heirs would be best off financially if you died as soon as you stop working…
