Should Government Take Over Your 401(k)?
Reports have surfaced in recent days over House Democrat attempts to make significant changes to 401(k) plans in our country. They first want to remove the tax break we currently receive by contributing funds to a 401(k) plan. Then, they wish to enroll everyone into a government run retirement plan where you would be required to put away 5% of your income to earn a 3% return. Let’s look at why this is likely to happen.
First, there are two reasons why I think that this is going to happen (assuming Obama is elected President).
1. The wealth building gap or the savings rate between races (specifically, black vs white) is fairly large. The interesting thing is that this still applies even when a black person earns as much as a white person. The current issue of Money Magazine (or maybe Smart Money) has an interesting article on this. The important thing to note here is the “fairness” rhetoric we are hearing in this political season. It is deemed unfair that a certain segment of society is more responsible with their money than the next. Therefore, government should control all entire retirement savings to ensure equal savings.
2. The stock market has suffered serious declines. It is easy for government to assume more power and authority during times of fear. Right now that fear is economical. You will see more calls for government to “buy up” 401(k) plans that have suffered severe losses. You will hear this concept presented as a bailout for individual’s retirements. Risk, apparently, is now a concept that is unacceptable.
If you don’t believe that this is happening, it has already been brought to the table in the House. I believe with the anticipated election win of Obama, House liberals are salivating at the opportunity to push through their very liberal legislation that they will be able to get through unblocked for the first time.
What is the next step? Confiscate all retirement funds to be distributed according to how the government sees fit? Or how about eliminating tax free withdrawals on Roth IRA money? I can easily see that happening; therefore, do not put all of your eggs in a Roth IRA.
I believe this is a very slippery slope that is going to be disastrous for our economy. I understand the allure many individuals have for Obama. He is a very impressive figure. I am very fearful, however, of the resulting policies of a completely unchecked Democrat-run government. Not just Democrats, but a Democrat party with very left-leaning leadership (Pelosi, Reid, Obama).
Meanwhile, the government is enjoying the best retirement benefits in the country. I am very concerned with the direction of our country. Soon, it seems, the government will be controlling more and more aspects of our lives: healthcare, retirement, etc. What is next? If oil prices skyrocket, will our government take over the energy industry to ensure “fair” gas prices? I’m not sure where this leads and I’m not sure I want to know.
Lastly, there is some people calling for closing the stock market for a week or so if we suffer another large drop in stock prices. What a joke. Maybe we should start policing casinos and lottery ticket distributors to make sure nobody risks losing any money. Maybe we should also discourage folks from buying cars that are known to depreciate more than others!