I’ve already suggested you plan to pay for your own health care. This weeks good news notwithstanding, Congress is a big fan of taking control of things, and healthcare is one of those things they are after. Might not be this year, but it might be in your lifetime. If I’m wrong, you’ll be sitting on a pile of money later in life, not a bad thing.
Well, maybe not a bad thing.
Ron Holland suggests you also prepare for the government to take control of your 401k. I heard a bit about this, but didn’t have a chance to blog about it, so I’ll just give you what Ron said:
Each year, the government will put $600 into a Guaranteed Retirement Account for you and every other working person in America. If $600 amounts to more than 5% of your annual compensation (if you earn more than $12,000) you will be required to contribute 5% of your total annual compensation to the GRA. The Feds will promise to pay a 3% “inflation adjusted return” on each GRA, based on the government’s Consumer Price Index. When you retire, you receive a portion of the account each month. Then — get this — when you die, your heirs receive only 50% of what’s in your GRA. The rest goes to Uncle Sam. Remember, this is the good news!
Next…
Following the introduction of Guaranteed Retirement Accounts, the next step will be to cap the tax deduction for annual contributions to existing private retirement plans at 5,000. (Many Americans will support this, given the hostility to the well-publicized Wall Street mega-bonuses and retirement plans.) Next will be a tax on every retirement plan’s income, to provide an immediate flow of revenue to the Feds. Finally, there would be a prohibition on buying any non-U.S. investment for any retirement plan.
He goes on to describe the scenarios required to get something like this into law (a significant event like a terrorist attack), and how it would be implemented. Given there was serious talk of this kind of action in the news, I wouldn’t be too quick to write the idea off as just a conspiracy theory.
I’m not saying you should stop using a 401k, but I am saying you might want to plan your retirement using a variety of tools, not just a 401k. I certainly do.
Windy Recycling Day 