Should savings be compulsory

[Bruce Wayne]

Increasing evidence suggests that people aren't saving enough for their retirement. Should it be made compulsory by the government?

[PrincessPerky]

yeah sure that will help, it didn't seem to help the education much, in fact the percentage of illiterates has GROWN, since instituting compulsory education. More people sit in schools, but less learn. I am guessing more people would actually save for retirement, but it would be less effective, IE not saving enough to make a difference, or not using it well after retirement. Or some economic effect, like less earned on what is saved.

[Bruce Wayne]

Thats a good point. I think people do appreciate things much more when they initiate the action themselves and have earnt it themselves, so 'free' education isn't achieving the best results.

Do you think there is an argument for a libertarian approach of no taxes (or much less taxes) and lassez faire government?

[BAGAGT1]

I don't think it should be compulsory, as I am sure there is a segment of low income workers who truly need to take home every cent they earn. With that in mind, I would like to see a little more regulation of 401k programs.

Once upon a time in the not so distant past, lots of mid sized and almost all large employers offered pensions (defined benefit) to thier employees for retirement. Times have changed, and these days very few mid sized companies offer a defined benefit pension retirement plan, instead the 401K has replaced it as a defined contibution retirement plan.

Unfortunately, as good as the 401K is, I see so many mid-sized companies who don't offer a match at all into their employees 401k. Without a company match, I would think it would be rather difficult for a low income or lower middle income employee to save enough into thier 401k to buy them a decent annuity when they retire.

I would like to see more regulation where upon an employer is required to match a certain percentage of the employee's contribution if for example the size of their workforce is equal to or greater than X.

I would also like to see more education for the employee on the importance of saving in the 401k. I know from my own experience, that I left a lot of money on the table of several of my former employers (one employer in particular had a very generous match), because I didn't know what a 401k was or how it worked. Employees need more than just a mailing sent to your home on your retirment plan, perhaps the Government should create a video that every employee would need to view when they start working for a company that provides a 401k program (kind of like they did for students entering college on financial aid).

Fortunately for me and my wife, we have both learned the errors of our ways, and are contributing 10% of our gross pay to our 401K (both of our companies have a generous match), and both of our companies also have a separate pension plan (my plan is defined benefit, my wifes is defined contribution).

[Bruce Wayne]

I would also like to see more education for the employee on the importance of saving in the 401k.

Financial education in general would be a valuable thing I think.

[jmjj215]

I would like to see more regulation where upon an employer is required to match a certain percentage of the employee's contribution if for example the size of their workforce is equal to or greater than X.

If they would cut FICA to make it revenue neutral (to the company), I would agree with this.

It's got to be grassroots. The govt. junks up pretty much everything it touches. Although a completely hands-off govt. is certainly no solution. There needs to be a fine line, a balance.

[baselle]

Nope, savings shouldn't be compulsory...but it would be nice to have an economic climate where the saver doesn't look like a total puritan goob (Bruce Wayne: since you are British goob=kevin).

[34saving]

The government has two alligances (one to spending to keep the economy going and one to saving so people can live in the future.) Since the government has a tendancy to deal with the short term I don't think the government is going to help "the savings problem" very much. I do think it would be reasonable to exclude (something like) the first $1000 of interest from income taxes though. I know lots of people who consider a HELOC their emergency fund largely because of tax advisors . . . Not my way of thinking, but its out there!

[34saving]

The government has two alligances (one to spending to keep the economy going and one to saving so people can live in the future.) Since the government has a tendancy to deal with the short term I don't think the government is going to help "the savings problem" very much. I do think it would be reasonable to exclude (something like) the first $1000 of interest from income taxes though. I know lots of people who consider a HELOC their emergency fund largely because of tax advisors . . . Not my way of thinking, but it's out there!

[Bruce Wayne]

In England you are taxed on the interest from your savings, the gains you make from the stock market, the sale of your property, inheritance etc.

Hardly a good situation if you're encouraging people to save is it?

[PrincessPerky]

The pendulum of complaint, first people arn't saving enough then not spending enough, then back. Silly IMO, the economy would be much better if the govt took its hands out (beyond some safety insured stuff, though that is debatable).

If people want to save, they should save, if they want to spend they should spend, niether group (so long as not depending on tax money to live) should be penalized for 'adversly effecting the economy' sheesh while back my ILs were considered 'unpatriotic' cause they still saved!

The govt in America taxes the loot in, saved, out, and every way in betweent ehy can, this in a country that fought over a tax on tea. George is rolling in his grave.

[Bruce Wayne]

Its even worse on this side of the pond. We're taxed on everything

[34saving]

A little off topic, but . . .once a salesperson said it was unAmerican that my husband and I have the philosophy: "No debt for depreciating assets". I tell you, that really endeared us to him, we bought EVERYTHING after that . . . (Can you sense the sarcasm through the typing )

[altyfc]

I'm not sure how you could easily make it compulsory... what did you have in mind?

Aaron

[akaivyleaf]

Social Security was an attempt at compulsory savings don't you think? It was good, but now its in danger of dying.

I think that it means more to people, we're more eager to do it, when we want to, not when we're forced to.

[jmjj215]

I don't think social security was ever good. Even FDR himself said it would have to be readjusted to meet changes.

I hate the thought that if people save their money the economy is going to crumble. Please.

Bruce, we're getting there.