Read these excerpts from The Week, a UK publication that also publishes a US version. That anyone can write such dribble is amazing.
“What he doesn’t mention is that the regular Social Security fund won’t come up short until 2034. Plugging the holes in SSDI would advance that date by only about one year, since SSDI is only a small fraction of the overall program. In this country, having some 18 years of breathing space for a government program counts as nearly miraculous…”
Wow, 18 years. Does the fact the Trustees have been urging action on Social Security for decades and nothing has been done mean anything? Does it matter that if anyone dare suggests ways to deal with the coming crisis, they are immediately beaten up by the AARP and AFL-CIO?
…”It would be easy to find such money. Indeed, we don’t even have to leave the world of retirement policy! We could simply scrap the 401(k) tax credit, which does not work as advertised to increase savings and sends the vast majority of its benefits to the rich. We could then plow the savings into Social Security. The 401(k) credit and similar programs cost something like $100 billion yearly, as compared to the total cost of Social Security of about $820 billion. Hey presto, we’re done…”
Easy you say? Just screw the entire working middle-class and presto, we’re done? Amazing irresponsible rhetoric, but the kind we have come to expect from the left.
Vast majority of its benefits to the rich? Is the writer aware there are numerous tests and limits on 401k and similar vehicles that prevent the rich from overly benefiting? Things like limits on the total contribution, on the compensation that can be counted and on the ratio of savings between high and low paid workers? Clearly what we need now is a policy that makes it more difficult for average people to save for retirement.
But most important is the nonsense that these plans cost the government money. In fact, they defer income taxes to the government, but in the end generate more income over alternate non-qualified investments because all earnings are taxed as ordinary income, not capital gains or dividends. In addition, pre-tax contributions to a 401k plan are subject to both Social Security and Medicare payroll taxes.
And oh yes, like the 401k or not, while they fall short of a defined benefit pension, they are all that most workers have to save for retirement. Take the 401k and other vehicles away even if they are underused, and you create more pressure on Social Security as a greater source of retirement income.
By the way, if you want real savings, drop or limit the tax-free nature of employer health insurance contributions.
For the truth about Social Security, including information directly from the Trustees Annual Report, review the Social Security category on Quinnscommentary or link directly via the link on Blogroll on the right side of the page.
QUINNSCOMMENTARY 
I think you have given the writer too much credit. When he talks about the benefits of 401Ks floating to the rich, I think he is talking the fees collected by Wall Street.
The idea that the consequences of Social Security are 18 years away are overly optimistic. The government has to refinance the debt held by the Trust Fund starting in about 3 years. Here is my article on it :
“Traditional coverage of Social Security tells voters that if Congress does nothing, the system will continue to pay scheduled benefits for nearly two decades. The problem with the analysis is of course that Congress is not in a position to do nothing. It cannot ignore Social Security as the relationship between Congress and the system evolves from private banker to creditor. ”
http://www.thehill.com/blogs/congress-blog/economy-budget/236148-social-securitys-uncertain-future
For what it is worth, 401Ks are only one component of retirement savings. And retirement savings is only one part of a retirement plan. The largest part of net-worth for a retiree is home-equity.
LikeLike
And the greatest risk is longevity.
LikeLike
You will have to explain the risk of longevity. People are not living much longer in retirement than they did 30 years ago. In 1935, it was 13ish years. Now life expectancy at 65 is 19ish. We have raised the retirement age by 2 years, so retirement is up about 4 years since 1935’s original plan.
I think the greatest risk is that the unfunded obligations grow every year by more than we collect in revenue. That means that every penny of benefit paid in 2013 came at the projected expense of a future retiree. It is little more than a financial game of musical chairs.
C
LikeLike
The longevity risk on the individual level is simply outliving your money which, of course, is the combination of how much you have to start with and how long you need it to last and the later is unknown.
LikeLike
Thanks, I have written about that problem previously. The government recently made a change to the 401K/IRA rules which allow people to buy longevity annuities in the retirement plans. The problem is that most advisors are telling people to take the option which leaves a remainder for your heirs. That is just dumb because it reduces the leverage of the protection. Insurance is an expense, not an investment.
If you have interest in the article it is : http://www.fedsmith.com/2014/05/27/going-in-the-wrong-direction/ It basically says that insurance is a better way to prepare for retirement than savings.
LikeLike