Friday, July 17, 2015

3 Changes Congress Can Make Right Now to Improve Retirement for the Working Poor

July 17, 2015
3 Changes Congress Can Make Right Now To Improve Retirement

In 2015, workers can stash $18,000 in these accounts ($24,000 if they're over 50), but why limit them at all?

1. The single guy working 2,000 hours per year at $10 per hour is only able to sock away 90% of his income, assuming he pays no taxes or has any other expenses. This needs to change.

Currently, seniors need to start taking money out of their traditional IRAs by April 1 of the year following the calendar year in which they turn 70.5.

2. The single guy making $10 per hour who is still working at age 70.5 should have the option to take his IRA distributions later in life, presumably once he has had more time to make the first contribution to his retirement plan.

If you're single, your ability to contribute the full amount to a Roth is eliminated if your income is north of $116,000.

3. The single guy making $10 per hour is being totally shafted by this $116,000 income threshold. It's really limiting his options. It therefore needs to go.

Congress is better known for gridlock than its willingness to embrace change -- especially, when tax implications are in the mix. That makes me pretty skeptical that these rules will change anytime soon, but maybe, just maybe, I'll be pleasantly surprised.

I hear that. The guy working hard for $10 per hour can always dream for a better retirement life though. There's no law against that. Congress needs to wake up and address this first world problem of the working poor, or they'll have no retirement at all.

In all seriousness, if I was part of the working poor then I would find this entire article very depressing and disgusting. Why is it that those with the most always seem to need more? And not for everyone, but just for themselves?

I don't see one thing here that actually helps the working poor. It would certainly help those making $200k+ though. Big shocker. Sigh.


Troy said...

I see $900B/yr on the table, though of course corporations aren't going to part with that loot without a fight. and ~2/5 of the country has been programmed to not resist.

Stagflationary Mark said...

I very much doubt that the $900B/yr (excess) is sustainable. For what it is worth, I'm not a believer in permanently high profit margin theories. Sigh.

Troy said...

I don't understand what's going on.

Removing the 5% scaling from the above chart:

is an entirely different picture.

Troy said...

real per-worker GDP, real per-worker CP

Now, maybe GDP's gotten junky with imputed rents and stuff, plus since 2000 government spending has risen 40%:

Stagflationary Mark said...


is an entirely different picture.

I'm not sure it is an entirely different picture. The left side of the chart shows GDP is much greater than corporate profits and so does the right side.

Graphing two exponential series, even with identical growth rates, could easily look like your chart if the series don't have the same starting value.

That's why I would prefer to look at the ratio between the two: corporate profits as a percentage of GDP. That would offer a much clearer picture of what is going on.