Sunset for the 401(k) Scam
Old people vote like crazy, after all, and there's a limit to how long you can blame their all-Alpo diet on Jina and racialized people.
By Cory Doctorow / pluralistic.net.
In Olden Days, people who worked for an employer got a pension. The
pension would pay $X/month (a percentage of your salary), maybe indexed
to inflation. That was a pension you could depend on, surety you could
use to plan your old age.
Today we call it a "defined benefits" pension but back then, we just
called it a "pension."
In the 1970s, these gave way to "market-based" pensions, AKA 401(k)s.
The theory was that instead of knowing how much you'd have to live on
when you were retired, you'd take some of your wages and put them into a
stock market that you didn't understand and were unqualified to
participate in and cross your fingers.
This was always going to end badly, but it was sold with sweeteners that
gave it a veneer of plausibility in the 1970s (they were big on veneers
in the 70s!).
401(k)s came with massive tax breaks, so every dollar you put into your
pension automatically earned 9.2% in annual savings, an incredible ROI.
But over the years, these tax advantages have vanished. Today, the
401(k) tax break is 0.6% - and your fund manager takes 1-2% out of your
savings for managing this money, leaving you in the hole before you make
your first transaction.
All of this is kind of moot anyway. In reality, almost no one has any
excess income to put into a 401(k), because of decades of wage
stagnation. Those people who DO have retirement savings are likely to
raid them and incur massive tax penalties once the stimulus runs out.
I've low-key suspected that part of the GOP program of coronavirus
denial was a tacit desire to head off the political challenges of a
massive cohort of retirees with no savings and anemic Social Security.
Those people weren't going to dig holes, climb in and pull the dirt in
over them. Nor would they consent to starve quietly on the corner after
they got evicted.
They would become a new, grey Bonus Army, successor to Occupy,
demanding mass-scale redistribution from the sharks who stole their
futures. Old people vote like crazy, after all, and there's a limit to how long
you can blame their all-Alpo diet on Jina and racialized people.
Remember in March when Texas Lt Governor Dan Patrick said that old
people had a patriotic duty to commit suicide so they wouldn't burden
the economy?
Talk about saying the quiet part out loud!