Social security by the numbers

[BuzzH]

Drive down the interstate. Who do you think is driving all those new vehicles? Many can afford it but choose debt over long term stability.
Part of the problem with today's society. They want a safety net. Paid for by those who made better choices.

Yeah, I don't necessarily disagree to an extent. But, if you think every vehicle driving down the road is new, and that every employee is simply not trying to secure their future, then you're just being dishonest.

Again, I know many of them that are barely staying afloat trying to live on 50K a year. I don't know how all of them are supposed to make better choices when rent, heat, water, garbage, insurance, keeping their jalopy running, copays, phone bills, food expenses, etc. are taking 100% of their income to just get by.

Pretty broad brush you're painting with that lower paid employees are driving new vehicles. I would also contend that the 401 and IRA programs are a huge benefit to the well heeled. high income earners, great deal, those lower on the pay scale, not worth a shit.

Care to explain how a 50K a year worker takes full advantage of the allowable limit for IRA/401 contributions? It gets wayyyyyyyyyyyy easier the higher on the pay scale you are. Just a fact, jack.

 

[kodiakisland]

Yeah, I don't necessarily disagree to an extent. But, if you think every vehicle driving down the road is new, and that every employee is simply not trying to secure their future, then you're just being dishonest.

Again, I know many of them that are barely staying afloat trying to live on 50K a year. I don't know how all of them are supposed to make better choices when rent, heat, water, garbage, insurance, keeping their jalopy running, copays, phone bills, food expenses, etc. are taking 100% of their income to just get by.

Pretty broad brush you're painting with that lower paid employees are driving new vehicles. I would also contend that the 401 and IRA programs are a huge benefit to the well heeled. high income earners, and not worth a shit for those lower.

Care to explain how a 50K a year worker takes full advantage of the allowable limit for IRA/401 contributions? It gets wayyyyyyyyyyyy easier the higher on the pay scale you are. Just a fact, jack.

The point is many can but choose otherwise and a lot of their choices are the reason they are barely afloat. I make way above that and drive a 2012 truck.
Had a discussion this week with one of those $50K/yr workers about how she doesn't eat leftovers. Ever. Tonight's meal for me is day 3 of the same leftovers. Her and her husband have a 2021 and 2023 vehicle both in payments. Choices. She couldn't afford that contribution, but not because there's not enough money to begin with.

 

[Bonasababy]

Yeah, I don't necessarily disagree to an extent. But, if you think every vehicle driving down the road is new, and that every employee is simply not trying to secure their future, then you're just being dishonest.

Again, I know many of them that are barely staying afloat trying to live on 50K a year. I don't know how all of them are supposed to make better choices when rent, heat, water, garbage, insurance, keeping their jalopy running, copays, phone bills, food expenses, etc. are taking 100% of their income to just get by.

Pretty broad brush you're painting with that lower paid employees are driving new vehicles. I would also contend that the 401 and IRA programs are a huge benefit to the well heeled. high income earners, and not worth a shit for those lower.

Care to explain how a 50K a year worker takes full advantage of the allowable limit for IRA/401 contributions? It gets wayyyyyyyyyyyy easier the higher on the pay scale you are. Just a fact, jack.

I believe he's fallen into a particular outlook that many succumb to...that debt...even manageable debt...is to be avoided at all costs, and if it isn't it demonstrates irresponsibility (feel free to correct me if I'm wrong). That ignores reality and isn't even smart financially in many cases.

 

[npaden]

How about the company pay people enough so that they can pay their bills and also contribute to a 401?

You're living in fantasyland if you think a $50K a year employee can afford even 8% (assuming the company offers any kind of 401 program).

You are arguing in circles. Someone who makes $100,000 is a fantasy but someone who makes $50,000 is also a fantasy?

You keep saying how much better a pension plan is than a 401k is so I give you examples of why that isn’t the case and you argue about what someone making $50,000 can or can’t afford.

We can run the numbers at whatever magical spot you want and they will come out the same. Is $75,000 the right number? Then we can have a $75,000 salary with an 8% 401k match so that’s $6,000 they contribute and $6,000 that the employer matches. $12,000 going toward retirement which is a pretty good number, 16% of their compensation.

For the same $81,000 cost to the employer if they are in a defined benefit pension plan at a current cost of 35% of compensation (actual % I am seeing at my clients) they would need to reduce that employees salary to $60,000 and then they would contribute $21,000 into the pension plan for them.

The problem is that they can’t find good employees paying them $60,000 and a great pension plan. They can find good employees paying them $75,000 with an 8% match on their 401k. The cost to the employer is the same either way.

If the employee wanted to contribute more to the 401k than 8% they could with the extra money they are making.

 

[kodiakisland]

I believe he's fallen into a particular outlook that many succumb to...that debt...even manageable debt...is to be avoided at all costs, and if it isn't it demonstrates irresponsibility (feel free to correct me if I'm wrong). That ignores reality and isn't even smart financially in many cases.

There is good debt and bad debt. Some get it, some don't. Debt for long term stability is one thing but debt for immediate self gratification isn't a good excuse for not being able to afford things.

 

[BuzzH]

You are arguing in circles. Someone who makes $100,000 is a fantasy but someone who makes $50,000 is also a fantasy?

You keep saying how much better a pension plan is than a 401k is so I give you examples of why that isn’t the case and you argue about what someone making $50,000 can or can’t afford.

We can run the numbers at whatever magical spot you want and they will come out the same. Is $75,000 the right number? Then we can have a $75,000 salary with an 8% 401k match so that’s $6,000 they contribute and $6,000 that the employer matches. $12,000 going toward retirement which is a pretty good number, 16% of their compensation.

For the same $81,000 cost to the employer if they are in a defined benefit pension plan at a current cost of 35% of compensation (actual % I am seeing at my clients) they would need to reduce that employees salary to $60,000 and then they would contribute $21,000 into the pension plan for them.

The problem is that they can’t find good employees paying them $60,000 and a great pension plan. They can find good employees paying them $75,000 with an 8% match on their 401k.

If the employee wanted to contribute more to the 401k than 8% they could with the extra money they are making.

Wrong, no company is forced to reduce their employees pay because they contribute to a DBP. Show me what law it is that requires them to.

Why does the employee have to match anything? What keeps the company from just paying 16% of the employees base pay into their 401 with no match required?

That's a real tough answer, so they can get off the hook for paying 50% of the employees retirement. Even better for the company is if they don't pay them enough to even afford the match. Once again, a huge benefit to the employer.

That's all bullshit that a company can't afford to pay 60K a year and a great pension plan. Really? That's what you're going to argue? Ok, you're right, multi-billion dollar companies, Walmart, Boeing, Tesla (before they tanked), Amazon, etc. etc. just don't have the scratch to afford to pay people decent AND fund their retirements. Got it.

You're such a company man it's not even funny, you're too far removed from the more average worker to even apply basic math to their income vs. expenses, that's crystal clear.

Would be a real shame if the Walmart heir couldn't afford to snap up all the available ranches that border Q creek, and pay in cash, when they come up for sale. JFC.

 

[npaden]

Money doesn’t grow on trees. The employer has a set amount of money they can pay employees. They can contribute 35% of that into a pension plan and give 65% to the employees or they can contribute 16% of that into a 401k and give 84% to the employee or contribute 8% into a 401k and give 92% to the employee.

The employees overwhelmingly choose the 401k when given the choice.

 

[D_Walt]

How about the company pay people enough so that they can pay their bills and also contribute to a 401?

You're living in fantasyland if you think a $50K a year employee can afford even 8% (assuming the company offers any kind of 401 program).

The short answer to why not pay more is because it would price you out of the market for many industries - or at least the ones I am familiar with in residential construction in Texas. We are addicted to cheap “foreign” labor - there is a whole lot to unwrap in that statement.

To you second point, you are 100% right. Even down here in South Texas where the cost of living is comparatively inexpensive a person making $50k (say $22-23/hr plus overtime) is more worried about eating this week than retirement in 20-30 years or even next year.

It’s a conundrum; if I was to advertise I was paying warehouse/delivery workers $20/hr I would have a line of applicants out the door. If I advertised I was paying $21.60/hr ($20 plus 8%) but you must put 8% in the 100% match 401k (which we have been able to do the last 13 years) I would have the same line but about 90% of the applicants would want to opt out.

 

[brymoore]

@npaden

Is the 8% 401k match hypothetical or am I misunderstanding your reference? Best I’ve seen is 100% match on employee 6%. Most companies are matching at a lower rate - 3% or 4% on full employee 6% contribution.

 

[kodiakisland]

Strangely enough, most business go into business to make profits. Weird I know.
A business can pay salary and benefits to whatever it wants to. If it can't get workers, it has to pay more.
No one forces anyone to take the job they have. Workers have all the choice. No one tells you what your career path is except you. If workers refuse to do certain jobs, then those jobs will start to pay better.

Don't like what WalMart pays, don't work there. Enough seem to be OK with it.

 

[BuzzH]

Money doesn’t grow on trees. The employer has a set amount of money they can pay employees. They can contribute 35% of that into a pension plan and give 65% to the employees or they can contribute 16% of that into a 401k and give 84% to the employee or contribute 8% into a 401k and give 92% to the employee.

The employees overwhelmingly choose the 401k when given the choice.

Apparently you think it does, if you live in the alternate reality that a 50K a year employee makes enough to afford max contributions into their retirement.

I get it, Amazon simply cant afford to pay retirement and decent wages with 20 billion in quarterly profits, or walmart with gross profit for the twelve months ending January 31, 2025 of $169.232B

For decades and decades workers all across the U.S. made a great living and have/had great retirements with DBP's.

 

[npaden]

@npaden

Is the 8% 401k match hypothetical or am I misunderstanding your reference? Best I’ve seen is 100% match on employee 6%. Most companies are matching at a lower rate - 3% or 4% on full employee 6% contribution.

I have 401k plans that I audit that have 16% employer contributions with no required employee contributions at all. I have some that I audit that contribute 0% employer contributions and the plan is 100% employee money (fast food restaurant).

My firms niche is utilities that still dabble in defined benefit plans so their 401k plans are pretty attractive. Several have discontinued their high cost defined benefit plans and the employees are better off no doubt.

The bang for your buck is way better with a 401k and the individual employee can invest based on their age and risk tolerance. No actuaries and lawyers to pay, just a lot lower cost.

 

[BuzzH]

@npaden

Is the 8% 401k match hypothetical or am I misunderstanding your reference? Best I’ve seen is 100% match on employee 6%. Most companies are matching at a lower rate - 3% or 4% on full employee 6% contribution.

My "company" only matches 3% dollar for dollar and another 2% 50 cents on the dollar. Further, my DBP/Pension, 401(tsp), AND SS are the 3 pillars of my retirement. Without one of those 3 legs, my retirement would be pretty shaky.

I agree, that most employer 401's are 3-4%.

The bottom line is, there is NO question that SS has allowed companies to offer lower and lower levels of retirement packages because they work on the assumption that SS will most certainly supplement retirement income.

There's also no question that SS needs to stay solvent or many low income workers are rat-f#@&ed in retirement, even if they contributed company matches and were responsible. Best way to do that is to cap benefit and pay ss on 100% of earnings. That's what's going to happen as there is no way the majority are going to allow SS to fade away.

 

[Dave N]

I only had a 6% match at Caterpillar. Daughter has the same at Rivian.

 

[BuzzH]

I only had a 6% match at Caterpillar. Daughter has the same at Rivian.

That's actually pretty good.

 

[npaden]

Buzz, I’ve given you about every possible scenario you can dream up.

You said $100k was unrealistic so I gave you $50k and you said that was a fantasy so I gave you $75k and that must have been close so you diverted back to telling me $50k is fantasy.

I’m not arguing about what the right salary should be. I’m just saying as someone who audits pension plans and 401k plans that pension plans are way more expensive to the employer to maintain and they have to be managed for the entire employee demographics so they earn a lower return.

401k plans are not the devil. If an employer wanted to contribute 25% of the employee compensation they could. The employee would be better off than if they contributed 35% of their compensation to a defined benefit plan.

To attract employees, employers have discovered that they can attract better quality employees by offering more money in their pocket today and less money into their retirement.

There is a reason that defined benefit pension plans are going the way of the dinosaurs, they are very clumsy and have almost no ability to adapt.

An altruistic employer could gold plate a 401k plan to be a much better option than any defined benefit plan I’ve seen.

 

[WyoCoalMiner]

We match 8% @ 100%. We also auto enroll all employees is the 401k plan at 2% unless they opt out or request higher. Tight restrictions on when they can withdraw prior to retirement. We provide twice a year investment seminar and our plan advisor provides free retirement planning. Our employees really like what we offer.

 

[BuzzH]

Buzz, I’ve given you about every possible scenario you can dream up.

You said $100k was unrealistic so I gave you $50k and you said that was a fantasy so I gave you $75k and that must have been close so you diverted back to telling me $50k is fantasy.

I’m not arguing about what the right salary should be. I’m just saying as someone who audits pension plans and 401k plans that pension plans are way more expensive to the employer to maintain and they have to be managed for the entire employee demographics so they earn a lower return.

401k plans are not the devil. If an employer wanted to contribute 25% of the employee compensation they could. The employee would be better off than if they contributed 35% of their compensation to a defined benefit plan.

To attract employees, employers have discovered that they can attract better quality employees by offering more money in their pocket today and less money into their retirement.

There is a reason that defined benefit pension plans are going the way of the dinosaurs, they are very clumsy and have almost no ability to adapt.

An altruistic employer could gold plate a 401k plan to be a much better option than any defined benefit plan I’ve seen.

Yes, there's a reason 401's are better for companies 100% of the time (they save money and the employee pays half, or up to nothing if the employee doesn't have the $$ for the match), and why they're not a good deal for a lot of employees 100% of the time (because many can't afford it or don't know how to manage them).

If I were a company, how is it a not a great deal to not have to pay anything into a 401 if your employees don't want to, or if they want to, only match a small percentage what's not to like about that? In comparison to being forced to contribute 100% for every employee.

That's a no brainer much better deal for the employer than the employees as a whole, and exactly why employers pushed for 401's instead of DBP.

All you have to do is look at who pushed hardest for 401's over DBP.

 

[BuzzH]

We match 8% @ 100%. We also auto enroll all employees is the 401k plan at 2% unless they opt out or request higher. Tight restrictions on when they can withdraw prior to retirement. We provide twice a year investment seminar and our plan advisor provides free retirement planning. Our employees really like what we offer.

That's really exceptional, all the way around.

The one thing has changed for us in a good way, is that new employees are auto-enrolled into the full 5% (3% dollar for dollar, another 2% 50 cents on the dollar, and the required 1%).

The one thing I don't like is that our TSP is a little bit too accessible, but I sort of over-look it since we also have a pension.

As far as advisors, we're pretty much relegated to youtube.

 

[npaden]

Yes, there's a reason 401's are better for companies 100% of the time (they save money and the employee pays half, or up to nothing if the employee doesn't have the $$ for the match), and why they're not a good deal for a lot of employees 100% of the time (because many can't afford it or don't know how to manage them).

If I were a company, how is it a not a great deal to not have to pay anything into a 401 if your employees don't want to, or if they want to, only match a small percentage what's not to like about that? In comparison to being forced to contribute 100% for every employee.

That's a no brainer much better deal for the employer than the employees as a whole, and exactly why employers pushed for 401's instead of DBP.

All you have to do is look at who pushed hardest for 401's over DBP.

You do realize that employers are not required to provide any kind of a benefit plan right?

And employers with defined benefit plans can require employees to contribute all or part as well?

The investment vehicle isn’t the issue.

Well I guess it is the issue because defined benefit plans cost so much more to maintain AND generally have much lower returns on investments.