Confiscation and the Future of Retirement Plans
In October 2008, in the middle of the financial crisis, liberal economist Dr. Terasa Ghillardicie went to Congress and held a meeting with a small group of senators. Her objective was to share her ideas concerning retirement and the government getting more involved. There is no doubt about it; these were extremely liberal ideas.
From that meeting, the Internet went viral with a story that Teresa Ghilarducci was promoting the idea of the government confiscating retirement plans. Of course, that was not true. I had Dr. Ghilarducci on my program a few years ago and asked her about that meeting. She said that in no way was she recommending such a drastic idea.
Would the politicians like to get hold of the trillions of dollars in retirement plans? I am sure that the majority would, and they still can without confiscating your retirement.
Back in 2009, during President Obama's first term, President Obama picked Mark Iwry to carry out a special project. The project was to establish the ability for government bond-backed annuities to be a part of 401K plans. In September, during the last year of President Obama's second term, it was announced that the system to use annuities in 401K plans was complete.
The idea was to give 401K participants the ability to create an income stream using annuities supported by government bonds. If they are buying government bonds with your retirement money to create this income stream, you are, in a sense loaning money to the government while they promise a Social Security number 2 type of income stream.
Today, most people don't realize that the Secure Act passed in 2019 addressed annuities in 401K plans. This legislation made it easier for 401K plans to provide annuities as part of a retirement plan.
So what does the future of retirement plans look like? This is purely speculation on my part.
· If President Biden has his way, higher-income people will lose the ability to deduct retirement contributions from their taxes.
· Annuities will be part of 401K plans very soon. Just the other day, a major 401K administrator announced they were adding annuities as a retirement plan option
· I don't think that participation in annuities will be mandatory by any means
· I think government bonds will support these annuity plans by giving the government a means to borrow retirement plan money.
· Finally, these government-based annuity plans will be very enticing and pitched in such a way that workers will be interested in them as an option.
ASK BOB about money and investment issues. Bob is always happy to visit with you.
Bob Brooks is a Financial Adviser and host of The Prudent Money Radio Show, which airs daily at 3 PM CST on 91.3 FM, 97.5 FM, and 99.9 FM in the Dallas Forth Worth metroplex. Listen online at www,prudentmoney.com/radio-show. You can reach Bob at 972-386-0384 and online at firstname.lastname@example.org.