Greased by lobbying and campaign cash, tax breaks for retirement savings are one thing Congress agrees on. But they also blow out the deficit and add to income inequality.
Five months before Congress faced a near-catastrophic standoff over the debt ceiling, with Republicans demanding restrictions to food and Medicaid programs to rein in spending, a bill that raised the cost of private retirement savings accounts to $282 billion per year was quietly signed into law.
In this era of deeply divided politics, the 2022 bill known as Secure 2.0 was hailed as a bipartisan success — a victory for average Americans. It had sailed through the House by a whopping 414-5 vote. It followed four other major bills passed between 1996 and 2019 that dramatically expanded taxpayer savings – all equally lauded as bipartisan victories.
But that rare issue that brought a divided Washington together also increased wealth disparities and the federal deficit. And the victory was most strongly applauded by the burgeoning financial services industry, for whom tax-advantaged retirement savings has transformed a $7 trillion retirement market in 1995 to a $38.4 trillion behemoth in 2023.
Unfortunately, with all of the price-gouging that’s been happening, $30/mo is nothing. It probably is now productive being spent. Even with compounding interest, that is going to result in enough funds to retire as an expat in a developing nation with an exceptional exchange rate and likely next to no end of life care, supposing that the investment firm that is profiting off of pensions being extinct does exceedingly well.
I also like to suggest saving anything that one can but noone is going to be able to realistically be able survive on that, unless there are significant socio-economic changes. It’s a “pie in the sky when you die” situation.