What are you cutting in your budget to absorb the Payroll Tax increase?

Status
Not open for further replies.
I think though we (country) are emphasing the wrong goal. Like I said SS was never meant to fund anyones retirement especially now that we are living so long. I think we should really kick up how to get more people to save, how to get more young workers to learn about compounding interest.
When I was a kid you got reward for saving (monetarily). you got toasters, green stamps, prizes for saving. How do we increase the rate of 401K contributions (I think only some thing like 30% participate).

eliza if you figure out how to increase 401k participation I would love to know. I am a HR Mgr and we have a dismally low participation rate. We have a good plan and even have a consultant who can give limited advice on what option to pick but I haven't had a new enrollee in several quarters.

Even more distressing is when people leave and opt to take a payout (with penalty) over rolling the funds into a difference account.
 
It's not working because people are living much longer, so many people are receiving benefits for 30 years past retirement, thus receiving more in benefits than they ever paid in. How can a system like that work in the long run?
Also, there are many people receiving benefits who have never worked at all. I have a friend who was in a car accident at age 18 and has received benefits for 40 years and has never worked. Similar thing for an aunt who is very overweight and hasn't worked since age 40 and has been receiving benefits for 30 years and will receive for her entire life.

The friends are probably getting SSI benefits. which is funded via other revenue (taxes). In order to receive disability benefits from ss, your parent or spouse must be contributing to the system. Now your aunt would be eligible because she has been paying into via the time she did work. If I became disabled I would get both ssi and ss disability benefits because of my work history and yes you are correct if I began getting them today I would continue to get them until I die, which for the average female would be another 25-30 years.
 
eliza if you figure out how to increase 401k participation I would love to know. I am a HR Mgr and we have a dismally low participation rate. We have a good plan and even have a consultant who can give limited advice on what option to pick but I haven't had a new enrollee in several quarters.

Even more distressing is when people leave and opt to take a payout (with penalty) over rolling the funds into a difference account.

One idea some companies are trying is automatic opt in. The reasoning behind that seems to be is that a lot of new employees will budget down to their check. Sort of the "you can't miss it, if you never have it". A few places found that when they automatically opt their employees in very few take the time to do the paper work to leave the plan.

Another thing some companies are trying is biweekly statements when you get your paycheck. It seems people are more likely to continue to save when they see the amount actually grow. Along the same line as folks on a diet. when you diet and see that inital 10 pounds drop off you get really psyched to keep going so you tend to continue.

You're right about the payouts. Washington post just had an article yesterday about people spending their 401K's

http://www.washingtonpost.com/busin...4a0e90-5e70-11e2-8acb-ab5cb77e95c8_story.html
 
One idea some companies are trying is automatic opt in. The reasoning behind that seems to be is that a lot of new employees will budget down to their check. Sort of the "you can't miss it, if you never have it". A few places found that when they automatically opt their employees in very few take the time to do the paper work to leave the plan.

Another thing some companies are trying is biweekly statements when you get your paycheck. It seems people are more likely to continue to save when they see the amount actually grow. Along the same line as folks on a diet. when you diet and see that inital 10 pounds drop off you get really psyched to keep going so you tend to continue.

You're right about the payouts. Washington post just had an article yesterday about people spending their 401K's

http://www.washingtonpost.com/busin...4a0e90-5e70-11e2-8acb-ab5cb77e95c8_story.html

The CFO and I have discussed automatic enrollments but I really think it would cause problems for my company. Employees just don't review their paystubs and I can see the blowups occurring when they realize what happened. While it would be legal I think it would leave a bad feeling with the employees.

My DD17 had a job with the town and has $25 in their retirement plan. I was explaining how she needs to move it to another instrument and let it keep accumulating interest. Once she gets a full time job, she can add more to it.

I wish my parents explained it to me when I was younger but dad had a state pension and mom was a stay at home mother so I don't think it crossed their minds.
 


eliza if you figure out how to increase 401k participation I would love to know. I am a HR Mgr and we have a dismally low participation rate. We have a good plan and even have a consultant who can give limited advice on what option to pick but I haven't had a new enrollee in several quarters.

This article appeared in our local paper this week and I thought it was an interesting take on increasing participation. It's keeping up with the Joneses in saving, not spending. There are a lot of flaws with the idea, as the article notes, but interesting nonetheless.
 
The CFO and I have discussed automatic enrollments but I really think it would cause problems for my company. Employees just don't review their paystubs and I can see the blowups occurring when they realize what happened. While it would be legal I think it would leave a bad feeling with the employees.

.

LOL. YOu know Arielle, I think this is the core of the problem. We (country we) as so financial illiterate. I too have big time scientist who have said flat out they don't even look at their paystubs. My company no longer gives paper checks, you must have direct deposit, since we switched to that no one even bothers to look up their electronic paystub.
 
This article appeared in our local paper this week and I thought it was an interesting take on increasing participation. It's keeping up with the Joneses in saving, not spending. There are a lot of flaws with the idea, as the article notes, but interesting nonetheless.

Not directly on point to the expiration of the SS tax holiday, but in case anyone is getting motivated to save more for retirement, I wanted to make the case for fully funding an HSA (to the extent it's available to you) before funding a 401k due to the triple tax advantage. After that, I'd fund the 401k up to the company match, and then into a Roth or regular IRA, depending on personal financial circumstances and goals.
 


Employees just don't review their paystubs

So true! I wish everyone had to write a check each week to the government to pay their taxes - I think it would shock a lot of citizens and make them think twice about how much of their money they are giving up to sometimes wasteful spending. Maybe people would give a second thought to tax increases that people now just seem to take in stride without protest and become more involved with trying to change the system.
 
My company did the automatic 401k enrollments last year. They sent out letters saying that if you weren't already contributing to your 401k, they were going to enroll you in 3% unless you called to opt out. After that, they'd increase by 1% each year until you hit 6%. I couldn't believe there were that many people not contributing that they'd do that, but I guess there are... It especially shocks me since they match 50% of the first 6% you put in, so you're throwing away an extra 3% of your salary. :confused3
 
Even more distressing is when people leave and opt to take a payout (with penalty) over rolling the funds into a difference account.

Arielle, I am going to put my .02 in on this. When I left my first job, I was in my early 20's (over 20 years ago) I opted for the payout. I never new any different. My parents never did any investing other than savings bonds, cd's, etc. No one at my job tried to explain to me what I was doing by taking my funds. (I know it was not in the job description.) I wish someone in the HR who knew more than I would have offered to explain this to me or put me in the right direction to learn. Maybe some of these people do not understand a roll over account.
 
My company did the automatic 401k enrollments last year. They sent out letters saying that if you weren't already contributing to your 401k, they were going to enroll you in 3% unless you called to opt out. After that, they'd increase by 1% each year until you hit 6%. I couldn't believe there were that many people not contributing that they'd do that, but I guess there are... It especially shocks me since they match 50% of the first 6% you put in, so you're throwing away an extra 3% of your salary. :confused3

You know when I got my first full time job in 1990 companies where matching 50% up to 6% saved and ya know what, it's not changed in all these years. Why don't the companies every increase the match? Does anyone get matched above 6%? I bet if they do they are in the minority. I know it won't make anyone save more but it would sure make me happy!!!
 
You know when I got my first full time job in 1990 companies where matching 50% up to 6% saved and ya know what, it's not changed in all these years. Why don't the companies every increase the match? Does anyone get matched above 6%? I bet if they do they are in the minority. I know it won't make anyone save more but it would sure make me happy!!!

My company suspended the 401(k) match from 2009-2012 but reinstated it this year. We went back to the match we had in 2008 --- 50% of the first $5,000 contributed, so $2,500. Any match is nice but I sure wish ours was higher.
 
My company suspended the 401(k) match from 2009-2012 but reinstated it this year. We went back to the match we had in 2008 --- 50% of the first $5,000 contributed, so $2,500. Any match is nice but I sure wish ours was higher.

My husband gets dollar for dollar up to 9% - which adds up quick!
 
My husband gets dollar for dollar up to 9% - which adds up quick!

Wow see that's NICE!! Since companies have done away with pensions they should have to raise their match every so once in a while. I mean 22 years of the same rate, that stinks. Now it's better than nothing don't get me wrong, but I'd like to see the numbers of how much they're saving doing the match vs the pension.
 
You know when I got my first full time job in 1990 companies where matching 50% up to 6% saved and ya know what, it's not changed in all these years. Why don't the companies every increase the match? Does anyone get matched above 6%? I bet if they do they are in the minority. I know it won't make anyone save more but it would sure make me happy!!!
Neither my spouse or I have seen a company match for over ten years. :(
 
LOL. YOu know Arielle, I think this is the core of the problem. We (country we) as so financial illiterate. I too have big time scientist who have said flat out they don't even look at their paystubs. My company no longer gives paper checks, you must have direct deposit, since we switched to that no one even bothers to look up their electronic paystub.



Dh and I both print out our electronic stub each pay. We check it for accuracy and have a paper trail if we find a problem in the future.
 
Dh and I both print out our electronic stub each pay. We check it for accuracy and have a paper trail if we find a problem in the future.

:thumbsup2:thumbsup2

Come back to me in a month, there will be quite a few people around here grumbling because they just got their W-2's and they will literally say "I thought I made more", to which I'm yelling "WHAT THE HECK DO YOU MEAN, YOU THOUGHT" don't you know? I've got guys (it seems to be mainly guys) who say they never look at their paystubs they just hand them over to the wife.

I don't get it. I'm the gal that checks here bank accounts on line probably every other day to make sure the atm transactions went through correctly.

I do wish they'd bring back home economic classes (that's what they were called back in the dark ages)
 
How?

the money I save, how is that going to be punished? In fact most retirement vehicles grow tax free until you actually use it and now with a ROTH you can save at todays tax rate and when you withdraw you will pay nothing (check me on that one).

So how are you as a saver being penalized?



If your income exceeds a certain amount then 85% of your Ss check gets taxed. The number is quite low when this kicks in. Once you hit 70.5 you have to take out a set amount that goes up each ear from your 401K and IRA. This could immediately trigger the 85% tax on SS.

Many in DC are now talking about means testing for benefits. You say you stay up on Ss and you have not heard this. This would punish the saver.
 
I think saying it punishes us is wrong. It just lowers how much saving benefits us. If the money was going to pay for some CEO's salary or if it meant we couldn't afford to pay for food then that would be bad but we only pay that higher tax if we have more than enough to pay for food and the money is reducing the difference between spending and revenues and that helps our children.
 
Status
Not open for further replies.

GET A DISNEY VACATION QUOTE

Dreams Unlimited Travel is committed to providing you with the very best vacation planning experience possible. Our Vacation Planners are experts and will share their honest advice to help you have a magical vacation.

Let us help you with your next Disney Vacation!





Latest posts


Top