Home > Everyone Speak Up., Financial Folder., You Need To Know! > Obama expands retirement savings to include “all” Americans.

Obama expands retirement savings to include “all” Americans.

I guess the government is looking out for us all again. They are testing a plan that would make it OK for companies to automatically enroll a new worker into their savings plan (401k) no matter what their wage and deduct up to 3% of your wages weekly towards that plan, unless you remember to tell your new employer that you don’t want to participate.

The report said that the government was very concerned that not many people were able to save for their retirement. So they feel that by doing this for us, all Americans will have a good amount saved up for their retirement.

The experts say you should have 11 years of 70% of your yearly income (after taxes) saved up to live on for 15 years at 75% of your regular income level. They say that you will be living comfortably. But that doesn’t include savings for health situations, travel or debt. They say you only have to save 70% of your wage for 11 years,  because you will be getting about 30% of your wage from social security.

So if you make $20 an hour, $14 after taxes for thirty years you have to bank about $20,000 for each of the 11 years of retirement savings, totaling $220,000.00 for your 15 year retirement. You will get $12,500 for social security annually. Dividing $220,000 by 15 gives you $14,500 a year + the $12,500 social security and you will live on $27,000 a year. Just hope you die in 15 years and don’t have any big problems along the way.

If you do what the experts say, at $8.00 an hour for thirty years and after all the savings and math you would clock in at poverty level, about $10,830 a year to live on.

Now under the presidents savings plan of 3% after working for 30 years at $8.00 an hour, your savings is $15,000. Divide by 15 plus your 30% social security ( if it’s still there) and you live on $6,000 a year, that’s only around 1/2 of poverty level. You can’t afford nothing. You can’t live.

So in order for all Americans to retire at or above poverty level on a 3% automatic retirement program, the minimum wage would have to double immediately and then keep up with inflation yearly. Don’t hold your breath.

Yes we all should save more for our retirement than necessary, but frankly speaking, unless you make upwards of six figures in this country you can’t even afford to send your kids to college, or private school, much less retire.

To take away wages from people who are below poverty wage already is wrong, when they need every penny they make now just to try to live. Many people will not be reminded by the new employer, or will not know that they can opt out of the savings plan or it will be automatically withdrawn. This will cause hardships by them trying to live on less income, unknowingly.

This will just cause more paperwork for all those above poverty level human resource people, when all us poor new hires that do know about it, come marching up to the human resource office on the first pay day, to opt out of retirement savings because we just can’t afford it.

Let the people decide where their money should go. For the government to decide anything about your money, beyond taking out taxes is wrong. Especially when it involves people with incomes below poverty level.


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