Trump Account thoughts

[TheTone]

Maybe I’m just a stick in the mud and wish that supposed tax cut money was going back to the people that actually paid into it or we could pay down some of our national debt. Meanwhile how’s social security looking that generations of Americans have been contributing to?

 

[BigHornRam]

Another factor on these...your kid has access to the money at the age of 18 for whatever they want. Penalties apply but theres nothing you can do if they want it.

Worst case scenario, little Johnny spends it on hookers and blow, when he turns 18. Best case scenario, little Johnny learns about investment and the power of compounded interest at an early age. I think the good out weighs the bad, but that just me.

 

[Nick87]

Worst case scenario, little Johnny spends it on hookers and blow, when he turns 18. Best case scenario, little Johnny learns about investment and the power of compounded interest at an early age. I think the good out weighs the bad, but that just me.

That falls under parenting, the horror.

 

[westbranch]

Worst case scenario, little Johnny spends it on hookers and blow, when he turns 18.

Some of us call that stimulating the economy!

 

[sigpros]

How are earnings defined? Woukd 4h sales work? I can't see why not.

I know like on a Roth IRA they say you can use baby sitting, lawn mowing etc. So i assume the 4H sales would work just not sure how. My way of thinking if you put like $3500 in from 4H sales there probably won't be any questions asked. Now if a 10 year old is maxing the $7500 every year in a roth they might look into it? But then again I am just speculating here.

 

[sigpros]

Maybe I’m just a stick in the mud and wish that supposed tax cut money was going back to the people that actually paid into it or we could pay down some of our national debt. Meanwhile how’s social security looking that generations of Americans have been contributing to?

SS is such a scam. I think something like this could be a way to wean us off SS. It is kind of like the young bucks at work complaining about no pension. I tell them the matching 401 and hours bonus they get is a better deal

 

[Forkyfinder]

Wonder how many parents or parents to be wont sign up for the free money that their kid will receive, because its titled a "trump account" ?

For me, you could call it biden, obama, clinton, stalin, or mao account - my obligation to do whats best for my kids is independent of politics.

It didnt make sense for me, much the same as @TOGIE.

 

[wvhunter304]

Wonder how many parents or parents to be wont sign up for the free money that their kid will receive, because its titled a "trump account" ?

For me, you could call it biden, obama, clinton, stalin, or mao account - my obligation to do whats best for my kids is independent of politics.

It didnt make sense for me, much the same as @TOGIE.

I wonder how right wingers would feel when this meets the definition of socialism they rail about?

 

[jimh406]

I wonder how right wingers would feel when this meets the definition of socialism they rail about?

Hard to say, but I don't think these meet any somewhat reasonable definition of socialism.

 

[Exhausted]

I wonder how right wingers would feel when this meets the definition of socialism they rail about?

We're not opposed to all social assistance, we're opposed to widespread socialism as a governmental structure. I've used state funded insurance, WIC, food stamps, etc. at one point or another. But I still think Mamdani and his ilk are dangerous to America and wish they would quickly be removed from power by any legal means necessary.

 

[westbranch]

How are earnings defined? Woukd 4h sales work? I can't see why not.

W2 or self-employment earnings reported on a tax return. There would be self-employment tax on reporting net income from 4h sales so I think most people just avoid it unless the kids receive a 1099 or similar.

Funding a Roth for kids once they have a W2 or other earnings is one of the best opportunities out there. If the kids work for a business owned by the parent's they don't pay FICA taxes on the W2, no income tax up to the standard deduction and they can fund a Roth based on the earnings.

 

[Bonasababy]

SS is such a scam. I think something like this could be a way to wean us off SS. It is kind of like the young bucks at work complaining about no pension. I tell them the matching 401 and hours bonus they get is a better deal

Every financial advisor I have talked with tells me pensions are more valuable. Many have automatic COLAs so beating or keepi ng up with i flation isnt a concern. 401's, 403b's, 457's etc do not.

But like SS, most arent enough on their own...but they make it a lot easier as you dont need as much in your personal retirement accounts.

For me, my pension is allowing me to delay taking SS, which will make me even more cola adjusted money for the rest of my life.

 

[Bonasababy]

Hard to say, but I don't think these meet any somewhat reasonable definition of socialism.

MAGA folks couldnt come up with an accurate description of socialism if their life depended on it.

Trump accounts...like the Trump checks and aid to farmers in his last administration...are first and foremost an attempt to buy votes and favor...and greatly add to the deficit.

 

[Forkyfinder]

I wonder how right wingers would feel when this meets the definition of socialism they rail about?

MAGA folks couldnt come up with an accurate description of socialism if their life depended on it.

Trump accounts...like the Trump checks and aid to farmers in his last administration...are first and foremost an attempt to buy votes and favor...and greatly add to the deficit.

Im not sure - the modern "right wing" means a lot of things that dont resonate with me and arent really objectively fitting of the traditional conservative politics. Theres a long list of recent fundamental changes, heres a short start:

Subidies
Tariff trade policy
Govt ownership of private enterpreise
Programs like this

I do know that villifying people only further entrenches folks into their respective tribe. Woke, Maga, or whatever else.

 

[Lostinthewoods]

Every financial advisor I have talked with tells me pensions are more valuable. Many have automatic COLAs so beating or keepi ng up with i flation isnt a concern. 401's, 403b's, 457's etc do not.

This is interesting to me that every financial advisor you talk to says that.

My data is probably old, but depending on the entity investing the pension I thought the average rate of return on pensions hovered around 7%.

You also then run risk with whatever company, entity, etc that runs your pension. If that company mismanages the pension and it all dries up, then are you SOL?


I always figured the 401K would be the route a financial professional would send you.

You can manage the fund, likely beat the pension rate of return even if you invested in a simple S&P, and it’s less risk with your retirement fund in (made up scenario) VTSAX VANGUARD verse (again made up) Illinois School pension fund.

I almost wonder if the payouts upon death are different for some pensions verse inherited 401K.


This post wasn’t to question your investment strategy by the way. I just found it interesting so many financial guys recommended the pension to you over the other stuff.

Lots of people have different theories I guess.

 

[sigpros]

Every financial advisor I have talked with tells me pensions are more valuable. Many have automatic COLAs so beating or keepi ng up with i flation isnt a concern. 401's, 403b's, 457's etc do not.

But like SS, most arent enough on their own...but they make it a lot easier as you dont need as much in your personal retirement accounts.

 

[sigpros]

This is interesting to me that every financial advisor you talk to says that.

My data is probably old, but depending on the entity investing the pension I thought the average rate of return on pensions hovered around 7%.

You also then run risk with whatever company, entity, etc that runs your pension. If that company mismanages the pension and it all dries up, then are you SOL?


I always figured the 401K would be the route a financial professional would send you.

You can manage the fund, likely beat the pension rate of return even if you invested in a simple S&P, and it’s less risk with your retirement fund in (made up scenario) VTSAX VANGUARD verse (again made up) Illinois School pension fund.

I almost wonder if the payouts upon death are different for some pensions verse inherited 401K.


This post wasn’t to question your investment strategy by the way. I just found it interesting so many financial guys recommended the pension to you over the other stuff.

Lots of people have different theories I guess.

Agreed. The market is a gamble but so is company pensions. I work with 2 guys who each lost 2 pensions and started over. That would really suck. Thats why I think the 401K is better. And you can leave it to someone if you want too. I have the option to leave a percent to my spouse 50, 65, 75, or 100%. I loose a little over $400 a month if I elect to leave my wife my pension

 

[sigpros]

Every financial advisor I have talked with tells me pensions are more valuable. Many have automatic COLAs so beating or keepi ng up with i flation isnt a concern. 401's, 403b's, 457's etc do not.

But like SS, most arent enough on their own...but they make it a lot easier as you dont need as much in your personal retirement accounts.

For me, my pension is allowing me to delay taking SS, which will make me even more cola adjusted money for the rest of my life.

Well I typed up a response but I did some thing and it went away. But I can retire after 30 years no matter my age. If i retire before 62 its $3200 a month BUT some of that is a SS make up and the year I hit 62 it doesn't matter if I start drawing or not My pension drops to $1800 a month.

 

[Bonasababy]

This is interesting to me that every financial advisor you talk to says that.

My data is probably old, but depending on the entity investing the pension I thought the average rate of return on pensions hovered around 7%.

You also then run risk with whatever company, entity, etc that runs your pension. If that company mismanages the pension and it all dries up, then are you SOL?


I always figured the 401K would be the route a financial professional would send you.

You can manage the fund, likely beat the pension rate of return even if you invested in a simple S&P, and it’s less risk with your retirement fund in (made up scenario) VTSAX VANGUARD verse (again made up) Illinois School pension fund.

I almost wonder if the payouts upon death are different for some pensions verse inherited 401K.


This post wasn’t to question your investment strategy by the way. I just found it interesting so many financial guys recommended the pension to you over the other stuff.

Lots of people have different theories I guess.

Many pensions...mine included...do not allow for doing anything with your contribution to it. Its paid by you and your employer, and the amount is specified in contract or law. Cant change your personal contribution if you wanted to. So theres no discretion.

We had a retirement fund option as well but the match was incredibly small so we sunk more into my wifes account with a better match.

Annual pension return has been higher than 7 % for years. Much higher in many. Managed by a board thats been very good and they have the money to get into oprions not available to the average investor. Just checked...they manage over 100 billion in assets, covering multiple pensions. That opens a lot of doors.

At one time I was bothered that in their projections they assumed a ROR that was too high...8 or 9% over time. Thankfully they dropped that in recent years.

No payoff in death but has a 100% survivor option that I chose...spouse gets the same amount if I go first. If she goes first my pension jumps up to a higher level. Reduction occurs if you retire before 65.

The math gets tricky as so many expenses while working go away or get cheaper in retirement, but not counting those mine pays a bit over 50% of what I made while working. Would have been more but I retired early. That jumps to over 60% if my wife goes first.

Its very safe. Requirements in rules and statutes guide its operation. If the future obligations get ahead of funding available theres a requirement to increase contributions. Happened a few times over my career.

I do know there are or were some badly managed pensions out there, and I think many unfairly ascribe value to every pension based on the few bad ones.

Certainly some are more shaky.