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Comment by JonFish85 | Hacker News Reader

I'm not thinking just SS. Imagine in 30-40 years when SW engineers are retiring with their $5m 401k, but their neighbor is still barely making rent at their service-level job. I imagine there are many more people who have foregone retirement savings to pay off their massive college loans.

Politically, the story would be something like this: why should you, a multi-millionaire SW engineer who hasn't paid taxes on your 401k not pay your fair share so that these other folks can spend some time with their families? After all, they were the victims of predatory lending! Close the loophole that allowed your opulent lifestyle!

And remember, 401ks are a multi-trillion dollar market of untaxed dollars. Do you really think tomorrow's politician in 30-40 years is going to miss that, never mind their constituents?

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Taxes are at historically low rates, and current governments have continually borrowed from the future to fund wars and tax cuts (outstanding US government obligations are in the trillions of dollars [1]).

Of course taxes are going to go up. Plan accordingly. If you've put millions of dollars in a pre-tax retirement account, you're a fool if you think it's coming out at anything near current tax rates. You're banking on a political climate that cannot exist existing. That's your fault.

And before blaming your average citizen, look how little anyone cares about what citizens want regarding net neutrality, a tax bill that is going to gut entitlements to support tax cuts for the top 1%, and so on.

[1] https://treasurydirect.gov/NP/debt/current (~20 trillion dollars in US gov outstanding debt obligations)

> Of course taxes are going to go up. Plan accordingly

They already did. The GOP tax bill specifically targeted our demographic as a way to finance tax cuts for the wealthy and businesses. The GOP doesn't even deny it.

Like it or not, we are the scapegoats for all the problems afflicting the poor. And it's not a stretch to believe the GOP is going to use popular support to extract every dime from us until we are homeless too.

Medicare cuts->Elderly dying off faster->Voter demographic change. Law of unintended consequences? Possibly. I can see the political winds shifting back hard over the next 3 years.

Enough Puerto Ricans might have moved to Florida already to turn the state blue. Won't know until next elections.

A lot of people Puerto Ricans are moving to traditionally blue Florida locations. SE Florida, Orlando, Tampa are the 3 most populous areas and all are strongly blue. Through gerrymandering they'll continue to get the same representation.

If these new residents makes the statewide elections close, things would be improved (because in general in close elections, candidates have to appeal to the tiny amount of voters on the other side that switch parties, so toning down extremism), plus as Puerto Ricans, they had pretty much no say in the federal government versus some say after they moved from the island to the mainland.

>>I'm not thinking just SS. Imagine in 30-40 years when SW engineers are retiring with their $5m 401k, but their neighbor is still barely making rent at their service-level job.

It's interesting that you believe people with $5M+ networth would have service workers as neighbors. :)

Why is that interesting? After working for 40 years, saving religiously, it’s entirely possible that they’re living a solid middle class lifestyle not much different from someone else who also lives the same lifestyle but rents and doesn’t save money.

I live in the Peninsula (San Mateo County, CA). My side of the street is mostly rentals (2BR townhouse duplexes) costing about $4k/mo. The other side of the street is single homes, 3BRs that go for $1.6M. If you want good schools for your kids in the Peninsula, $4k/mo isn't a crazy rent, you might be able to go somewhere else in the area and pay $3k, but maybe you care enough about your kid's future to pay the extra $1k/mo for better schools... so you have a lot of people who are tradespeople or who are struggling to save much after they take care of their kids, but a lot of the homeowners are probably worth $5M at retirement.

My former next door neighbor had to move far away because she just couldn't afford it anymore, but probably at least a half-dozen families on my block could plausibly have net worths in the $5M range. In a neighborhood like this you see $70k and $10k cars parked next to each other.

Strangely enough that proposal was floated around in earlier versions of the currently proposed tax bill: the 401(k) yearly contribution cap was going to drop from $18,000/year to $2,400/year. That would have driven savings into Roth 401(k)s/Roth IRAs so that the tax income would be realized sooner rather than later.

I currently save at a 50/50 mix of 401(k)/Roth 401(k) just in case the scenario you described comes true. I expect that as I age I'll contribute more post-tax dollars to my Roth and fewer to my 401(k).

I was a bit miffed to learn that the max contribution for an IRA and Roth IRA combined is only $5,500. I did some reading and understand the point of it but I would much prefer to be in control of my own money and where it is invested than some of the limited options given through an employer's 401k.

Plus you cannot contribute at all to an IRA once your income is above a number (132,000? last year) that is way below valley software average salary. It's kind of a way to encourage one to work for a company that has a 401K I guess.

When you change jobs, you can rollover your 401(k) into an IRA, so if you're in an industry where change jobs every 3-5 years, the extra savings makes the difference pretty small (you can always put your money into a low-fee index fund in the 401(k) and then manage it more when you rollover).

Further, a lot of 401(k)s at larger companies that use Fidelity (at least, possibly others) have a feature where you can allocate money into a general brokerage sub-account, where you can invest in anything you could if you opened an IRA at Fidelity.

Yes, that's what I did after leaving my last job and read up more on IRAs. For retirement savings, the plan is for index funds. I was more annoyed by the max on IRAs since a lot of the companies I've worked for have either not offered 401ks or just had poor options.

This Bogleheads post had some good replies about why this is the way it is in terms of contribution max:

https://www.bogleheads.org/forum/viewtopic.php?t=115303

It is what it is and, until I find something decently high-paying, doesn't really matter in the short run.

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