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.

  • Flying Squid@lemmy.world
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    7 months ago

    “I know you want that doll, honey, but I’ve put the money for it into an IRA and it will make you a lot happier when you don’t have to support me when you’re grown up.” You do you with your kids, I’m going to get mine things that will make her happy.

    And she already knows she has no obligation to support me. I’ve made that clear to her.

    • person420@lemmynsfw.com
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      7 months ago

      Do you really think she’s just going to let you starve and live on the street?

      And yes, that’s exactly what you say. Funny how it’s not things that make kids happy, it’s spending time with them. Reading to my daughter her favorite book for the 1000th time is much more enjoyable than just buying her a new doll.

      It’s also a great lesson in short term happiness vs long term happiness.

      • Flying Squid@lemmy.world
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        7 months ago

        You bought her a book? When you could have put that money in a Roth IRA?

        You’re clearly an abusive parent!

        • KevonLooney@lemm.ee
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          7 months ago

          Stop being obtuse. You know what he means.

          Also, libraries are great for kids to choose their own books. You just assumed he spent money on a book instead of time taking his kid to the library. It’s true, kids don’t care about money. They care about time you spend with them.

          • Flying Squid@lemmy.world
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            7 months ago

            True, I did assume that someone who claims to have read the same book to their child 1000 times did not get it from the library.

        • ripcord@lemmy.world
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          7 months ago

          You’re saying you only have enough extra money each month for either a children’s book, OR that book’s value in retirement savings?

          And assuming that’s their life situation as well?

              • Flying Squid@lemmy.world
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                7 months ago

                Me:

                People think that if you spend $30 or $40 a month on things that make you and those you love happy, you’ll never save enough to make yourself marginally more comfortable in the last 10-20 years of your life (if you’re lucky) that will be uncomfortable no matter what.

                You:

                I promise you, if you put that $30/month into your own IRA, you’ll make her a lot happier when she doesn’t have to support you when she’s grown up.

                Me:

                “I know you want that doll, honey, but I’ve put the money for it into an IRA and it will make you a lot happier when you don’t have to support me when you’re grown up.” You do you with your kids, I’m going to get mine things that will make her happy.

                You:

                And yes, that’s exactly what you say. Funny how it’s not things that make kids happy, it’s spending time with them. Reading to my daughter her favorite book for the 1000th time is much more enjoyable than just buying her a new doll.

                So yeah, you did say either buy a child a toy or invest in retirement.