Increased Retirement Contribution Limits May Be Too Late To Help Baby Boomers!

As the U.S. government slowly awakens to the reality and ramifications of a $21 trillion national debt and the ‘Borrowing from Peter to pay Paul’ accounting practices that have both Social Security and Medicare in danger of an undeniable need for emergency attention, it was announced on Thursday, November 1, that the maximum amounts of money that can be contributed to qualified retirement plans annually has been increased, effective in 2019. In order to facilitate greater private employee savings, the maximum 401(k), 403(b), most 457 and Thrift Savings Plan contributions will increase by $500, from $18,500 to $19,000 and the limit for contributions to an individual retirement account will increase by $500, from $5,500 to $6,000.

It seems to make the greatest sense, particularly at this late hour, that those most affected by a realignment or modification of the U.S. Social Security Program, initiated more than eighty years ago, should receive the greatest freedom to invest tax-deferred funds, in order to hopefully make up whatever  shortfall or adjustment is yet to be forced upon them. But instead, the government announced that “catch-up contributions” for those over 50 years of age will not change in 2019. Qualified catch-up contributions for 401(k) and other employee plans will remain at $6,000 and IRA catch-up contributions will remain at $1,000.

When an IRA-holder gets a W-2 at the end of the year and sees that more than 8% of their gross paycheck has gone to social security, they wonder how it’s possible, not only that the system is running at a deficit, but moreover that the entire system is on the verge of collapse. The stark reality is that the system started inefficiently, operated inefficiently and hasn’t ever been required to be the least bit accountable. Ida Fuller became the first person to receive a social security check on January 31, 1940. Her first monthly check of $22.54 was based on her total income from 1937 to 1939 of $2,484 and total Social Security contributions amounting to $24.75. In plain English, it means that Ida received ninety percent of her entire gross Social Security contribution back, with her first monthly payment and every payment after that went straight to the national debt column. What were we thinking and why was nothing done? So now, as the government is forced to get a handle on such uncontrolled spending, baby boomers are going to be smacked square in the teeth.

This is what makes it so difficult to understand why the government has always chosen to penalize individual retirement account holders far more heavily than those lucky enough to have employers with ‘employer-sponsored’ retirement programs. Those with employer-sponsored plans already have greater savings potential, based simply on the ‘matching funds’ provided by most plans. The advantage is compounded by the growth of those matching, but ‘not earned’ funds, while IRA-holders are quite simply relegated to doing more with less. American Bullion was a pioneer in the Gold IRA industry and is fully qualified to help you make the best use of any self-directed options, call (800) 653-GOLD (4653) today!

Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.