As details about the Rebuplican born tax plan start to emerge, there was a surprising proposal to limit 401k contributions to $2,400 per year instead of the $18,000 that it is now. Being that Americans currently estimate that they will need about $1,000,000 saved up or more in order to live through retirement, this limit could have a HUGE implication on the populous as a whole. That's in current dollars as well, if you account for inflation, the money needed to retire falls into the 1.75-2.5 million dollar range. If you look at the proposed $2,400 a year with an 8% increase and 35-40 years of savings it would come out to an estimated $345,000 to $540,000 after retirement.
Where would this leave our country in the future? Well it would further the divide between the rich and poor and shrink the middle class significantly, as most of the aging population would fall into a poverty position. This would raise their dependence on government care and support as people are living longer. This would have the potential to plunge the country into a prolonged state of economic collapse that would take years to recover from.
Thankfully, both Wallstreet and the general population quickly snapped at this proposal when it emerged, so much so that the president responded with the below tweet commenting that changes to the 401k are going off the table:
Thankfully it seems as if there is reason still out there right now. However, we need to take note and make sure this type of proposal does not come up again! This is also a scary reminder that things as we know them can change on a dime. Don't let your plans rest on any one thing because it may or may not be there tomorrow.
You can read more about this story at CNN: http://money.cnn.com/2017/10/23/pf/taxes/trump-tax-reform-401k/index.html
