Cares Act- How will this effect the economy down the road?

[ChiBitCTy]

For those of you not familiar with the Cares Act, here is a good guideline of everything that's involved- https://home.treasury.gov/policy-issues/cares

I work in the finance industry and in particular with retirement plans.  The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.  In theory it's a good thing for those whom have encountered hardships due to Covid-19, however many are taking advantage of this and simply taking out money just because they can.  

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

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[Upgrade00]

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

For us to understand the effect it may have, I think we would need to get information on how many people are actually taking the offer, their average age and if they actually need the aid at the time; a 29 year old liquidating their retirement savings can make up that back with more years of work ahead of them and would not be as dependent on the government after retirement as a 45+ year old in the same situation.
Also, one who is currently at a crisis financially would benefit from the scheme to keep a business afloat or provide basic needs.

There is a slim chance that those withdrawing without actually needing the cash at the time are doing so to put that cash in some other investment which they think would be more profitable at the time they are fit for retirement. That would be a huge gamble.

[dothebeats]

There is a slim chance that those withdrawing without actually needing the cash at the time are doing so to put that cash in some other investment which they think would be more profitable at the time they are fit for retirement. That would be a huge gamble.

I'm actually looking at it this way; there would be some people that are withdrawing from their retirement plans to invest the money into something else while it is still possible. We couldn't blame them, given that unemployment is still rising every day and there's not much to do to get some profit/money in the mean time. Some smart individuals will try to make their money work for them even though there's a possibility that they cannot make it in the end, while others are just being honest about their situation and just need the cash ASAP to tend to their basic needs.

The demographics of those taking out some money from their retirement plans, as Upgrade00 pointed, is actually helpful in determining the course of the economy in the coming years.

[fiulpro]

I believe most of the people out there who do need help doesn't even have a retirement plan or even health insurance. Some companies do provide their employees with the same but that's unfortunate that the people belonging to the middle class family and below rarely have time to do stuff like that , especially in underdeveloped and developing countries.
Only the Rich and the well off people can actually make sure to have all the plans well and ready in advance. Plus when they said individuals still employed !! Wasn't the whole point opposite?  The unemployed should get the opportunity first above all.

Plus according to Google only 36% of the people in the whole US have retirement plans up and about. I cannot understand who drafted this law in what state.

[Coyster]

Plus when they said individuals still employed !! Wasn't the whole point opposite?  The unemployed should get the opportunity first above all.

One has to be employed or at least self employed to have a retirement plan, it's not an opportunity (free money) of any sort, it's just the payment an ex worker receives after they have retired and no longer working, so a worker must have either served the government or maybe a private firm to be on a retirement plan when retired.

I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

It's up to the workers who are taking fractions out of their retirement plan, the government is only trying to relieve them of some burden caused by the pandemic. If they want to meet basic needs are are only taking out a little, then there is nothing wrong with that, but any worker taking a considerably large portion of their retirement plan should have an investment they want to put it into. It is what it is, when you take your retirement benefits doesn't matter, it's what you do with it; some retired workers have earned their retirement benefits at the appropriate time and still squandered it, anyone who's withdrawing from this plan now and is smart will have no problems in the future.

[Lucius]

I find this offer very attractive and I would personally take advantage of it if I had the opportunity to do so. I see the reasons in the fact that a lot of people work all their lives (40+ years), then retire at, say, 65 years of age. If we look at the average life expectancy of people in the USA, it is around 79, which is not so bad - but if someone empties their pension fund at the age of 60 and lives for at least another 20 years, they could find themselves in serious financial trouble.

I personally know a lot of people who haven't even experienced their retirement, or have only enjoyed it for a few years - so if someone offered a 60-year-old to take as much as $100 000 at once, here in Europe it would surely be done by more than 2/3 of people.

The pension system is seriously compromised, especially in countries where there is depopulation and large-scale emigration - because if there are no workers, then there is no one to finance pensions or they are so low that they cannot meet even basic living needs.

[Gozie51]

I find this offer very attractive and I would personally take advantage of it if I had the opportunity to do so. I see the reasons in the fact that a lot of people work all their lives (40+ years), then retire at, say, 65 years of age. If we look at the average life expectancy of people in the USA, it is around 79, which is not so bad - but if someone empties their pension fund at the age of 60 and lives for at least another 20 years, they could find themselves in serious financial trouble.

I personally know a lot of people who haven't even experienced their retirement, or have only enjoyed it for a few years - so if someone offered a 60-year-old to take as much as $100 000 at once, here in Europe it would surely be done by more than 2/3 of people.

I would want to view this from an angle of being prudent in the person. If someone is good with managing finances,cthen that will not be a problem if they take out their money from pension. That can help better if they reinvest the money especially in a capitalist system that allows individual establishment. I don't see any problem if someone work for like 15yearsand decide to resign or retire to establish a business.

In some countries, if you have worked in government for 15years, you are entitled to resign and your entitlement will be paid to you. Is better to resign while young like 55 - 60years so you can have energy you can use for other endeavour.

[jaysabi]

For those of you not familiar with the Cares Act, here is a good guideline of everything that's involved- https://home.treasury.gov/policy-issues/cares

I work in the finance industry and in particular with retirement plans.  The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.  In theory it's a good thing for those whom have encountered hardships due to Covid-19, however many are taking advantage of this and simply taking out money just because they can.  

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

Americans already don't save enough for retirement in general. Social security isn't designed for people to survive on alone, it's supposed to supplement your own savings and in the worst case, keep people out of abject poverty when they didn't save enough themselves. People depleting retirement savings before retirement for any reason will increase the number of people who are relying mainly or entirely on social security in the future. And the money taken out won't just be a dollar for dollar amount they're down in the future because they'll be missing out on compounded gains over time. 

[Darker45]

For those of you not familiar with the Cares Act, here is a good guideline of everything that's involved- https://home.treasury.gov/policy-issues/cares

I work in the finance industry and in particular with retirement plans.  The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.  In theory it's a good thing for those whom have encountered hardships due to Covid-19, however many are taking advantage of this and simply taking out money just because they can.  

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

Is this feature of the Cares Act granted to literally everyone who asks for it? Or is there some kind of justification required or perhaps a set of requirements to be complied with to be able to avail of it? If this is granted to just everyone who wishes to withdraw from their retirement plans, this could indeed pose a certain problem in the future. I'm not saying people are irresponsible of their future but, yes, they could be at times.

It is their money, yes, but if the retirement plan system is this loose it might really offer itself to abuse, and the burden will fall to the government in the long run. Well, I can only hope that the US economy will thrive in the future so that they could absorb the possible impact of this.

[exstasie]

For those of you not familiar with the Cares Act, here is a good guideline of everything that's involved- https://home.treasury.gov/policy-issues/cares

I work in the finance industry and in particular with retirement plans.  The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.  In theory it's a good thing for those whom have encountered hardships due to Covid-19, however many are taking advantage of this and simply taking out money just because they can.

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

Considering people generally get an employer match on contributions, this is a pretty sweet deal. I'm not surprised people are taking advantage of the ability to cash out without penalty.

How many of these people do you think are taking out the cash and hoarding it, or using it as working capital in a business? Vs. the number who are simply burning through their retirement savings to pay day-to-day expenses? That makes a big difference.

When I was transitioning into self employment some years ago, I cashed out my retirement account (with penalty) to put the capital towards my business. It ended up being a great decision, and I've since rebuilt my portfolio.

[Findingnemo]

For those of you not familiar with the Cares Act, here is a good guideline of everything that's involved- https://home.treasury.gov/policy-issues/cares

I work in the finance industry and in particular with retirement plans.  The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.  In theory it's a good thing for those whom have encountered hardships due to Covid-19, however many are taking advantage of this and simply taking out money just because they can.  

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

From Individual's perspective it is not really that bad, they need money badly for their survival or they simply taking the advantage of the condition so they can use that money into something productive which can give more money than those retirement plans.And I guess lot of them heard about investing due to covid 19 that is why some people trying to become an investor.

[Yatsan]

For those of you not familiar with the Cares Act, here is a good guideline of everything that's involved- https://home.treasury.gov/policy-issues/cares

I work in the finance industry and in particular with retirement plans.  The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.  In theory it's a good thing for those whom have encountered hardships due to Covid-19, however many are taking advantage of this and simply taking out money just because they can.  

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

I see this Cares Act as a good savior of the people undergoing hardship most specially at this time of pandemic for they can withdraw funds from their retirement plan for the sake of surviving the effect of this pandemic that most are out of job and do not have any other sources of income duly because they were temporarily out of their jobs maybe because remote working won't work on the type of job they have. I think there is nothing wrong with that for they have worked out for it ever since they started working it is just they will be accessing their retirement plan too early than supposed day of usage. There will be no issue in that as long as this Care Act won't be abused that I guess won't happen for we do have certain decent reasons why we need to access our retirement plans if we do have such one because it is our money after all.

[ChiBitCTy]

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

For us to understand the effect it may have, I think we would need to get information on how many people are actually taking the offer, their average age and if they actually need the aid at the time; a 29 year old liquidating their retirement savings can make up that back with more years of work ahead of them and would not be as dependent on the government after retirement as a 45+ year old in the same situation.
Also, one who is currently at a crisis financially would benefit from the scheme to keep a business afloat or provide basic needs.

There is a slim chance that those withdrawing without actually needing the cash at the time are doing so to put that cash in some other investment which they think would be more profitable at the time they are fit for retirement. That would be a huge gamble.

You'e exactly right.  From my own personal experience the age range has varied quite a bit .  I see mostly people in their 40's and 50's but I have also seen plenty of those in their 20's and 30's taking advantage of this as well.  Even if it was just older people or just younger people taking advantage of this Act, I think there is still a whole lot to be worried about down the line whether sooner or later.

[ChiBitCTy]

For those of you not familiar with the Cares Act, here is a good guideline of everything that's involved- https://home.treasury.gov/policy-issues/cares

I work in the finance industry and in particular with retirement plans.  The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.  In theory it's a good thing for those whom have encountered hardships due to Covid-19, however many are taking advantage of this and simply taking out money just because they can.  

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

From Individual's perspective it is not really that bad, they need money badly for their survival or they simply taking the advantage of the condition so they can use that money into something productive which can give more money than those retirement plans.And I guess lot of them heard about investing due to covid 19 that is why some people trying to become an investor.

No this is not what's happening.  First off funding your retirement plan is often the first place anyone should be investing.  Many group retirement plans ( 401k's, 457's, 403b's etc) offer a match of some sort ( free money ) as well as discounted mutual fund options.  So taking money out of your plan is often not a good idea.  I can also guarantee that the percentage of people who are using this money for investing elsewhere is likely somewhere around .001%.  People are taking this money often for no good reason other than they can.  This is a terrible thing for Americas economy. 

[exstasie]

First off funding your retirement plan is often the first place anyone should be investing.  Many group retirement plans ( 401k's, 457's, 403b's etc) offer a match of some sort ( free money ) as well as discounted mutual fund options.  So taking money out of your plan is often not a good idea.

401K contributions get matched when you make them. It's not like you lose that money just for withdrawing early, assuming you're vested. If you're not vested then we're not talking about very much money anyway.

The penalty hurts but in this case there is no penalty.

I can also guarantee that the percentage of people who are using this money for investing elsewhere is likely somewhere around .001%.  People are taking this money often for no good reason other than they can.

It's a minority but .001% is an exaggeration. A lot of people don't have adequate startup capital, and the early withdrawal penalty is normally a huge disincentive from tapping retirement accounts. Now they can take their capital (plus employer match) penalty free and put it towards something productive.

I bet most people are just hoarding the cash based on all the fearmongering about economic collapse. Probably not the end of the world.

[hugeblack]

 The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.

It is strange that such a law exists. In my country, you are not entitled to take from retirement money until after the end of your service period, and the return will be reward if you want to live a normal life with a minimum level of luxury for the rest of your life.

Governments should add to individuals training workshops to learn new ways of investing and learning instead of having all the things on their asset list being salary, retirement money.
The impact will be significant on individuals, but I do not expect many people to risk withdrawing a lot of money.

[Lucius]

It is strange that such a law exists. In my country, you are not entitled to take from retirement money until after the end of your service period, and the return will be reward if you want to live a normal life with a minimum level of luxury for the rest of your life.

Well, for those of us who are not from the US, this is definitely something unusual - because in my country there are pension funds that are designed for mandatory and voluntary payment - and the one who pays into such funds can not get those funds in any other way than to go to pension and to receive a certain amount each month. The exception is a voluntary fund in which the insured person is entitled to 15% of the funds only when he/she reaches the age of 55.

In the event that a person dies after paying his or her entire life into pension funds, that money is not paid to anyone - except in exceptional cases when the pension is inherited by a spouse or child who for some reason cannot support himself. I personally like the choice that is given by Cares Act, but I would introduce mandatory counseling for anyone who wants to do it, because I believe that some are not fully aware of the implications of this act.

[AicecreaME]

<...>

I think up to $100,000 withdrawal from their retirement plan is a great deal for those who need the money especially now we’re in the middle of pandemic.

Those people who tend to withdraw and are utilizing the said offer, i believe are smart enough to know what to do with their money and where to spend it over. They managed to put up with such savings for their future, hence i assume they have the ability to spend and use it wisely. Maybe those people especially the ones who belong to younger age bracket are withdrawing to invest their money to some kind of asset that will generate them an additional income. These people are wise because they’re making their money work for them while doing the bare minimum.

On the other hand, maybe some are withdrawing  just because they are really at the edge and they badly needed the money. We can’t blame these people since in the first place that’s their retirement plan. They can always use the policies to their advantage since they own the money. We’re all having a hard time and maybe they’re at worse position than we are now, leading them to withdraw what they saved up for their future.

I think it still depends on the person himself on how he would manage his savings. These people utilizing the cares acts program can either go homeless or have comfortable life in the future based on how they would use the money they have withdrawn from the plan. After all, we can’t dictate them. We can only give advice and guide them.

[ChiBitCTy]

First off funding your retirement plan is often the first place anyone should be investing.  Many group retirement plans ( 401k's, 457's, 403b's etc) offer a match of some sort ( free money ) as well as discounted mutual fund options.  So taking money out of your plan is often not a good idea.

401K contributions get matched when you make them. It's not like you lose that money just for withdrawing early, assuming you're vested. If you're not vested then we're not talking about very much money anyway.

The penalty hurts but in this case there is no penalty.

Not sure what your point is by this.  I agree, this is true.  It doesn't take away from the fact that everyone who has a 401k or other group retirement plan, should be contributing as much as they can, at least to the company match, if you can afford to do so.  

It's a minority but .001% is an exaggeration. A lot of people don't have adequate startup capital, and the early withdrawal penalty is normally a huge disincentive from tapping retirement accounts. Now they can take their capital (plus employer match) penalty free and put it towards something productive.

I bet most people are just hoarding the cash based on all the fearmongering about economic collapse. Probably not the end of the world.

Of course that was a bit of an exaggeration, but likely not but a ton.  Are you someone who works in the financial industry who's taking these requests daily, who actually speaks with tons of people doing so, where you are being told by most what they plan on doing with the money? Trust me people for some reason love to give you the reason for account withdraws when doing so, I'll never understand why but they offer up that info all the time.  

If you're saying that investing in the stock markets is not productive then you don't know history very well.  

[ChiBitCTy]

<...>

I think up to $100,000 withdrawal from their retirement plan is a great deal for those who need the money especially now we’re in the middle of pandemic.

Those people who tend to withdraw and are utilizing the said offer, i believe are smart enough to know what to do with their money and where to spend it over. They managed to put up with such savings for their future, hence i assume they have the ability to spend and use it wisely. Maybe those people especially the ones who belong to younger age bracket are withdrawing to invest their money to some kind of asset that will generate them an additional income. These people are wise because they’re making their money work for them while doing the bare minimum.

On the other hand, maybe some are withdrawing  just because they are really at the edge and they badly needed the money. We can’t blame these people since in the first place that’s their retirement plan. They can always use the policies to their advantage since they own the money. We’re all having a hard time and maybe they’re at worse position than we are now, leading them to withdraw what they saved up for their future.

I think it still depends on the person himself on how he would manage his savings. These people utilizing the cares acts program can either go homeless or have comfortable life in the future based on how they would use the money they have withdrawn from the plan. After all, we can’t dictate them. We can only give advice and guide them.

I mean this in all due respect but you couldn't be further off.  Unfortunately people overall are not that intelligent, have a lack of proper schooling and parenting and this tends to effect them for their entire lives.  I've worked in the financial field for over a decade now and one thing I've come to realize that is without question an absolute fact and that is people overall have no idea how to manage money properly.  I wish your positive outlook were the case, but it's simply the furthest thing from.

Don't take my word for it, there's plenty of statistics out there on the google machine.  For example - https://www.cheatsheet.com/money-career/10-retirement-statistics-will-scare-crap.html/

[so98nn]

These are pension money and taxes that were once used by government or still use for the development of nation. Honestly, it's money that is owned by the tax payer, provident fund contributors, EPF contribution and much more. It does go into government treasures and used by them for development.

In the process they are securing the funds and also giving interest money to these holders. It means though government is using it they have to payback the interest rate on that holding. Thus if at the retirement people are taking back the money then it's not bad thing since they owe it.

However, in the pandemic situation like this it can cause negative impact. Think of government employees, doctors who are salaried on our taxes will get hampered more due to this. Over the time this could lead to chaos and it is already showing up in the current time also.

If majority of people take it out then government will have to take laons from reserve Bank of Nations and could go in debts badly over the time.

I could think of more chaos and nothing else with this act.

[exstasie]

If you're saying that investing in the stock markets is not productive then you don't know history very well.  

The returns in the stock market are okay. I'm personally glad I cashed out my 401K and built my business with it instead of leaving it in the market. The returns have been exponentially larger.

I also think the stock market is a bubble, a ticking time bomb. The Fed averted collapse this time but I don't think QE infinity is going to work forever. It's not going to be fun when that house of cards topples down.

[jostorres]

Yeah the facts you have stated here are right, there are going to be some consequences for this action that some people are taking right now, although that will be depending on how they chose to invest the money right now, those of them who would be careless and spend the money without plans are going to be the ones that would be regretting it later.

That aside, I know that some of the people that are taking advantage of a chance like this are not doing so just to squander the whole money on unnecessary things, they have better plans and they are aware of the consequences that would follow if they misuse this kind of opportunity.

[ChiBitCTy]

If you're saying that investing in the stock markets is not productive then you don't know history very well.  

The returns in the stock market are okay. I'm personally glad I cashed out my 401K and built my business with it instead of leaving it in the market. The returns have been exponentially larger.

I also think the stock market is a bubble, a ticking time bomb. The Fed averted collapse this time but I don't think QE infinity is going to work forever. It's not going to be fun when that house of cards topples down.

Now taking your 401k money and investing it in a business can be a great move, no question.  Now that of course comes with stipulations and heavy factors to consider such as age, penalties, low cost basis = heavy taxation ( unless of course we are speaking about a Roth 401k that's been held for 5 years or longer).  Kudos to you for making it work though.  This is often how the wealthiest men on the planet get to where they are today.  But, of course, this is without question not a good idea for the majority.  

The stock market returns have been excellent compared to other traditional/commonly used financial vehicles such as bonds, CDs, Interest barring bank accounts, notes, etc ..which is what 50% of US citizens are invested in ( & obviously lesser % in most other nations). The vast majority of people aren't suited for higher upside financial products/ riskier investing ..such  as options, futures, real estate, business ownership, commodities etc.

I agree, the markets are over-bought.  It will crash again, likely in the next year or two IMO..but that's pretty much moot for those who have a mid to long term outlook for their portfolio.  That means I can buy low, and with my mid-to- long term outlook, as long as I don't panic sell out of my positions then I haven't lost anything as I still have the same amount of shares that will eventually grow back.  Most major US market declines only last a few months, some a few years at most ( past 100 years anyhow ).  

QE is used by every single Central Bank.  There's a reason though why countries don't just go print ridiculous amounts of money..and why some are able to do so more than others.  The U.S. is able to do more QE because the economy is the worlds strongest.  Our national debt is out of control and will have negative impacts that will only get worse, but luckily for the US it's foundation of businesses is far superior to the rest of the worlds overall in terms of profitability/mid to long term outlook etc.  US gov bonds also continue to be eaten up by foreign nations, even with low interest rates & are considered the safest investment vehicle on the plant ...despite the massive debt and ramp-id QE.    

Sorry for the novel.

[fiulpro]

See I do believe this is a good act for sure and people will be able to get a lot of benefits from it. But I believe we have to focus on the fact that *will they be able to actually help people*, what is the stats of the people they helped ?

Ofcourse this is a good act and would help people in the long run and at the same time the economy will recover way faster.

Plus I do believe investing in stock markets is actually very beneficial at this time since right now due to downgrade of the market people have the potential to buy stocks at much lower rates and at the end they would easily make a lot of profits in the end.

[coolcoinz]

First of all, as a libertarian I treat social security as a tax. It's not savings because you cannot opt out, so if they'd allow me to take my money out I'd do it in an instant.
The whole system should be disbanded if you ask me. The usual argument of its supporters is "what if you couldn't manage your money because you weren't smart enough and lost everything?" I'd ask someone smart to do it for me, but at least I'd know that I can withdraw at any point. Retirement plans should be managed directly or by private companies, not by a centralized institution that makes you wait until a certain age.

[jaysabi]

First of all, as a libertarian I treat social security as a tax. It's not savings because you cannot opt out, so if they'd allow me to take my money out I'd do it in an instant.
The whole system should be disbanded if you ask me. The usual argument of its supporters is "what if you couldn't manage your money because you weren't smart enough and lost everything?" I'd ask someone smart to do it for me, but at least I'd know that I can withdraw at any point. Retirement plans should be managed directly or by private companies, not by a centralized institution that makes you wait until a certain age.

I think it's absolutely correct to view social security as a tax. Logistically, the money you're taxed isn't put into an account for you to withdraw later when you retire. It's paid out to current retirees in the present. In the future when you retire, your payments will come from younger workers who are paying the social security tax.

[bitgolden]

This could be used for very well reasons and it could be used for very wrong reasons as well, it all depends on the individual how to use it. I know people who will take out everything just to buy a big tv and a car or whatever and I know people who will take out to pay debt so that they could live better and even be able to save again.

You might imagine it is not a good idea but there are people with school debt or credit card debt and even maybe loan and they could pay that off and when they do they could put half of that into retirement fund, allowing them to save even more. When you have debt, you get 100 but pay back 120 (or even more) but when you save 50-60 instead of that and have zero debt, you could put even more money aside for your future.

[coolcoinz]

First of all, as a libertarian I treat social security as a tax. It's not savings because you cannot opt out, so if they'd allow me to take my money out I'd do it in an instant.
The whole system should be disbanded if you ask me. The usual argument of its supporters is "what if you couldn't manage your money because you weren't smart enough and lost everything?" I'd ask someone smart to do it for me, but at least I'd know that I can withdraw at any point. Retirement plans should be managed directly or by private companies, not by a centralized institution that makes you wait until a certain age.

I think it's absolutely correct to view social security as a tax. Logistically, the money you're taxed isn't put into an account for you to withdraw later when you retire. It's paid out to current retirees in the present. In the future when you retire, your payments will come from younger workers who are paying the social security tax.

Which, if you think about it, makes the whole idea a big scam. If your money is being spent to pay off the previous generation and the next generation will pay for you, what happened to the money paid by the first ever participants in the program? Those people who were told that if they keep paying, their moeny will later be paid out to them. Who stole that mone and indebted the system?

[pokeronlinestatus]

Even those who are withdrawing because they encountered hardship are still taking some risk there. Those who are not having any hardship might withdraw and keep the money and use it for other purpose that will maybe generate more income for them, but those seeing hardships will literally spend the money on feeding and all that.

So, you can see from here that those who are experiencing hardships are the ones that are mainly at risk here, but I hope that they utilize the money wisely so that they don’t do things that they are going to end up regretting later.

[Salauddin1994]

The wisest thing to do before the economy hits the road is to save money for the future the difficulty here will be less and the risk will not fall because money cannot be spent if it is withdrawn most of the projects are usually under government projects so taxes are levied. That's why you need to protect yourself and spend money before you fall into remorse.

[el kaka22]

The idea of putting your money into that is not because they want to take your money, but because it is quite difficult to put money aside when you are not forced to do that. I can guarantee you that if you do not force people and just suggest it, they will live spending their money regularly and when they get old they will not have any money at all, and they will die very poor.

However if you force them to put money aside this way, they are going to be well off when they are older and will not worry about money. So, I wouldn't take my money out instantly if I were you, it is not really acceptable to be 80 years old and not have money, at that point you are better off dead because you are going to suffer a lot worse life until you die if you do not have money, can you imagine being homeless at 80?? It would be insane.

[RealMalatesta]

Investing your retirement fund to a business is not a great idea depending on what business we are talking about but putting your retirement fund to a stock is basically the same thing as well so I can't say what type of business.

If we are talking about withdrawing that money and putting it into your own business and starting from zero to build a whole business, that may not be a great idea, not just because you may fail because the opposite of that is you might succeed so I can't say that, but also because if you own a business you need to own one that you can sell later when you retire, and retirement is something everyone should have the luxury of as early as they want, even if you want to continue working at least have that cushion, starting a new business would make you work and retirement is literally the opposite of that, help you survive without working.

[teosanru]

For those of you not familiar with the Cares Act, here is a good guideline of everything that's involved- https://home.treasury.gov/policy-issues/cares

I work in the finance industry and in particular with retirement plans.  The cares act allows for individuals still employed and under 59.5 years of age to take withdraws from their retirement plans, up to $100,000, as well without the normal 10% penalty.  I am constantly getting calls from clients who are utilizing this feature.  In theory it's a good thing for those whom have encountered hardships due to Covid-19, however many are taking advantage of this and simply taking out money just because they can.  

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

See one thing I have realized after Coronavirus is that people have developed that mentality of YOLO more and more now looking towards life in a more short term perspective which isn't totally right or wrong. But here I think there would be a situation a of micro macro paradox kicking in. At micro level yes people might suffer problems with lack in their savings in future as you said some a re depleting their accounts so could be in grave trouble especially if they are retiring in anywhere around 10-12 years.
While on the macro front this looks like a band aid on the wound given by covid. By that I mean this was an intentional act done by Trump government to increase liquidity in markets to keep the economic growth trending. By this I mean if this remedy would not have been taken the markets for 2-3 years might have gone in a grave slump which anyways would have eaten returns of a lot of people. So in a way this is a step which could protect their savings in longer term. But yes coin has two sides it's too early to foresee it's real impact.

[ChiBitCTy]

See I do believe this is a good act for sure and people will be able to get a lot of benefits from it. But I believe we have to focus on the fact that *will they be able to actually help people*, what is the stats of the people they helped ?

Ofcourse this is a good act and would help people in the long run and at the same time the economy will recover way faster.

Plus I do believe investing in stock markets is actually very beneficial at this time since right now due to downgrade of the market people have the potential to buy stocks at much lower rates and at the end they would easily make a lot of profits in the end.

Right now the stock markets are almost at all time highs.  Many stocks are at all time highs.  So there really isn't a buy low opportunity at the moment ( though this can change quickly).  Also, there is no such thing as "easily" making profits.  Though your point does hold true, buying low is the smart move.

First of all, as a libertarian I treat social security as a tax. It's not savings because you cannot opt out, so if they'd allow me to take my money out I'd do it in an instant.
The whole system should be disbanded if you ask me. The usual argument of its supporters is "what if you couldn't manage your money because you weren't smart enough and lost everything?" I'd ask someone smart to do it for me, but at least I'd know that I can withdraw at any point. Retirement plans should be managed directly or by private companies, not by a centralized institution that makes you wait until a certain age.

It is certainly more of a tax than retirement plan for the younger generation, that much is true.  I have family members who currently take their social security income and it's working out great for them, but for myself and other young professionals..I'd not get too excited.  I personally have no faith that money will still be there by the time I can take it.  I think SS will be around in some fashion, but I doubt the money I deserve ( that I've been paying in to ) will be there when the time comes. 

The idea of putting your money into that is not because they want to take your money, but because it is quite difficult to put money aside when you are not forced to do that. I can guarantee you that if you do not force people and just suggest it, they will live spending their money regularly and when they get old they will not have any money at all, and they will die very poor.

However if you force them to put money aside this way, they are going to be well off when they are older and will not worry about money. So, I wouldn't take my money out instantly if I were you, it is not really acceptable to be 80 years old and not have money, at that point you are better off dead because you are going to suffer a lot worse life until you die if you do not have money, can you imagine being homeless at 80?? It would be insane.

Absolutely.  The sad fact of the matter is most people do a horrible job of saving, that is the ones who even do it at all.

[Harlot]

It would really depend on the person's situation because like what you said some of your clients are just getting money from their accounts because they can so I think even if they deplete their own retirement accounts I don't think they will be really affected by their actions. But for people who are taking advantage of this because they are hit by the pandemic they are really the ones that will be hit from this, yes it can be their temporary aid for their financial problems right now especially the ones who became unemployed because of the pandemic they will experience some financial problems on their retirement.

[Shasha80]

No need to be surprised, saw more and more people drawing up their retirement plans. Because the current situation urges people
to have cash to buy daily necessities. Due to the increasing number of unemployed, it makes some people have no choice but to
withdraw fund retirement plans. Because we cannot expect only from government assistance, so it is natural that many people draw
their retirement plans.

[Xembin]

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

Yes, sometimes depending on government assistance make some people not to concentrate in others issue that will sustain them after retirement. I think if there's lack of security in a country there will be economy effect because every investors need security in their various places to carry out their well.

[rodskee]

I foresee serious problems down the road with so many dipping in to their retirement, many of which are depleting their entire accounts.  The question I ask myself and everyone else..what are all the negatives consequences likely to come from this?  I think there will be all sorts of issues in terms of social security, homelessness, reliance on government assistance etc.

Yes, sometimes depending on government assistance make some people not to concentrate in others issue that will sustain them after retirement. I think if there's lack of security in a country there will be economy effect because every investors need security in their various places to carry out their well.

Being a people of a country we are entitled for government care when we retire but it is also our obligation to make our life easier when time comes that our age come to the highest in which 60-70 because we can save small amount each day for our retirement.
the problem with the people is they spend their money all and all when they are still strong and capable to work and starts becoming problematic when they are retired.
i will never let this things happen to me,because as of now i have already saving Fiat in my bank accounts and crypto in my nano ledger so when time comes i know that i am ready and need not to bother the government for assistance.

[ChiBitCTy]

Many of you I think aren't understanding the point of this thread.  It is not about deciding whether people who are enduring hardships due to Covid-19 should be eligible for this money or not, or whether they truly need it or not...it's about the long term implications of what this could/will do to the economy.  Being on the front line of this, I know for a fact that many people are abusing this Act, and using the money in a way that is not in their best interest.  I also know that many are using in their best interest.

The point of this thread is how this will effect the economy down the road when countless people have blown through their retirement during Covid and will need government assistance or some sort of help down the road.  This will effect how their plans play out down the road, maybe increase subsidized housing, the need for food banks etc etc.  These are the implications and long term issues I was trying to discuss.

[exstasie]

Many of you I think aren't understanding the point of this thread.  It is not about deciding whether people who are enduring hardships due to Covid-19 should be eligible for this money or not, or whether they truly need it or not...it's about the long term implications of what this could/will do to the economy.  Being on the front line of this, I know for a fact that many people are abusing this Act, and using the money in a way that is not in their best interest.  I also know that many are using in their best interest.

The point of this thread is how this will effect the economy down the road when countless people have blown through their retirement during Covid and will need government assistance or some sort of help down the road.  This will effect how their plans play out down the road, maybe increase subsidized housing, the need for food banks etc etc.  These are the implications and long term issues I was trying to discuss.

The fact that such a large chunk of the population is dipping into their retirement funds is indicative of a larger systemic debt and savings problem. It reflects the reality that most people already live somewhat close to hand-to-mouth, and have no real savings to draw on in a multi-year or even multi-month downturn (aside from their retirement account).

Wiping out their retirement accounts is just staving off the inevitable implosion of the debt bubble. The government knows this is a terrible solution, but the only other options are to borrow or print loads more helicopter money.

[ChiBitCTy]

Many of you I think aren't understanding the point of this thread.  It is not about deciding whether people who are enduring hardships due to Covid-19 should be eligible for this money or not, or whether they truly need it or not...it's about the long term implications of what this could/will do to the economy.  Being on the front line of this, I know for a fact that many people are abusing this Act, and using the money in a way that is not in their best interest.  I also know that many are using in their best interest.

The point of this thread is how this will effect the economy down the road when countless people have blown through their retirement during Covid and will need government assistance or some sort of help down the road.  This will effect how their plans play out down the road, maybe increase subsidized housing, the need for food banks etc etc.  These are the implications and long term issues I was trying to discuss.

The fact that such a large chunk of the population is dipping into their retirement funds is indicative of a larger systemic debt and savings problem. It reflects the reality that most people already live somewhat close to hand-to-mouth, and have no real savings to draw on in a multi-year or even multi-month downturn (aside from their retirement account).

Wiping out their retirement accounts is just staving off the inevitable implosion of the debt bubble. The government knows this is a terrible solution, but the only other options are to borrow or print loads more helicopter money.

I couldn't agree more.  This is what I see and deal with on a daily basis.  People are so often living above their means have no sense of what financial savings are all about.  It's often like they are allergic to good advice.  With so many people living so close to "hand-to-mouth" like you stated, I fear this Cares Act is going to push so much over the edge, so to speak and end up blowing up in our faces ( americas economic face that is ).  Scary how unintelligent and lazy people are.  Blows my mind time after time though it shouldn't

[sana54210]

Saving is not going to save you if you ever have anything that happens to you and you have to cash it out.
There are people who get sick and spend all their retirement money and end up working until very old age.

Governmental ones are perfect for that, almost all big nations have free healthcare as well, places like USA for example do not have it for some reason I do not know about but in the end other nations do have governmental old age income, you pay a certain tax until you retire with each paycheck and when you retire the government pays you a salary basically for paying them all that tax. At the end of the day I would say having a forced governmental retirement fund would allow you to just spend your old age with ease without every worrying about money or health.

[ChiBitCTy]

Saving is not going to save you if you ever have anything that happens to you and you have to cash it out.
There are people who get sick and spend all their retirement money and end up working until very old age.

Governmental ones are perfect for that, almost all big nations have free healthcare as well, places like USA for example do not have it for some reason I do not know about but in the end other nations do have governmental old age income, you pay a certain tax until you retire with each paycheck and when you retire the government pays you a salary basically for paying them all that tax. At the end of the day I would say having a forced governmental retirement fund would allow you to just spend your old age with ease without every worrying about money or health.

Well that's simply not true.  First off it all depends on how much you have saved and what happens to you.  This is what we have insurance for as well.  It is true that the US has a shitty healthcare setup, and do not have free healthcare like most advanced nations, but many still have insurance and some good insurance, so it all depends on the individuals situation.  But to say savings wont help, just isn't true.

The US also has social security, which is an "old age income", btw.

[SquallLeonhart]

The fact that such a large chunk of the population is dipping into their retirement funds is indicative of a larger systemic debt and savings problem. It reflects the reality that most people already live somewhat close to hand-to-mouth, and have no real savings to draw on in a multi-year or even multi-month downturn (aside from their retirement account).

Wiping out their retirement accounts is just staving off the inevitable implosion of the debt bubble. The government knows this is a terrible solution, but the only other options are to borrow or print loads more helicopter money.

It is not 100% a financial situation that makes them go into their retirement funds, don't get me wrong I hate the financial system we currently have as much as the next guy, working for peanuts to make someone else rich, having someone so rich that poorest 100 nations combined do not worth that much, all of these are horrible and I agree that people go into their savings because of covid is a reality as well.

However, one thing I would like to point out is that even when you do not need money at all, there are tons of people who still go into their retirement fund whenever they can because they want to spend the money right now instead of waiting to be older, it could be better investment according to them, it could be for their business or it could be as simple as getting a new car because people are not really smart with their money.

[disconnectme]

It is still early to jump into conclusion what would happen in the near future, if I have money locked somewhere and I am passing through difficulties and would love to have the money to help me out since it is my money, the issue is this, are they using it for productive means, if not then it could be a serious issue in the future especially those close to their retirement age.

[exstasie]

The fact that such a large chunk of the population is dipping into their retirement funds is indicative of a larger systemic debt and savings problem. It reflects the reality that most people already live somewhat close to hand-to-mouth, and have no real savings to draw on in a multi-year or even multi-month downturn (aside from their retirement account).

Wiping out their retirement accounts is just staving off the inevitable implosion of the debt bubble. The government knows this is a terrible solution, but the only other options are to borrow or print loads more helicopter money.

It is not 100% a financial situation that makes them go into their retirement funds, don't get me wrong I hate the financial system we currently have as much as the next guy, working for peanuts to make someone else rich, having someone so rich that poorest 100 nations combined do not worth that much, all of these are horrible and I agree that people go into their savings because of covid is a reality as well.

However, one thing I would like to point out is that even when you do not need money at all, there are tons of people who still go into their retirement fund whenever they can because they want to spend the money right now instead of waiting to be older, it could be better investment according to them, it could be for their business or it could be as simple as getting a new car because people are not really smart with their money.

I get it. It's hard for people to think in terms of retirement, especially when it could be several decades out. If you think about it, a lot of people probably think of this as "free money" too. Their accounts are employer matched and have grown with the market's gains over the past decade. The only thing stopping them from emptying their accounts before was 1) not having their employer match fully vested (this can take several years) and 2) the tax penalty on early withdrawals. Now that the tax penalty has been removed (and people also have a legitimate fear of short term financial difficulties on the horizon) it's not a big surprise that people are digging into their retirement funds.

Like I was saying before, this phenomenon is completely tied together with our culture of consumerism, which was already driving our economy off a cliff because of the inevitable drive towards debt deflation and subsequent bubble pop. https://en.wikipedia.org/wiki/Debt_deflation

A breakdown of the retirement savings system will just accelerate things.