A Forced 401(k)?

Filed in archive Money & Politics , Retirement , Saving on June 6, 2006

Congress thinks your piggy bank is lonely, so they're considering some forced savings, namely a 401(k) program that you opt out of instead of opt in. That means when you start a job, you'd already be enrolled--instead of going through the paperwork to opt in, which is just inconvenient enough that many workers never get around to it, you'd only have to go through the hassle if you wanted out of the 401(k).

I'm not going to let politics become a big part of this blog, but there's no doubt that politicians play a role in your financial well-being, whether directly through tax law, or indirectly through the results of their various policies. You can ignore politics, but it won't ignore you.

Contemplating the thought of being forced into a 401(k)--yes, you can opt out, but making you work to opt out is a strategy to increase the number of savers--my first inclination is to say, "No. The government shouldn't be putting its hands into every aspect of our lives. We can decide how to save or spend our money. Work on that war on terror or go waste some taxpayer dollars debating gay marriage, Big Brother."

But, but, but...

This country also has a lot of safeguards to help people financially, from bankruptcy protection to welfare to Medicare and medicaid to Social Security benefits--our government hands out a lot of free money, and you could certainly argue that some of that money gets handed out because some people make (or made) poor financial decisions throughout their lives and now need a helping hand.

Now let me be clear: I'm of the opinion that we don't let people starve because of bad personal finance habits.

However, if the government is going to provide a safety net, doesn't it follow that they should have some say in what you do with your earnings, so the chances of your needing governmental assistance diminish? After all, you'd feel a lot better helping a person who worked hard and saved but had a run of bad luck than helping a person who used their money for an HDTV in every room of the house, and figured they'd worry about tomorrow when tomorrow shows up, right?

The government probably feels the same way, and you can certainly see their point.

For me, I come down against it--too much governmental interference in the lives of private citizens. But I understand the rationale--and I won't get angry if it comes to pass.