The federal government is in an unfathomable amount of debt, but that's not stopping President Obama from trying to help US citizens improve their personal finances. The message from his weekly address was clear.
Even before this recession hit, the savings rate was essentially zero, while borrowing had risen and credit card debt had increased. More broadly, tens of millions of families have been, for a variety of reasons, unable to put away enough money for a secure retirement . . . We cannot continue on this course.
The President isn't wasting any more time to remedy this reality and announced changes this weekend that will take effect immediately. The administration is hoping these changes will make it easier for Americans to save, particularly for retirement. Find out the three main ways saving will be made easier when you read more.
- Auto enrollment in retirement plans: The administration will eliminate many hurdles smaller employers have had to automatically enroll workers in to retirement plans. Employees will still be able to opt out of employer-sponsored retirement plans, but the existence of auto-enrollment makes higher-rate of participation more likely.
- Saving tax refunds: There will be a third option when selecting how you'd like to receive your 2010 tax refund. Besides choosing to receive a paper check or direct deposit, the IRS will allow those eligible for refunds to receive payment in the form of U.S. savings bonds.
- Sick days and vacation time become 401(k) money: I can see this one becoming particularly popular, because so many workers are in the habit of letting their accrued vacation days go to waste. The White House will make it easier for employers and workers to convert unused vacation and sick leave pay into 401(k) contributions.
Theory
Rocket Dog
Del Gatto
#2 is basically allowing citizens to take their refund, which is excess withheld money they should have had from the start anyway, and turn it into loan to the government. Next thing you might start seeing is an increase in the automatic tax withholding, like how California is doing in November.
I don't understand how governments think we can cut to prosperity when we've all been turn upside down and shook until all our change has fallen out of our pockets. We need to grow and bring incentive to bring back jobs into America, not increase fees and taxes which is constantly pushing companies to move operations out of the state/country. I've geographically lost a number of friends when their companies moved their department to Colorado and Nevada because it is cheaper to operate in those states.
1I like option #3. Several of my co-workers have already maxed out their vacation days and have stopped accruing new vacation time as a result. They really should go on vacation, but since they don't, at least this option would allow them to bank that unused time as retirement dollars instead of going to waste.
2Like dienliv pointed out, #2 is just silly and benefits the government infinitely more than it benefits its citizens. #3 is nice after I remembered that it's a state law here in California that employers have to pay our your unused vacation when you leave the company and not everyone who lives in other states gets that.
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