Is there anything to learn from the US and their 401K system??

gadgetmind

Yes, 401ks can include Roth contributions since 2006, which are post tax so fairly close to UK ISAs.

http://en.wikipedia.org/wiki/Roth_401%28k%29

However, 401ks need to keep the pots separate.

Summary: You're right, but I'm not sure you're illuminating versus clouding.

kidmugsy

gadgetmind wrote: »

Summary: You're right, but I'm not sure you're illuminating ...

I'm illuminating the fact that the comparison may be a bit daft. It's as if you compared, say, Federal income tax rates to UK income tax rates without taking account of (i) tax bands (ii) state and local income taxes (iii) social security taxes (iv) national insurance contributions …..

I once spoke to a German who had been offered a job in Britain but, he told me, wouldn't accept it because the company pension would be so poor. He hadn't twigged that he'd also get a tax-free lump sum, and a State Pension in addition. Making naive comparisons is rather a waste of time.

boglehead

dunstonh wrote: »

Why? You want to compare systems but dont seem to want to look at the differences.

You are comparing apple with oranges. Please give me the same stats for the UK, indexed to the nbr of people living in each country (60 vs 320m) and indexed on avg/median salary... Then we can compare

boglehead

My original point was rather on looking at the proportion of people blowing their pension at once, when they hit retirement. Now that the access to pension pots is similar between countries, we surely can get an idea if a high percentage of retirees will go for a lambo - the new car of the people according to labour.

SnowMan

From the budget document Freedom and Choice in pensions

https://www.gov.uk/government/consultations/freedom-and-choice-in-pensions

There are a number of countries that provide individuals with greater freedom over how they access their pension wealth, most notably Australia the United States and Denmark. It is difficult to apply experience from these countries directly due to different cultures of saving and different systems of state support. Evidence from these countries shows there will be many people who manage their money over their whole remaining lifetime. However, there is also likely to be a group of people who spend their pension wealth early in their retirement

gadgetmind

That's the thing with freedoms. We don't always agree with how some people use theirs, but it's vital that we defend their right to exercise said freedom exactly how they choose to.

Linton

gadgetmind wrote: »

That's the thing with freedoms. We don't always agree with how some people use theirs, but it's vital that we defend their right to exercise said freedom exactly how they choose to.

Yes but...

If they dont understand the implications of the choices they make their "right" becomes illusory. They choice they think they are making is very different to the actual one.

gadgetmind

While I would prefer that people exercise their freedom by making an informed choice, we have to respect their absolute right to make uninformed ones.

Raising a kid is very much about teaching them how to make "good" choices, and at times you have to limit the choices available, or even force one on them. However, as they get older, you have to let go of the reins even though this means that they might get things wrong (sometimes very wrong!) at times.

Grown adults reaching retirement age shouldn't be treated like children. Guidance should be given regards the options available, and tools provided to let them understand the likely outcomes of their decisions, but then it's over to them.

boglehead

gadgetmind wrote: »

Grown adults reaching retirement age shouldn't be treated like children. Guidance should be given regards the options available, and tools provided to let them understand the likely outcomes of their decisions, but then it's over to them.

Amen to that !

http://www.lamborghini.com/en/home/ :rotfl: