Few of us would argue that tax reform is needed. Some provisions are unfair while others are just too complicated costing us precious dollars to get help with filing. But one aspect of our tax system that almost everyone supports is the program that allows ordinary Americans to set aside money for retirement tax sheltered.
That’s why it was good news Monday when President Donald Trump tweeted: “There will be NO change to your 401(k).”
His comment came in response to a Congressional proposal to reduce the amount taxpayers could shelter from $18,000 to $2,400.
We agree with Trump when he says, “This has always been a great and popular middle-class tax break that works, and it stays!”
The goal of this provision has been to encourage average Americans to save for retirement, especially as fewer and fewer employers offer a defined benefit pension plan.
Add to that the fact that many of us are living longer and will need an income source for longer. Plus, older-age health care spending averages about $250,000 over the course of a retirement, according to Money Magazine, and usually rises as we age.
Social Security provides a base but isn’t enough, for most of us, to pay for a comfortable lifestyle. That’s why it’s important that we have access to a way to save for retirement. The ideal answer is a program that takes money out of our paycheck before we have a chance to spend it, through a 401(k) at work but this tax break also let’s us do it on our own.
This is one instance when Congress should listen to the president.