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Government Protection of IRAs
Old 02-03-2013, 08:17 AM   #1
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Government Protection of IRAs

I didn't see this in recent threads but I'm sure it has been discussed in the past. From a few weeks ago:

The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.

Retirement Savings Accounts Draw U.S. Consumer Bureau Attention - Bloomberg

My question is how to prepare for this? RE & spend? Gold coins in the backyard?
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Old 02-03-2013, 08:23 AM   #2
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The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams...
Could be a good thing. I wouldn't object if they made selling variable annuity IRA's to widowed grandmothers over the age of 80 a federal offense with a mandatory life sentence.
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Old 02-03-2013, 04:40 PM   #3
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This would help with the fear that people like my wife have: that wall street will crash the economy again, and without another TARP, everyone will lose their retirement accounts. She is currently getting about 4% on her investments, and as soon as she retires she wants to move them into FDIC insured CDs, which are getting about 1%. So this move would help consumers in that respect.

Also, we did have a banker wanting to sell my 80 year old mother-in-law a immediate annuity with the only money she had left. When we called the guy to complain, he said it was her idea, that she wanted the higher return. Still, what kind of planner would go along with that?
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Old 02-03-2013, 05:17 PM   #4
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Given the terrible way most people manage their retirement savings and the ridiculous fees many companies charge it might be good to have a little more oversight. There was a spate of articles a few months ago about alternative IRA investments; sure some would do well from them, but mostly I imagine there a way of luring people into risky investments with the promise of big returns and a nice fee for the administrator. I bet many people who can look beyond the end of their noses are terrified of the time when people have to start taking income. Low savings rates and bad investment decisions are annoying when you have a job. Continuing those bad decisions into the income phase will be a disaster.
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Old 02-03-2013, 05:37 PM   #5
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“I could imagine the CFPB growing into a role on investment savings if it seems like the SEC is asleep at the wheel,” Calabria said in an interview.
The bureau could claim jurisdiction through its Office for Older Americans, which was established by Dodd-Frank with a mandate to improve financial literacy. It is run by Hubert H. Humphrey III, the former attorney general of Minnesota.
Run away...Run away... the Office of Older Americans is after us!!! (Who knew that this office even existed?) HHH III is probably a slow runner.

I suppose that this was inevitable, but we are not any safer because of it. I'm sticking with my 60/40 asset allocation that is parked @ Vanguard along with my five income streams.
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Old 02-03-2013, 06:34 PM   #6
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This will just be another excuse for people to not pay attention to their finances. There's already plenty of regulation of annuities yet people continue to buy them without doing basic due diligence (e.g. a google search and 5 minutes of reading) to see what the gotchas are. The government making IRAs "safe" will only result in the loss of choice and flexibility for those of us who know what we're doing.

You can't fix stupid (with legislation).
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Old 02-03-2013, 07:05 PM   #7
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..........
You can't fix stupid (with legislation).
Yea....but. There is a difference between stupid and somewhat senile. Many of us have seen seniors in our lives fleeced.
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Old 02-03-2013, 07:43 PM   #8
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My 85 YO mom and I have an agreement: Anyone wanting to talk money with mom (finance, bank, service guy, repair guy) needs to talk to me.

She likes it because I get to be the bad guy and she doesn't.

A few times, "...I need to check with my son first..." has had some people back off/never return. That's OUR own "Office of Older Americans"
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Old 02-03-2013, 09:01 PM   #9
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I think I would not like the Government involved in this until it can demonstrate an ability to balance its own budget.
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Old 02-03-2013, 09:24 PM   #10
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I think I would not like the Government involved in this until it can demonstrate an ability to balance its own budget.
The Government is already involved in retirement saving through the tax code. I'd like to see some legislation that provided for all retirement schemes to include some basic minimum of low cost funds, for people to be automatically enrolled in a retirement scheme rather than having to opt in, and for all full time employees to have access to workplace retirement scheme. The UK has done this recently with its National Employment Savings Trust, NEST.
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Old 02-03-2013, 09:29 PM   #11
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The Government is already involved in retirement saving through the tax code. I'd like to see some legislation that provided for all retirement schemes to include some basic minimum of low cost funds, for people to be automatically enrolled in a retirement scheme rather than having to opt in, and for all full time employees to have access to workplace retirement scheme. The UK has done this recently with its National Employment Savings Trust, NEST.
So maybe what you would want is a SS system with a layer of voluntary contributions? The existing SS system automatically enrolls most people.
Maybe buy an annuity from the Government?
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Old 02-03-2013, 10:02 PM   #12
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So maybe what you would want is a SS system with a layer of voluntary contributions? The existing SS system automatically enrolls most people.
Maybe buy an annuity from the Government?
No. My post says what I think would be some improvements to the existing flawed system.
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Old 02-03-2013, 10:20 PM   #13
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Guess I don't understand. What is the difference between the government highly regulating retirement or providing it itself?
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Old 02-03-2013, 10:20 PM   #14
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The conspiracy person that consumes me says that this is just the beginning of the end, the government take over of retirement accounts. Mandated "investment" in us government bonds to ensure "safety" of ones retirement money.
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Old 02-03-2013, 10:35 PM   #15
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In the best case situation, we are all going to be old and senile one day. I'm looking at how I can protect my investments from myself when I'm old and senile. I don't see a problem with some government oversight here. Actually, how about an FDIC style thing for 401K. but congress would have to pass that, I suppose.
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Old 02-03-2013, 10:41 PM   #16
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The conspiracy person that consumes me says that this is just the beginning of the end, the government take over of retirement accounts. Mandated "investment" in us government bonds to ensure "safety" of ones retirement money.
+1

Then THEY get all the money.....or at least the USE of the money.
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Old 02-03-2013, 10:55 PM   #17
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Actually, how about an FDIC style thing for 401K. but congress would have to pass that, I suppose.
Anybody who wants it can already have FDIC protection for every penny of their retirement accounts. What do you have in mind?
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Old 02-03-2013, 11:08 PM   #18
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I guess I meant accounts like my wife's 401a and 457 accounts through her work place are not FDIC protected. If the firm operating her retirement plan goes out of business, her accounts are gone. She has no choice to select an FDIC account in either one. Yes, you are right that if I went and picked up a personal 401k that I could select an FDIC protected one.
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Old 02-03-2013, 11:19 PM   #19
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Guess I don't understand. What is the difference between the government highly regulating retirement or providing it itself?
Sorry for your confusion.
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Old 02-03-2013, 11:27 PM   #20
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Guess I don't understand. What is the difference between the government highly regulating retirement or providing it itself?
Seems to me it would be a matter of degree. usually, regulation is more rule enforcement oriented, and government operation is outright operation of something.
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