I certainly don't know how to get inflation +10%. AFAIK the proposal isn't tied to inflation although that obviously could change, and I agree that I am an above average saver and investor (although there are plenty on this board that are better).
But I think you maybe forgetting what a great run stocks had in the 1980s and 1990.
For instance investing $2,000 a year in the NASDAQ composite (which could be replicated or even exceed with the Janus funds) from 1980 to 1990, and then never adding a dime gave you $350,000 in retirement saving by Jan 2000. I invested more than 2K a year starting in 1983, and my 401K and IRAs were tech focus although I started lighten up in the mid 1990s so I mostly missed the huge run up in my 401K. But still accumulated 400K around 37 or 38 wasn't that hard in bull market.
The point being if the cap existed in 1999 people who were investing from 1980 to 2000, might have looked their account balances in Dec 1999, and decided no need for me to contributed any more because of the cap. They'd wake up a decade later and found they still had $350,000 and that at age 50 age 350K wasn't a ton of money..
Sorry for the slow response, I had some technical problems.
Yes, this proposal is indexed for inflation. The cap is tied to the maximum DB plan benefit, which is currently $205k. That number has been indexed since EGTRRA was passed in 2001. There is nothing in the proposal about un-indexing it.
I don't understand "no need for me to contribute any more because of the cap". Do you mean "contribute more to my 401k plan"? or "contribute more to my retirement savings"?
There's nothing in the proposal that should change anybody's attitude toward saving for retirement. The only impact would be where they saved.
Suppose I'm a great, 40 year old investor who found that I had $400k in my 401k in 2000. Looking ahead, I can imagine that I will eventually hit the $3.4 million cap on qualified accounts. Further, I can imagine that after I hit that cap, I won't be getting my employer match on my 401k*.
Note that I'm only 12% of the way to the cap, I still have to build up the other 88%. Still, I am so concerned that I may eventually lose some future match, that I decide to put some of this year's retirement saving into an after-tax asset.
In 2001, I discover that my investing genius was just riding a bubble up. My balance drops to $300k. I decide I don't need to worry about building up "too much" qualified plan assets, and I go back to putting all my retirement savings into the 401k. IMO, that's a a very rare story, and it has minimal impact on my eventual financial situation.
I can't imagine anyone who is sharp enough to figure out the 401k match angle, who would simply stop saving money for a decade because he might, someday, be forced to save in non-qualified accounts.
* But, note TP's post above. There's a good chance my employer will find a way to get me the match in a non-qualified plan.