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Don’t Save Too Much

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Government rules for retirement savings contradictory

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If there’s one thing our government is known for it’s talking out both sides of its mouth. While repeatedly sounding the alarm that Americans are not saving enough for retirement federal laws currently limit just how much we can contribute to our retirement savings. 2018 maximum IRA or Individual Retirement Account contributions are capped at $5,500 per individual, $6,500 if you’re over the age of 50. What happens if one saves more than their allowed to their IRA? Uncle Sam will penalize savers with a 6% tax penalty for each year the funds remain in the account.  The message is clear, save for retirement but not too much. Ironically current government limitations on retirement savings only stymie retirement preparedness while at the same time the need for retirees to tap their home equity increases…

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1 comment

The Positive Realist September 10, 2018 at 11:15 am

Shannon,

I strongly disagree about who pays for the HECM losses in the MMIF. The US Treasury does not pay UNLESS the total balance in the MMIF is negative. Otherwise the surplus in the forward mortgages in the MMIF pays for HECM losses.

As of 9/30/2017 the surplus in the forward mortgages in the MMIF exceeds the HECM losses and also is sufficient to meet the Congressional mandate for reserves which is 2% of the insurance in force as of fiscal year end.

So basically what I am saying is that those who are responsibly paying outrageous MIP on their forward mortgages are doing that so the HECM program can be available to seniors. That stinks.

Reply

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