USA - The Obama administration’s proposed limits on ‘reasonable’ retirement savings would penalize success and patience in favor of the nebulous concept of fairness

When Saving Is a Problem Not a Virtue

By Blake Hurst

President Obama’s fiscal 2014 budget has a section prohibiting individuals from accumulating over $3 million in tax-preferred retirement accounts.

It states: "Individual Retirement Accounts and other tax-preferred savings vehicles are intended to help middle class families save for retirement. But under current rules, some wealthy individuals are able to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving. The budget would limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013."

At a time when the media is full of articles on baby boomers not saving for retirement and about the financial challenges faced by college graduates loaded down with student debt, and when the country’s savings rate is extremely low, only this administration could identify as one of its budget priorities the problem of excess saving in tax protected retirement accounts. 

Perhaps some branch of Krugman-inspired economics has described excess savings in IRAs as an economic problem of epic proportions, but the consensus seems to be that Americans save too little, not too much.
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