Greased by lobbying and campaign cash, tax breaks for retirement savings are one thing Congress agrees on. But they also blow out the defici
Tax-advantaged savings has become a staple of the American retirement system, with 60 million savers squirreling away $6.6 trillion in their 401(k)s, alone. … [But] that success now vexes many retirement experts, alarmed by how easily Congress acquiesces to tax breaks for retirement savings that disproportionately help the wealthy while treating the benefits relied upon by most retirees — Social Security and Medicare — as budget-busters ripe for reform. … The latest expansion of private retirement savings comes at a time when Social Security, which the majority of American seniors rely on to cover basic living expenses, faces insolvency in 2034. Secure 2.0 sailed through Congress shortly before lawmakers convened working groups to try to fix Social Security’s $119 billion cash shortfall, which amounted to less than half of a single year’s worth of tax benefits for retirement savings that mostly go to higher earners. … The success of the retirement industry and its advocates in Congress has put a sinkhole in the federal budget at a time when entitlements are under threat. While the cost to the Treasury for tax-advantaged retirement savings was $81 billion in 1995, it has since swelled to over $369 billion in 2023 and, in the wake of Secure 1.0 and 2.0, is expected to nearly double to $659 billion in 2027.