As you know, the average 401K has taken a tremendous hit over the past 9 months; but even scarier is that a democratic congress and president may just make you 401K disappear.

Let me quote an article for you: House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created “guaranteed retirement accounts” for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, said that since “the savings rate isn’t going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”

http://www.usnews.com/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html

Now let me give you some of the author’s thoughts on the results of that: 4) Ghilarducci would offer a lousy 3 percent return. The long-run return of the stock market, adjusted for inflation, is more like 7 percent. Look at it this way: Ten thousand dollars growing at 3 percent a year for 40 years leaves you with roughly $22,000. But $10,000 growing at 7 percent a year for 40 years leaves you with $150,000. That is a high price to pay for what Ghilarducci describes as the removal of “a source of financial anxiety and…fruitless discussions with brokers and financial sales agents, who are also desperate for more fees and are often wrong about markets.” Please, I’ll take a bit of worry for an additional $128,000. Now, allow my to add my input. If, and I admit it’s a big “if” that this ever happens, but is a lot more likely with Obama; you should also have two additional things happen.

One: you should have people contributing less to their retirement funds as the govt. will take on more of a caretaker role for their later years.

Two: With the possibility of lower returns of the mandatory 5% of the government fund and the bigger safety net of this program, less dollars will be put into companies in the US that currently enables them to grow pretty well and more people will be less likely to buy in on new companies because they are not worth the risk as the government has more of the people’s back.

I cannot emphasize enough, think greatly of the possible results of Obama before you vote for him.