Last week brought a chorus of howls over President Trump’s tax reform. Among the sophomoric (and expected) soundbites involving “gifts to the rich” was a revealing gem from Rep. Richard Neal, D-Mass., top Democrat on the Ways and Means Committee.
Speaking to a gathering of financial services professionals and executives on the day the plan was announced, the Bay-State braggart warned against the targeting of retirement plans to pay for other tax cuts.
Welcome news from an unexpected ally, but politicians being politicians, he just couldn’t stop talking, and let the following slip.
“One of the priorities of tax reform has got to be retirement savings. You can outlive an annuity, you can’t outlive Social Security.”
We’re banking that ears pricked, and maybe it wasn’t quite as it sounded, but anyone with a rudimentary knowledge of investment and insurance products knows most annuities are bought with lifetime income in mind.
Happy to give Neal the benefit of the doubt, and he’s possibly well-versed enough to reference special planning circumstances that require period-certain products, but combining the words “nuance” and “politician” would be a first.
It’s more likely he was arguing for public sector solutions to the country’s retirement ills, not realizing that Social Security is, in fact, an annuity. He ranks high on Ways and Means, and we’d therefore expect basic financial comprehension, but alas …
“Neal also laid out three red lines governing the Democrats’ approach to tax reform,” The Hill reports. “First, they will insist that any tax package be revenue neutral. Second, it must help the middle class. And third, it must not shower any benefits on the wealthiest taxpayers.”
And we’d like gumdrops to fall from the sky, but it’s not how any of this works, nor should it (especially No. 3).
Neal’s attitude is a non-starter which, unfortunately, is probably the point.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
Fixed-term annuities are fairly common, smarty-pants. Social Security is a life annuity and can’t be outlived.