More on the Roth

Megan McCardle doesn't think your Roth is safe.

So I don't advise not saving. But I've started thinking about saving in ways that Uncle Sam won't be tempted to touch--like paying off your house early, maybe buying a vacation home (for cash) if you know where you're likely to want to spend a lot of time, and doing the kind of renovations that save you money in the long run--better insulation, higher-end energy-efficient appliances, etc. Paying now to lower your monthly costs later may have a better after-tax return than that "tax free" account.

Solid points, although someone in my position cannot take advantage because of how much investment is needed to buy real estate vs. the cost of the Roth. I mean, the limit being about $5000 per year - that'll buy you - ah, I suppose nothing in the real estate market. But for people already owning homes, I suspect this is good advice.

She makes the same point I did below that at some point in the fiscal future, the government is going to look around and need money and is going to punish those who saved early. I do agree that there should be limits on Roth contributions - it doesn't make sense to me why earners of over 100,000 are able to save in Roths. Then it becomes used as a tax shelter for estates versus a tool for middle class retirement. What we'll eventually get is something similar to the housing crisis where a combination of factors conspire to hurt middle class savers. Policies with good intentions and start with some early success get overused and abused and eventually cause strange incentives and unfair policies. Then, the government will over-correct in order to redress the problem and punish both the problem cases and the cases where it worked as designed.