Save for your future - unless you're poor, then you don't get any benefits

The Boston Globe (via the Consumerist) has an interesting article on how the poor are punished for saving money, either through the 401(k)/403(b) program or just by plain saving their paychecks.

Some pretty startling tidbits from the article:

"We're constantly told that we need to save early and often to prepare for retirement...[y]et government policies tell low-income families, 'If you save for the future, you won't get our help today.' "

"For example, the tax credit for saving for retirement is wiped away when the taxpayer also qualifies for the earned income tax credit."

"[E]ach $1 saved by a single mother earning $15,000 a year would cost [a person] $2.60 in higher taxes and lost government benefits."

"...[P]utting a few dollars aside in a retirement plan can disqualify families for food stamps, healthcare benefits, and assistance given to poor families with children."

"In Massachusetts, for example, anyone with assets of $2,500 or more is disqualified from receiving federal assistance to families with dependent children. That asset test includes retirement accounts and even the cash value of a life insurance policy...[a]s a result, a single parent with two children who earns $500 a month would lose $133 a month in benefits if the family saved more than a nominal amount for retirement."

Employers love to assert that not putting money into a retirement plan is like leaving "free money" on the table, in the form of employer matches. For the poor, taking that "free money" is poison, as it will reduce or end their government benefits immediately. Putting in even 1% of their paycheck towards retirement - $2 a week for the woman earning $15,000 a year, and with a company match of 100% - is enough to reduce their benefits by 26%. Even maintaining an emergency account for expenses is enough to cause benefits to cease.

Truly sickening.