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Alternative Retirement Income Options in 2005
A very wise and good friend of mine told me once: "One good investment is worth a 'lifetime' of labor." After reading this article, the wisdom behind this statement will be clear to you. The big question we should all be asking ourselves is "how...
Downtown San Diego Condo Market is Ideal for Investors.
Savvy condo investors are looking to Downtown San Diego to purchase investment properties to replace the disappearing apartment buildings that are being converted to condos. Today there is a relative abundance of entry level condos available due to...
Innovative Entrepreneur Ideas
Working for yourself is an excellent career choice. If you are tired of dealing with unsupportive bosses, workplace politics, and the overall hassles associated with working, being an entrepreneur may be a perfect idea. Similarly, if you have an...
Surviving Corporate Politics Part 2: Keeping Up Appearances
Never a 2nd chance to make a 1st impression, or so the saying goes. We all know that when someone is introduced into your work environment for the first time, their peers size them up immediately. How they are dressed, how they talk, and how...
The Fabric of Economic Trust
Economy is called the dismal science because it pretends to be one, disguising its uncertainties and shifting fashions with mathematical formulae. Economy describes the aggregate behaviour of humans and, in this restricted sense, it is a...
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It's High Time for Lifetime Savings Accounts
I'm constantly reading articles on the internet and in financial magazines in which so-called financial planning experts express perplexity as to why about 30% of employees do not participate in their employers’ 401(k) plans. These writers don’t seem to have clue. Well, allow me to enlighten them a bit. For the most part, it’s because of the restrictions imposed on the employees’ money.
Also, because many people never know when they might need access to their money, they are unwilling to tie it up for long periods of time. They would rather give up the tax advantages as well as their employers’ matching contributions than to have those restrictions and age requirements placed on their money.
I know because I was one of those people for many years. I just couldn’t bring myself to tie up my savings like that until I could see that my retirement was less than 25 years away. Unfortunately, it’s not advisable or practical to wait that long to start saving for retirement.
It’s not just 401(k) plans that tend to scare people off. All of the tax-sheltered accounts currently available require us to either use the money the way the government dictates (for retirement, education, medical expenses, buying a house, etc.) or jump through a bunch of hoops (which usually requires extensive knowledge of tax laws or the services of an accountant or tax lawyer) to be allowed to do otherwise.
Anyway, what good would even a 50% average annual return do you if died before you were legally allowed to access those funds? It’s high time we got a tax-sheltered account which allows us to spend our money when, where, and how we want, without having to ask for anyone’s advice or permission. After all, it’s our money and we don’t need a government nanny watching what we do with it.
So, what’s the solution? Congress should get busy and pass legislation to create a Lifetime Savings Account option for taxpayers. There is at least one proposal for this kind of account floating around in Congress right now, with more expected soon. These accounts are not be confused with the so-called personal
savings accounts that might be a part of any Social Security reform. Lifetime Savings Accounts would not be in any way connected to Social Security.
My version of the Lifetime Savings Account would be just like a Roth IRA in many ways, including the fact that withdrawals would be exempt from federal tax except (1) there would be no income eligibility limit, (2) withdrawals could be made at a time and at any age, and (3) the annual contribution limit would be higher.
During the first year it was available, I would allow a “catch-up” contribution of up to $50,000 per individual and $100,000 per married couple. This would be an attempt to offset the fact that we should have had this option several years ago. This money could be shifted from a person’s taxable savings, IRA, Roth IRA, 401(k), or any combination of those vehicles. Beginning in year two, the maximum contribution would be set at $10,000 ($20,000 per married couple) and would be increased a little each subsequent year, based on the inflation rate.
A Lifetime Savings Account would encourage more people to save money, even if just for the short term. More people could afford a bigger down payment on homes and automobiles. More people would likely begin saving for retirement and/or their children’s education using this kind of account because of its lack of restrictions. Overall, it would be better for our economy.
Write or call your representative and senators and ask them to pass legislation to create Lifetime Savings Accounts. For more information about Lifetime Savings Accounts, see the following link: http://www.lifetimesavingsaccount.com.
About the Author
Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.
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