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.
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.
car service from Midway Anna ..Most accountants, financial planners and wealth-building experts agree that there... Read More
Vacation season is upon us and it can be tempting... Read More
One of the things most of us have old ideas... Read More
Everyone wants to be wealthy, but most of us do... Read More
Some people in this world are thinking that their poor... Read More
Remember the bloodied face of Randall "Tex" Cobb?He was a... Read More
I counsel a LOT of people about money. I see... Read More
Offshore strategies may or may not be right for you.... Read More
I'm constantly reading articles on the internet and in financial... Read More
Self-Made Millionaires are not smarter or better than you. They... Read More
Most people want to get to the end of their... Read More
Why is it that the older and richer people become,... Read More
We all go to school for about twelve years, kindergarten... Read More
Loose change that is, if you want a easy way... Read More
Everyone dreams of early retirement. The idea of no longer... Read More
Recently I was reading a book called The Millionaire Mind.... Read More
There once was a hawk, ferocious and swift. He was... Read More
In his best selling book, "Rich Dad, Poor Dad, Robert... Read More
According to Wallace Wattles, in his popular wealth treatise called... Read More
Recently, one late winter night, my four-year old son and... Read More
The rewarding of high compensation packages to top executives who... Read More
One very important wealth creating habit is to set up... Read More
What if I told you that reading a book would... Read More
A mole travels one road, according to the way nature... Read More
So you want to become wealthy? While there is no... Read More
bmw rental chicago Verona ..I want to share an experience I had in common... Read More
Very few people whom I know are familiar with the... Read More
Many people have a false understanding of what it actually... Read More
Self-Made Millionaires are not smarter or better than you. They... Read More
They are the object of thinly disguised envy. They are... Read More
As a woman Netpreneur, I sat down via e-mail with... Read More
OK, this article will start with the cheapest piece of... Read More
Do you have financial problems? Then a budget is the... Read More
Well, the New Year is around the corner and so... Read More
You have probably heard other people say that "Money isn't... Read More
The idle are a peculiar kind of dead that cannot... Read More
Money can be your servant or it can be your... Read More
"If you know how to spend less than you get,... Read More
Do you like so many others feel, that even if... Read More
There is perhaps no more important decision than to take... Read More
It all begins with a simple calculation.You are home on... Read More
Parents must give serious thought to protecting their family through... Read More
In light of the dominant mindset overshadowing the market these... Read More
My First Million took me exactly 27 months to achieve.... Read More
Almost all of us go to work everyday and do... Read More
In my last article on Creating Residual Income I mentioned... Read More
It is with great pleasure of having you here at... Read More
Do you ever get this in your email box: Find... Read More
Whenever we read about building wealth or even attend a... Read More
Everyone wants to be wealthy, but most of us do... Read More
Wealth Building |