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.
Lincoln Stretch rentals Alsip ..While you need to have a lot of positive-thought and... Read More
The inability to come up with the necessary cash when... Read More
When you purchased your home, you most likely got a... Read More
From tender age, we were exposed to myths about money... Read More
Not Enough Money?I believe that most people haven't got enough... Read More
Endowments and endowment mortgages have received a lot of bad... Read More
There are many of us who are working on our... Read More
In light of the dominant mindset overshadowing the market these... Read More
This is a true story from my own experience that... Read More
No matter what income level you are currently at, generating... Read More
Have you ever had that feeling where you could not... Read More
Are you setting the right money goals?Most people believe having... Read More
"Any fool can rich, the wise get wealthy." Chris WidenerGetting... Read More
In today's unpredictable global economy, you obviously never know what... Read More
Let me ask you a very simple question. Do you... Read More
Key 1 Pay your self firstkey 2 Saving is not... Read More
Money can be your servant or it can be your... Read More
This 4,000 acre sale (now a marina and resort town... Read More
As a work at home Mother, I know the value... Read More
SCENE 1: Pharaoh has just woken up from a very... Read More
When young men ask me how to succeed, I tell... Read More
At any time in history, no matter what the current... Read More
Want to be one of the lucky ones on the... Read More
No one has complete control over their thoughts. But with... Read More
You can learn the secrets of world monetary flow if... Read More
Western Springs shuttle limo ..I'm constantly reading articles on the internet and in financial... Read More
When Ben Franklin said "a penny saved is a penny... Read More
Estimated Reading Time: 4 minutes -- Envision your life 10... Read More
Uncle Sam and his band of merry-men, better known as... Read More
Vacation season is upon us and it can be tempting... Read More
Perhaps the primary message of Rich Dad, Poor Dad is... Read More
Here are some thoughts about the morphing of thought and... Read More
Ever think about how eating all those fast food meals... Read More
Almost all of us go to work everyday and do... Read More
So you want to become wealthy? While there is no... Read More
"Ooooooh," you may say, "I could NEVER be good at... Read More
The four main steps in building a wealth cycle foundation... Read More
"Any fool can rich, the wise get wealthy." Chris WidenerGetting... Read More
A residual income is one that comes in no matter... Read More
You can't build a house from the roof down, and... Read More
At any time in history, no matter what the current... Read More
The cashflow board games, Cashflow 101, Cashflow 202, and Cashflow... Read More
Points to ponder as you consider what can be done... Read More
Have you ever had that feeling where you could not... Read More
"It's the business of your life?and you're the CEO!" Gala... Read More
As a woman Netpreneur, I sat down via e-mail with... Read More
They are the object of thinly disguised envy. They are... Read More
1) Pay off your loan, credit and store card debt... Read More
Very few people whom I know are familiar with the... Read More
Whether an established conglomerate or a fledgling company, a business... Read More
Wealth Building |