An idea to Re-Fund America with Our Own Money

[FixTheEconomy]

How about a plan to fix the economy that will:

* Put money directly in the hands of working, responsible American households
* Promote spending without costing taxpayers
* Completely reverse the 2008 losses in consumer spending

To reignite our economy, we need to spend money. Unlike Washington and Wall Street, we have the power to spend money without handouts or bailouts.

Americans have over $8.1 Trillion in IRAs and 401(k)s. The “Refunding America” plan, calls for legislation to allow anyone with a Defined Contribution account (including 401(k), 403(b), 457, TSP, etc) or an IRA to withdraw up to 20% of their account balance without paying penalties or income tax. The proposed legislation would grant this opportunity to any IRA or DC account holder for any reason.

This will put an extra $22,000, on average, into the hands of 64% of working American households.

The full plan is at refundingamerica.org

What do you all think?

 

[stekim]

I think any financial planner would tell you taking out 20% of your retirement funds is a very stupid thing to do. Particularly considering the economy will eventually get better whether you do that or not.

 

[neurosport]

the only part i like is giving money directly to people who need it and not to banks ...

 

[Skull Pilot]

BAD Idea.

people should be worrying about their own economics not the country's.

There are only 3 things people should be doing right now and they are the same 3 things that people should have been doing all along.

1) PAY DOWN ALL DEBT. Carry no debt but a mortgage and possibly a car loan but make a vow that this will be your last car loan.

2) Save 20% of gross income for retirement in a combination of employer sponsored plans, 401K, 403b, SIMPLE IRAs etc, and a Roth IRA if you qualify. If your employer does not offer a plan, open a Roth and save the rest in a diversified portfolio owned by a trust with specific instructions as to when the money can be withdrawn.

3) Buy nothing that is not an absolute necessity until you have at least 6 month's and preferably one year's gross income in a savings account or a very conservative investment portfolio.

There is nothing more important than your personal financial security. if you don't watch out for yourself and your family, who will?

 

[stekim]

BAD Idea.

people should be worrying about their own economics not the country's.

There are only 3 things people should be doing right now and they are the same 3 things that people should have been doing all along.

1) PAY DOWN ALL DEBT. Carry no debt but a mortgage and possibly a car loan but make a vow that this will be your last car loan.

2) Save 20% of gross income for retirement in a combination of employer sponsored plans, 401K, 403b, SIMPLE IRAs etc, and a Roth IRA if you qualify. If your employer does not offer a plan, open a Roth and save the rest in a diversified portfolio owned by a trust with specific instructions as to when the money can be withdrawn.

3) Buy nothing that is not an absolute necessity until you have at least 6 month's and preferably one year's gross income in a savings account or a very conservative investment portfolio.

There is nothing more important that your personal financial security. if you don't watch out for yourself and your family, who will?

Sage advise to be sure. The current recession was caused, in part, by people buying things they could not afford. Sure it stimulates the economy if everyone buys too much house and runs up $25,000 in credit card debt buying shit they don't need. But like U.S. governmental spending, that is not sustainable. And we are paying the price.

 

[FixTheEconomy]

Hey Guys, the feed back is much appreciated!

I understand where you guys are coming from, which is why participation in the plan would be completely optional. We have surely anticipated people not wanting to make the withdrawals.

Also, keep in mind that not all retirement savings are held in 401ks and IRAs. Total retirement assets are around $16T, with only $4.1T held in IRAs and $4.0T in 401(k)s.

The point about overspending is certainly valid, but this plan doesn't affect a household's tendency to spend beyond its means.. in fact it should promote more responsible spending. Tell me if this makes sense...

* Responsible savers/spenders who have the means to spend money right now will have greater incentive to do so during this period where the country needs spending.
* Savers/spenders who would be "overspending" by withdrawing are no more or less encouraged to spend, given that participating is optional.
* Savers/spenders who have overspent in the past will have the opportunity to get on Skull Pilot's course of action. They can withdraw tax/penalty free to pay down debts so that they can start over saving and spending responsibly. Those people who would be withdrawing anyways (either taking the penalty or under the dire financial need exceptions) would also have a much easier time.

Does that make sense?

 

[Indiana Oracle]

The citizenry needs to pay down debt and avoid future personal deficit spending to the extent possible. If we leave things alone, this will happen by itself.

If we want people to spend more now, they first need to know their job is relatively secure. Not the case at the moment. If we want to accelerate debt pay-down as a prelude to increased spending, people need more money to do that with.

Equals lower taxes on individuals and businesses. Review The Prophet's big social ideas after this is fixed. Do nothing to increase taxes on individuals and businesses.

 

[Paulie]

BAD Idea.

people should be worrying about their own economics not the country's.

There are only 3 things people should be doing right now and they are the same 3 things that people should have been doing all along.

1) PAY DOWN ALL DEBT. Carry no debt but a mortgage and possibly a car loan but make a vow that this will be your last car loan.

2) Save 20% of gross income for retirement in a combination of employer sponsored plans, 401K, 403b, SIMPLE IRAs etc, and a Roth IRA if you qualify. If your employer does not offer a plan, open a Roth and save the rest in a diversified portfolio owned by a trust with specific instructions as to when the money can be withdrawn.

3) Buy nothing that is not an absolute necessity until you have at least 6 month's and preferably one year's gross income in a savings account or a very conservative investment portfolio.

There is nothing more important that your personal financial security. if you don't watch out for yourself and your family, who will?

I follow pretty much exactly the same plan. Always having at least 6 months worth of emergency funds should be a top priority before ANYTHING not necessary to survival is bought. If you bought a DVD player because you reeeaaaallllly wanted it, but you don't have 6 months worth of cash saved up yet, you need to check your budgeting and make some changes because you're an idiot.