Saturday, November 29, 2008

Part IV: SPIRAs For The Future

The main idea for creating SPIRAs is empowering Americans with a foundation of assets and a bigger say in determining their future. As these accounts grow it will be possible to enhance benefits to further the quality of life for the account owners. For instance, as an account becomes substantial enough to afford the essential benefits we mentioned before it becomes possible to afford a more esoteric benefit such as this:
(1) at the age of 40 or older a person whose SPIRA is meeting comfortably the
needed benefits a one time distribution from the generated interest could be
allowed to be used for anything the owner desires such as
a. travel around the world
b. opening a business
c. purchasing something always wanted
d. actually it could be used for anything at all icluding charitable donations
(2) this benefit would be a well deserved advantage to fulfill a life's ambition

It's important to remember that this benefit would be only available when all the essential benefits are met. As this is a more whimsical benefit it might be stipulated that the amount
distributed for this benefit would be taxed at a low rate of say 5%. The amount from this tax would go directly into the present SS system to help keep it solvent. So, if all goes well with SPIRAs and the accounts become large future generations would have assets quaranteed as all SPIRAs must be passed to beneficiaries. As well, if an individual's account is substantial and there is more than enough in her or his account he or she could donate to another person part of her or his SPIRA as long as the account still remains substantial enough to quarantee the needed benefits. This could happen before one's death building SPIRA accounts for more people fostering the program.

It would be nice for people to know that they will always have medical coverage irregardless if they lose their job or the economy hits a snag as these accounts must remain untouched. Not only is the principal of a SPIRA outside the reach of the account owner it should also be outside the reach of creditors as well as the IRS, etc.. Once a person establishs a SPIRA it should remain a source for affording benefits permanently giving a sense of security for the owner.
It should be emphasized again the importance of Congress accepting the fact that individuals need to be given an equitable share in determining their future. Let's be real!!! We are all disgusted with our situation now under the present way of doing things. We are all angry, and we want a real change not just ineffective and endless adjustments of the present system.

Let's hope the new Administration and the new Congress will have the forsight and imagination to make a bold move that will change the destiny of the US and its' citizens. SPIRAs can change the future while supplanting SS leaving it as is playing out its' benefit to us all. Certainly something needs to be instituted to augment SS while not diminishing it. We all have our hopes up high for something new.

Thanks, and all comments are welcome


Friday, November 28, 2008

Part III: SPIRA Benefits Cont"d

SPIRAs are accounts established voluntarily by individuals to provide for securing benefits that are important for a quality life. The first priority would be health insurance. Every SPIRA would provide some help in paying for this benefit. Building these accounts would be effected by a combination of ways such as the following:

(1) allowing for tax deduction for contributions to a SPIRA as with regular IRAs
(2) allowing unlimited contributions to a SPIRA after tax deduction amount met
(3) gov't direct stipends to SPIRAs to build these accounts
a. as well increasing earned income refunds if committed to a SPIRA
b. gov't matching SPIRA contributions by lower income earners
(4) directing some of the taxes of an individual to a SPIRA rather than to gov't
a. if there is an increase in capital gains tax deposit the differential to SPIRAs
b. estate taxes could be directed for deposits into these accounts
(5) allowing for tax free transfers to a SPIRA from established IRAs, 401Ks, etc.

Of course, a person would receive the benefit of tax free distributions of generated interest income for securing benefits. By establishing a SPIRA that affords these tax free distributions an individual commits to the regulation that the principal of a SPIRA remains untouched in the account permanently while upon death it must be passed on to beneficiaries. Last time we talked about what would happen as these accounts grow and the interest generated supercedes the cost of health insurance. The interest would then be divided into two parts. Half would be "reinvestment interest" that would be reinvested back to the principal following the regulations of the SPIRA. The other half would be designated as "distribution interest" available as tax free distributions for aquiring benefits such as:

(1) life insurance, negotiated as a group policy securing competitive rates
(2) disability insurance, again negotiated competitively
(3) when the distribution interest becomes substantial then
a. paying for education
b. helping with first time home purchase
c. helping to purchase a "green car" that achieves energy savings. this
car would be manufactured in the US so as to foster our economy and jobs.
japanese, german, etc. would qualify if made is US
d. help to purchase solar panels and other energy efficient equipment
(4) as people reach retirement their SS benefits would be supplemented so as
to afford a better, more realistic standard of life
(5) a one time special distribution at age 40 that we will discuss later

So, people would make commitments to regulated SPIRAs with the understanding that benefits, including supplementing their SS at retirement, would be paid for with tax free distributions. As well, they commit to leaving the principal permanently in the SPIRAs only to be passed on to beneficiaries of choice.

As well, as these accounts grow and provide medical coverage and more substantial retirement income there would be an agreement that owners of these accounts would be removed from Medicare and SS. The SS system would not be changed in any way. It would function as it does now with all present contributions being maintained as they are now. However, as the benefits of retirement distributions supercede substantially SS benefits, slowly Medicare and SS could be supplanted on a per case basis freeing up monies for the solvency of the SS system. This freeing up of monies would grow exponentially in future generations as all SPIRAs have to be passed along.

The main idea is to value all individuals as holders of assets. It's to not fall into the imbalances of the gov't or just a few individuals holding the assets of America. It's to entrust individuals to control their destinies in a more substantial, real way. We should learn from the lessons of the past economical collapse.

thanks, and all comments are welcome

Part II: Recapitulating About SPIRAs

Recapitulating, SPIRAs are special IRAs set up at FDIC insured institutions earning a guaranteed interest rate. Acting as a CD, a SPIRA acount would not be subjected to the fluctuations of the stock market.The interest earned would then be distributed tax free to pay for medical coverage. This medical coverage would be based ideally on viable health insurance programs set up by Congress treating all Americans as a group.

Let's be realistic! These accounts are not going to be funded out of thin air. This will be a patient process that will take time. One of the main ways of funding these SPIRAs would be the allowing of IRAs, 401Ks, etc. to be transferred to these accounts tax free.

Take for example a person, age 50, has $400,000.00 in a 401K. Then transfer this to a SPIRA that earns a regulated minimum of 6% per year. The interest earned would be $24,000.00 per year. The first priority would be to secure medical coverage. There would be gradations of coverage. A person could opt to get a high deductible medical savings account that would function like medical savings accounts now available. The premiums of course would be paid for from the interest earned on this SPIRA. This distribution would be tax free.

Let's say the premiums would range from $3000.00 to $12,000.00 per year. The account is generating $24,000.00 per year. What remains after paying for the medical coverage would be $21,000.00 to $12,000.00. What would then happen to this excess interest money? It would be ideal to be able to secure other benefits for the individual. However, the first priority would be for obtaining medical coverage. This would supercede all other benefits.

The excess interest per year then could be used to secure certain benefits such as life insurance and possibly disability insurance. After securing medical insurance, it would be important to reinvest some of this excess interest back into the SPIRA in order to increase the account principal. Let's say then that half of the excess interest would have to be reinvested back into the SPIRA and half of the excess interest could be available for securing certain specified benefits to be discussed later. SPIRAs would be growing for future generations as all SPIRAs have to be willed to beneficiaries.

The first advantage for the US and its' people is the providing for some way to pay for health insurance. Having health insurance is a must for a quality life. The ability to pay for this coverage is a priority. SPIRAs are a possible way that would begin to guarantee future generations a means of securing coverage. Obviously not everyone would have substantial SPIRAs. However, any SPIRA would generate interest income that could be used to help secure medical coverage. Any SPIRA would be a foundation of assets that provides benefits, provides a sense of security and of pride that would be passed onto future generations. SPIRAs should be enhanced by gov't incentives that would foster the growth of these accounts and the equitable share in the prosperity of the country by all people not just a few. After the last few disastrous months it's obvious the country needs to see the advantage of empowering more of its citizens.

The benefits of SPIRAs are widespread. As these accounts grow more and more benefits could be secured for individuals. As well, benefits secured by SPIRAs would begin to supplant benefits provided by employers and the gov't saving them huge amounts of money. Employers could enhance employees SPIRAs as this would benefit them as well. SPIRAs are an investment in the future solvency of Americans. Something radical and unique needs to be done at this trying time for Americans. With a broad stroke we could change our future idealogy about how we treat ourselves and future generations. Our gov't should invest in these futures.

Tomorrow, let's talk about the other possible benefits that could be afforded by SPIRAs and the possible ramafications.

Thanks, and all comments are welcome,

Tuesday, November 25, 2008

Part I: Special IRAs, "SPIRAs" for all Americans

As we have seen in the past money can be given to banks, to insurance companies, and to wall street firms, etc. without hesitation. We are talking about hundreds of billions of dollars to wall street while giving only $600.oo to individuals. I would like to see our country do something wonderful and unusual, however not unusual to the founding ideals of the country. That is "for the people, by the people and of the people." What we need at this trying time is something dynamic to lift our spirits, to change our priorities, and to foster economic solvency for all Americans.

The worst imbalance of Democratic idealism is the desire to hold the people's money in the government's hands. The worst imbalancce of the Republican idealism is the desire that monies be held by a select few and corporations. Both parties should be effecting their best qualities, those that meet the needs of all Americans by fostering ownership of assets by all working individuals.

What I'm proposing is the idea that the monies that are slated for bailouts on wall street be given to working individuals to be placed in special IRA accounts, SPIRAs, that would be owned by these individuals.

These accounts would be established at banks that are FDIC insured, and these banks would have to pay a minimum of 6% interest on the accounts or can offer more to foster competition. The idea is that the interest earned on these accounts could then be used to pay the benefits for the individuals. The first priority of course would be to pay for medical coverage. Only the interest generated by these accounts would be used. The principal would not be touched. The interest earned and used to pay for the benefits would be tax free. These accounts would be strictly regulated and would have to be passed on to designated beneficiaries fostering future substantial accounts owned by the next generations. Of courese, the immediate effect would be an infusion of cash into banks to increase liquidity while creating a foundation of assets for working Americans.

Possible sources to fund these accounts:
(1) direct substantial stipends from the federal government possibly based upon age and work history.
(2) if there is to be an increase in capital gains tax, the added taxes could go into these accounts.
(3) estate taxes could be allocated to these accounts.
(4) allow transfers to SPIRAs from any IRA, 401K, etc. without tax consequences.
(5) allow voluntary deposits to SPIRAs affording some tax deduction.
(6) for working people who are 62 and older and collecting SS benefits and have earned income, the amount lost from their SS benefits ($1.00 for every $2.00 earned) would go into these accounts.
(7) people making under 50,000.00, or more for married couples, could make contributions to SPIRAs that would be partly matched by the Fed. Gov't.

These are a few possible ways to increase the principal of these accounts while it should be understood that once the money is placed in these accounts it cannot be touched. Only the interest generated could be used for securing benefits. The benefits of these accounts would be far reaching and will be discussed in later blogs. The medical coverage generated by these accounts could supplant medicare, a problematic system. If an individual is earning more and her or his account grows faster that should be seen as a plus as these individuals and their beneficiaries could be removed from medicare and possibily from SS as their generated interest grows substantially.

Tomorrow I would like to expand on the possibilities and ramifications of these SPIRAs. What I am asking is that our President and our Legislature do something imaginative and inspiring that benefits all Americans not just a few.