Of all the retirement- and savings-oriented proposals I've seen, Sens. Bob Kerrey and Joe Lieberman's Kid$ave is the goofiest.
They plan to introduce legislation that would allow parents to make tax-free contributions to retirement funds for their children.
Parents would get a dollar-for-dollar tax credit of up to $500 a year. Kid$ave would allow parents to put two percentage points of what they now pay to Social Security into a private children's savings account that would be structured like an individual retirement account.
As a middle-aged parent of two young kids, and a worker who pays a bunch of money into Social Security every year that I'll probably never get back, I say to Sens. Kerrey and Lieberman: "Are you nuts?"
In a Congress fighting over anything that takes revenue away from the federal government, you propose a revenue-loser like this?
Most of us parents who are even thinking about retirement are still struggling to come up with the money for our "golden years." We've paid into Social Security for years - almost 25 in my case - only to discover today's retirees are getting our money, and all that's left for us is an IOU.
Sen. Kerrey, D-Neb., and Sen. Lieberman, D-Conn., say their proposal helps address the nation's savings and investment crisis. But what kind of investments will people make with $500? The amount is so small most of the money will sit in a bank savings account that pays 3% interest. Even if parents choose mutual funds, they'll have to pay administrative and/or custodial fees.
I say if you want me to save and invest more money, give me (and other middle-income workers) that $500 tax break in the form of a dollar-for-dollar credit for my IRA - for which I'm already paying a fee.
Or, give me a higher deduction for child care, and I'll sign a notarized statement saying I promise to invest the tax savings in the U.S. capital markets.
And speaking of my kids, how could I possibly begin to save for their retirement when I'm saving every extra penny for their college education? Give me that same tax credit for a college fund, which I promise to invest in the U.S. capital markets, and you've got yourself a deal.
In all fairness, the two senators mentioned college. Kid$ave would allow children to take a 10-year loan against the account for higher education. Great, huh? Don't they know about the huge default rate on student loans? Don't they realize young people don't give two hoots about retirement? Unless they win the lottery during the 10-year period mentioned above, even my perfect children would blow off the loan, figuring they'd deal with retirement savings when they're older.
That Scarlett O'Hara mentality is what got my generation in trouble. Why foist it on my children's generation? Instead, give me tax-advantaged vehicles to finance their college and my retirement, and fix Social Security so I at least get out what I put in (preferably plus investment income). That way, I have a fighting chance of accumulating enough assets on my own that when I die, my kids will inherit so much they won't have to worry about their retirement.