Grow Retirement & Family Wealth from the bottom-Up
William Nunnally 3-1-2019
The US economy is currently being administered from the top down through government support of large corporations and businesses that rely on large numbers of customers. The basic retirement of Social Security is also a top-down government program that favors the wealthy. Growing retirement funds for those at the bottom of the income scale is limited to the individual and does little to grow family wealth over generations. This top-down approach favors the wealthy and corporations, but is not the best way to help citizens grow family wealth from generations to generation. A better way to help the average citizen to grow family wealth from generation to generation is American Wealth Accounts (AWA) which works from the bottom-up with the same limit on generation saving for all citizens. .
AWAs are personal accounts for every citizen, granted at birth, that is a better alternative to social security. An AWA account is funded by the standard social security deductions of both citizen and employer. The retirement deductions then purchase special government AWA bonds that are held in a personal, eternal AWA account. AWA government bonds are specified to yield 3% over the cost of living with adjustment the first day of every year. The bond interest generated by an individual’s AWA account can be spent and taxed as income or allowed to increase the principal account value without tax, up to a maximum value on one million dollars. Only AWA interest dollars can be dispersed from the AWA account as the principal is eternal to be passed on to family members AWA accounts at death. After the AWA inflation adjusted, principal value increases to one million, all interest must be withdrawn to be spent or invested in some other activity. Interest on the principal and any other funds are not taxed if deposited in the eternal principal but taxed as regular income when spent. The FED and the states would provide the AWA bonds and pay the bond interest to citizens rather than selling conventional government bonds and paying interest to those outside the US. Thus, AWAs favor lower income citizens growing family wealth. After all, if the government is going to borrow funds that are backed by citizens, citizens should receive the interest on the borrowed funds.
This approach fuels the economy from the bottom up while upper income support is limited. In a recession or lost job situation, the AWA owner can borrow against their AWA principal to be paid back by the continuing interest on the AWA eternal account. For a family of four, their AWA accounts could automatically provide loans of up to several tens of thousand dollars, if necessary, without massive government debts generated by legislators. For wealthy AWA owners, after the AWA account is maxed out, they are on their own for retirement income. Thus, AWAs are the best way to retirement and grow family wealth from the bottom up as well as handle pandemic situations, unemployment by giving citizens the power to make their own decisions.
The AWA principal is eternal in that the principal must transferred to descendants at death, after all medical bills and debts are paid with the interest on the AWA account. The AWA of every citizen, starting at birth, is a method of funding higher education or trade education for every child. Rules for AWA can be tailored to require each parent deposit 5-10% of their monthly income to each child, including government support, to purchase AWA bonds for each child’s AWA. Additional rules can be developed to limit employer plus government contribution to 50% of the AWA principal limit to give citizens the initiative to finish funding their AWA.
Additional funding to those citizens on government support would enable those citizens to deposit social security level amounts to their AWA with the proviso that AWA interest must be added to the eternal AWA principal while on government support. Also, government plus employer support would be limited to 50% of the AWA principal maximum and those citizens on government support must use bond interest to increase the principal value.
Citizens presently on social security, would have the option to change to an AWA with the principal value at the time of AWA selection determined by past Social Security deposits that are deposited in their AWA account. The AWA account of present social security citizens would return previous social security payments to the government using AWA account interest after death and before distribution to heirs. The FED would provide the eternal AWA account funding in the form of AWA bonds which cancels the long-term social security debt. At least citizens responsible for a portion of the federal government debt would be receiving interest on the funds loaned to the government.
AWAs are also provide a way for cities and states to address long term pension costs by offering present and future retirees the opportunity to change to an AWA account at the level of equivalent social security payment. Cities and states would be required to pay the equivalent social security dues into retiree’s AWA accounts, but the long-term debt is reduced.
The military, police, and first responders could also be included in the AWA program. For example, government contributions to the AWA accounts of military personnel would be twice that of non-military citizens and those in dangerous occupations would be three times that of non-military citizens. This approach could also be employed for policemen and first responders.
In summary, AWAs are personal accounts that are funded by a debt swap to transfer the government debt of every citizen to their own “lock box” rather than having the debt in a “government lock box” so that citizens are being paid every month for the borrowing of the federal and state governments.
American Wealth Accounts (AWAs) encourage capitalism and provide instant support in times of panic and disaster by fueling the economy from the bottom up, focusing on the lowest income citizens with the objective of growing family wealth and having access to an eternal financial backstop. Family wealth is the foundation of the ladder to success and readily available funds are the foundation for surviving disasters like the coronavirus economy.
The most appealing aspect of AWAs is that all of a citizen’s contributions to social security, up to the maximum value of their AWA account, could be passed on to family heir AWAs at death to grow family wealth over generations.