To restart the economy, Congress needs to give Americans access to their own savings.
If Americans could withdraw up to half, or a third, or even a quarter of the funds they have saved for retirement, hundreds of thousands of Americans would do so. And they would use those funds to rebuild their lives and survive this economic storm. The economic takeoff would be sharp and prolonged.
This is a terrible idea, for a couple of reasons: First of all, it requires a rewriting of the rules that's more complicated than "let's just give people money," which the government has done once already with fairly successful results.
But also: Taking money out of your retirement account now -- assuming you're not a journalist, like me, with puny retirement savings -- is a good way not to have the money you want for retirement later.
"In a perfect world, you never touch retirement savings until you retire. Taking it out before then not only reduces your savings, it robs you of years of compound interest. If you are 35 today, taking $10,000 out of a retirement account would leave you short $68,000 when you retire, assuming a 6% average annual return.A third reason this idea is bad: It does nothing to help poor people -- including poor workers -- who don't have much in the way of savings. Giving them money to spend helps them AND helps the economy when they spend. Encouraging people to dip into their retirement savings now just clears the way for another economic crisis a few years from now, when retirees find themselves short of the cash they need to live comfortably.
