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Years ago, when losing weight was easy and I had an incredible shock of hair, I worked for a highway department. And every year we would produce a sweeping schedule and mail it to every household in the municipality.
I hated the sweeping schedule. Why? Because we sucked at abiding by it, and there were legions of homeowners who couldn’t wait to harangue us every time we screwed up.
Yes, I know it sounds ridiculous, but there were people who lived for the sweeping schedule. They would remind their neighbors, “the sweepers are coming, the sweepers are coming.” And to prepare for this momentous event, they would rally their neighbors to temporarily forego street parking—thus granting us unprecedented access to the grime and debris that settled in the gutters.
And then they would wait, and wait, and wait. The street was free of cars. The gutters were begging to be scrubbed. “WHERE ARE THOSE BLOODY SWEEPERS, DAMMIT?”
We sucked at maintaining the sweeping schedule because every sweeping jurisdiction had one sweeper and every sweeping jurisdiction was swept at the same time. So if the sweeper from, say, jurisdiction 1 broke down, there were no back-up sweepers to maintain the schedule. Sweeping in jurisdiction 1 was put on hold until its sweeper was repaired.
So one day, just after I got verbally abused by a citizen whose street was swept two days late, it hit me. Our streets weren’t that filthy. They didn’t need to be swept six times a year. Three times a year was enough. Wouldn’t a schedule in which half our sweeping jurisdictions were active and half were idle make more sense? This way, if a sweeper broke down, there would be plenty of back-up sweepers to maintain the schedule. The idea of alternate-month sweeping was born.
When I took my idea of alternate-month sweeping to my boss, I remember thinking, “This is so obvious. Someone must have thought of it before. And if we ain’t doing it, there must be a good reason why.”
Well, it turned out, nobody had thought of it. It also turned out that all the higher-ups had a “why the hell didn’t we think of this before” epiphany. Alternate-month sweeping was thus put into operation. And I became a legend—the inventor of alternate-month sweeping. My finest contribution to the general welfare of the community during my twenty years of public service.
I thought about alternate-month sweeping recently for two reasons. First, fiddling with a sweeping schedule can’t be the crowning achievement of my life. Am I that pathetic? Surely I can do something more beneficial for mankind. Second, I recently had an idea that strikes me as something very analogous to my alternate-month sweeping idea; that is, it’s an idea so obvious and simple that people are either blind to it or assume it’s already been explored.
My idea is the Junior IRA, and I blogged about it a couple of months ago. For those of you who didn’t see that post, here’s the link. The Junior IRA, or JIRA for short, is hardly earth-shattering. It’s just a Roth IRA for children that removes the work requirement and allows anyone to fund it. Here’s how it would work in a nutshell.
Every newborn in the United States would leave the hospital with a birth certificate and a JIRA.
The newborn’s parents or guardians would have the authority to choose the JIRA’s custodian (Vanguard, Fidelity, Schwab, etc.).
The only eligible investment option for a JIRA would be a low-cost, total-stock-market index fund (Vanguard’s VTSMX fund, for instance).
The federal government and the birth state would each be required to contribute $1,000 to every newborn’s JIRA. Since there are roughly four million babies born in the United States every year, this feature would cost roughly $8 billion dollars annually (four billion from Uncle Sam and four billion from the states). Eight billion dollars is, of course, a lot of money. But in the context of what the feds and and the states currently spend (over $4.6 trillion annually), it’s pocket change.
The maximum contribution to a JIRA in the first year of a child’s life would be $3,000 ($2,000 from the government and $1,000 from other sources). The maximum contribution after the first year would be $1,000 annually.
Contributions to a JIRA could come from any source (parents, grandparents, aunts, uncles, charities, foundations, churches, etc.) and could not be used by the contributor for a tax deduction.
As soon as a child turned 18, her JIRA would immediately convert to a Roth IRA.
Now maybe I’m nuts, but I don’t see a downside to this idea. Who loses? Who is made worse off by the Junior IRA? We allegedly have a retirement crisis in this country. Corporations aren’t going to take care of our children in old age. The government’s too inept, corrupt, and broke to be counted on. Wouldn’t it be great, then, if our children could to start saving for their retirements while they were still in their diapers?
If you do see any flaws in my Junior IRA, please let me know. In the meantime, I’ve decided to alter my retirement plans. In addition to picking up garbage, baking bread, and traveling the world, I’m going to champion the Junior IRA. In fact, I’m so pumped about this new endeavor, I’m already fantasizing about my tombstone.
Here rests Mr. Groovy
Inventor of alternate-month sweeping and the Junior IRA
1961 – 2061
Final Thoughts
I have no idea how to make the Junior IRA a reality. I figured I’d start by reaching out to my congressman and two senators. Here’s a screenshot of the email I sent them last night. I’ll keep you posted on their responses. It should be fun. And if anyone knows how a poor schlub with no following can get a law passed by Congress, please let me know.
Great post again Mr. Groovy,
We must immediately lobby some do-nothing schlubressman to write the bill with this title,
“The Mr. Groovy JIRA Saving American From Itself Bill”
“Harumph, Harumph, Harumph……
I didn’t get a Harumph out of you!” – Mel Brooks
Kidding aside, it’s a good idea. Even cooler if there was no limit on the initial and you could set up a crowd-funding page for the baby.
Like the Sundance Kid (Redford) said to Butch Cassidy (Newman),
“Huh. You just keep thinking Mr. Groovy, that’s what you’re good at.”
B
LOL! “Give the governor a ‘harumph.'” “Guns or knives, Butch?” Made my weekend, Brent. Not only were you able to work in two of my favorite movies, but you were also able to work in a very intriguing idea. I never even considered crowd-funding the payoffs (i.e., lobbying) needed to get the JIRA enacted. Let me think about that. It’s crazy enough to work.
This is a cool idea.
Not to be morbid, but family friends tragically lost of of their children. What provisions would you propose for situations like this? As another commentor noted, if I’ve given money to a child, I would not want my gift to go into a government pot.
Good question. And not morbid at all–because it will happen. My initial idea was that the money in a deceased child’s Junior IRA would be split up evenly among the child’s siblings. But what if the child had no siblings? Should the money then be split up among the child’s first cousins? And at what point should the money go into the IRAs of the parents? Some line of inheritance would have to be formulated. But you’re absolutely right about the money not ending up in the government’s hands. Nobody wants to see that. Thanks for stopping by, my friend. You made me think.
The UK has/had two similar programs. The first was called the Child Trust Fund where the government paid £250 (c$400 at old rates) at birth and another £250 at age 7 into what were essentially tax free managed accounts that parents etc could pay into for the child. Since 2010 the CTF stopped taking new children and we now have a Junior ISA (the ISA being an Individual Savings Account, ie free of tax on withdrawl) which automatically converts to an ISA at, I think, 18. However there isn’t any government contribution to the Junior ISA. Lifted from Wikipedia re the Child Trust Fund “According to the Children’s Mutual, “In terms of changing people’s behaviour, this is the most successful product there’s ever been.” For households with income of £19,000 a year, 30% of the children in that category are having £19 a month saved for them. Part of this is due to grandparents being more willing to contribute to funds, since the money cannot be diverted to the family finances.”
Thanks for sharing, Charles. It’s good to hear that the UK is trying to help its children and encourage the Brits to be better savers. I hope we mirror that effort on this side of the pond as well. I think our government and citizenry have to change their respective mindsets. Dependency on the government helps neither party. My Junior IRA could go a long way in bringing about a rebirth in self-reliance.
I love the idea except the part that requires extra government spending. Starting kids on the program when they are born works because it is an automatic-opted-in approach. Doesn’t require anyone to do anything. Great idea – any other countries have something like this?
Hey, Mr. FS. New Zealand has something called KiwiSaver that allows parents to enroll their kids. But it looks like contributions to a child’s KiwiSaver account is based on employment. In order for parents to make contributions to their child’s account, they have to be employed. So it’s not exactly what I envision, but it’s better than anything we got. And I hear you about the government contribution. Our government’s already $19 trillion in debt. Do we really need to give it another thing to spend money on? The only reason I find it worthy of consideration, though, is that it might be an effective way to transition away from our pay-as-you-go-system (i.e., Social Security).
You’re a freaking genius! When you strike it big, I’ll be happy to say I “know” you. “The inventor of the Junior IRA? Oh yeah, we were friends. I called him Mr. Groovy. That’s how close we were.” 🙂
I’m extremely flattered. After all, you’re the one who’s on Rockstar Finance! You’re too kind. Thank you. When we have the signing ceremony on the White House lawn hopefully I can invite you, Penny, and my other blogger friends.
Love the idea. Three positives immediately jump out at me. First, starting early. We all know that time – and compound interest – are fabulous. Second, removal of the work requirement … well, because it’s hard for most newborns to find decent employment. Third, allowing contributions from third party entities provides greater opportunity to those who don’t have the advantage of built-in access to capital via their parents, grandparents, etc.
James, thanks for your kind words. I really appreciate it. The option for third party contributions seems like a no-brainer to me. And for those who want to help a disadvantaged kid get a leg up, it would be a great vehicle. One reason I’m wary about government and charities is that I have no assurance that my money is going to the cause. If I want to contribute $200 to a kid’s JIRA, I know that kid is getting a $200 benefit. Not a $100 benefit or a $50 benefit. I’ll keep you posted. If you think of any ways to publicize this and get it on some politician’s radar, please let me know.