Archive for May, 2010


Government Intervention

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May 26, 2010

5/26/10

Government Intervention – What’s next? Maybe Private Pension Plans?

 Social Security was considered a pretty good idea to help us during our retirement years.  Along the way the government decided that the SS Fund was going to be their personal bank account and borrow against it as they saw fit.  There has been no accountability for their irresponsible behavior.  Social Security should have been privatized over 25 years ago and the current generation would have a fighting chance.  But the government in their infinite wisdom decided not to allow that to happen because you can’t borrow against someone’s private fund.

Recently, the Obama administration brought us a little closer to socialism by making the government, owners of financial institutions who were struggling and decided to bail out automobile companies, banks, other financial institutions such as AIG and the beat goes on.  As we all know they took their best shot at completely overhauling the healthcare system to a government ran program.  They didn’t get everything they wanted but unless we the voters slow them down they will try again.

Guess what!  There is now a movement afoot to combine government and private sector 401k’s under the auspices of a government ran retirement program.  If this comes to fruition or not only time will tell.  Believe me if they get a hold of the retirement system in this country both government retirement plans and those from the private sector lumped into one, they now have a multi-billion or can I make that a multi-trillion dollar piggybank for them to use because they’ve ran out of money by raping and pillaging all the existing government sponsored programs.  How else are they going to reduce the deficit that they have created with their spending that they have created over the last 12 months, taxes for sure what else?  Maybe this is just the tip of the iceberg.

Private Pension Plans might seem like a really good idea, let me correct that it’s a great idea and maybe the only salvation to our retirement future.  There will be more information to come shortly.

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DID YOU KNOW

Filed Under: Government Intervention by admin — 1 Comment
May 4, 2010

DID YOU KNOW

With over a trillion dollars in Qualified Plans, I wonder if people realize the Federal Government is their partner on these plans and will take millions for their share.  The government encourages you to put your money in a “Qualified Plan Account” and to defer the taxes.  An example of some of these accounts includes 401(K)’s, IRA’s, SEP’s and 403(b) plans just to name a few.

Who came up with these Plans? – The Government.  Over the last 40 or 50 years there have been numerous changes in Qualified Plans and I believe no one will be surprised with the present landscape in our government today that they could certainly change again.  Qualified Plans are not “tax saving accounts” as many believe.  They only do two things: They defer the tax you owe and the tax calculation.

But this is exactly what we are doing with  the government in “Qualified Accounts”

They are not saying: “You do not owe the tax”.

They are saying: “You can pay the tax later”.

At What Bracket? “That is a good question”.

Qualified Retirement Plans can be a viable tool for some of us for our retirement planning; however, they can lead to financial ruin if they are not fully understood.  People believe these plans are the best tool for their retirement as this is the status quo of today.  Two factors that could destroy their wealth are increases in tax brackets to maintain the lifestyle they expect and the government’s ability to change the rules at anytime.

Doing some research and quickly educating yourself you will see the future tax liability and how it may affect your effective rate of return.  The message here is government intervention and future increases in tax brackets to pay off the mounting debt that is accruing today leaves us with a bleak forecast.  Anything tied to Washington and income taxes is certainly bad news for us and our children.

This is not to say Qualified Plans are bad.  However, it is important that you know and understand exactly what they do.  If you put this under a microscope and carefully think it through, you will see the water is murky.  What was once intended to be financial security in our golden years has been turned upside down by government spending and it may take many generations to right the ship once again.

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Thought for the Day:

“The world is a looking glass and gives back to every man the reflection of his own face. Frown at it, and it will look sourly upon: laugh at it and with it, and it is a jolly, kind companion.”

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