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RetirementLarry LaBorde As we spend our days earning our daily bread and living our lives it is easy to neglect our retirement planning. Many will put this off until so late in life that their only workable plan is to buy lottery tickets and hope for good luck. There is only one responsible way to plan for retirement and that is start early, contribute every year (or month) and stick to it. If you are under 50 years old and your big plan for retirement is social security then forget it. You need a new plan. The social security system will slowly be means tested where only the truly destitute will qualify. It will start by means testing Warren Buffett and Bill Gates out of the system because they do not need the income. Eventually anyone with any type of private pension, savings or other assets will be means tested out of the system until they have exhausted their assets and are broke. It will simply become old age welfare much like nursing home care now. The numbers will simply not allow for anything else. At any rate, who wants to retire like that? Walter D. Kennedy wrote an excellent article entitled "Paddling Your Own Canoe" about taking charge of ones own life and ones own welfare at www.kennedytwins.com/oped.htm. This is how our country was founded and the way of our forefathers. When Ben Franklin was asked after the constitutional convention what type of government we have he answered, "A republic, if you can keep it." Our republic has slowly changed into a socialistic state whose politicians have made too many promises in order to get reelected than the country can honor. Accept that fact, take control of your own life and move on! Social security can not be fixed and it is not a workable plan for anyone under age 50. Forget political solutions and work on individual solutions. From the other end of the spectrum big business is squeezing its retirees. In order to stay competitive with the world markets many corporations are complaining that their retirement obligations make them less competitive. Everyone has read about the under funded retirement funds at the nations biggest corporations. Those that are not reported as under funded usually do so by rosy investment portfolio predictions of 15 to 25% in the coming years that will make them solvent some time in the near future. This is highly unlikely. Whenever corporate profits are down and a CEO is not meeting his numbers the retirement fund is the first thing to get cut. United Airlines had a 9.8 billion dollar pension obligation. The US Pension Benefit Guaranty Corporation (another word for taxpayers) is now guaranteeing the retirees benefits. The PBGC however, is only funding 6.6 billion of the liability. Somehow over 3 billion dollars in benefits evaporated. With government management I suspect the benefits paid out will be less than half of those promised in just a few years. Lucent has a huge under funded retirement liability that it has no hope of fixing since Lucent is now a much smaller company than the parent corporation was that acquired the obligation. If all of Lucent's profits went into the retirement fund for years it would still be under funded because of the large number of retired employees. Everyone has read about Delphi's problems the least of which is the under funded retirement fund. Delta has just shed its retirement problems and can Ford and GM be far behind? Of course the only way to discharge an under funded retirement fund is to push it off on the federal government or the PBGC (taxpayer guaranteed). The worst part of all this is that the boomer generation flood of retirees has not yet breached the levees but it is coming as sure as a tsunami (just a year ago I couldn't have even spelled tsunami and would have just said tidal wave). Now that we have covered all that is wrong what can we do to help our own situation? 1. If you have a 401K or a profit sharing plan that you can roll over into a self directed IRA without penalty then do so at once. If you have a defined benefit plan at a corporation that has an under funded retirement plan that will allow a lump sum distribution or rollover into an IRA then strongly consider it. Take charge of your finances. Educate yourself on investments but remember what Will Rogers said, "I am more concerned about the return OF my money than the return ON my money." Remember that in the long term the government will have trouble meeting its obligations and will have to try to inflate its way out of its debts. This will be bad for dollar investments so put a portion of your portfolio (10 to 25%) in precious metals right now and be ready to put a larger percentage there later. If you are still working then CONTRIBUTE REGULARLY TO YOUR RETIREMENT. 2. Pay down your debt and then live BELOW your means. Live as frugally as possible and save all you can now. If you can not pay for your home in the next few years consider selling it and purchasing another more modest home. The government has now welded shut the safety valve on debt with the tougher bankruptcy laws. Things are going to start to change for those with large unmanageable debt and it is not going to be pretty. 3. Build up a 6 month emergency fund in your savings account. This is difficult but it can save you complete economic ruin if you lose your job or run into financial difficulty in the future. It will take years to build up this fund but it is important. It is even more important than that new car you might have your eye on. 4. Think about a second stream of income. Maybe a stream of income that can continue into your retirement years? Perhaps a home based business or maybe a hobby that can generate a little cash instead of consume it. Consider simply planting a large garden to cut down on grocery bills. Cutting an expense is as good as generating income. (A penny saved is a penny earned, thanks again Ben). 5. Finally think about your family. Whenever things have become economically challenged in the past families have pulled together and pooled their resources. Get to know your parents, siblings and children again and learn to depend on each other. If you are serious about taking charge of your retirement finances and investing a portion of them in precious metals then I suggest you set up an IRA at American Church Trust www.churchtrust.com. They will allow you to keep the actual precious metals within your IRA as well as to invest in conventional investment vehicles. For more information send me an email at llaborde@silvertrading.net and I will send you an information package. Be sure and include your snail mail address. You can also read more about gold and silver in your IRA on my web site www.silvertrading.net. Larry LaBorde 321gold Inc |
