Runaway Entitlement benefits and their continuing obligations is the third factor insuring an economic storm sure to hit America’s shores soon.
In this next chapter, Retirement, little by little you begin to understand America’s fourth reason for its coming economic storm. Are you interested in learning more about the surprising challenges to America's retirement programs from its aging Baby Boomers?
Retirement
[lxxxv]
While there had been great strides and improvements in our retirement plans in the United States in these past 40 years, can you imagine the impact of the Baby Boomers hitting retirement age relative to stocks and other investment sectors and as required by retirement plans withdrawal requirements? That's what this chapter helps to explain, and places Retirement as the 4th reason for the economic storm.
IRA and 401(k) plans are defined contribution plans which are defined, as follows:
In a defined contribution plan, contributions are paid into an individual account for each member. The contributions are invested, for example in the stock market, and the returns on the investment (which may be positive or negative) are credited to the individual's account. On retirement, the member's account is used to provide retirement benefits…. Defined contribution plans have become widespread all over the world in recent years, and are now the dominant form of plan in the private sector in many countries. [lxxxvi]
The minimum distribution requirement in these plans reads like a cigarette warning:
IRS regulations require that participants must begin receiving payments from their retirement account by April 1 of the calendar year following the later of:
The calendar year the employee attains age 70½, or
The calendar year the employee retires. [lxxxvii]
As previously mentioned, in just 2011, the leading edge of the 75 million strong – 83 million with immigrants – Baby Boom generation hit the customary retirement age of 65. By 2016, these Boomers will be 70½ when they must begin their retirement plan withdrawals. Further supporting these retirement plan distributions are statistics that suggest that 40% of Boomers will not have enough assets to retire on.
Rich dad saw that the real cause for concern was that the issue of personal financial survival after retirement was being pushed forward. That is why he repeatedly said, “ ERISA is my generation passing on its problem to your generation. ” As the problem became too complex to solve, laws were passed to pass the expense of retirement on to the next generation. In other words, Social Security and ERISA pass the expense of the care of one generation on to future generations. [lxxxviii]
The picture that follows on the next page is another visual that you might appreciate as concerns the impact of the Baby Boomers. You probably know already or can quickly extrapolate what this incredible birth anomaly we know as the Baby Boomers and their related retirement holdings will do to those respective investment markets when they are required to liquidate their retirement accounts, in accordance with Erisa guidelines.
From 2011-2016, America will begin to process the annual retirement account liquidations of its largest generation ever. Just picture the largest sell off in history of stocks and other approved retirement plan investments. Are you tired of the surefire onslaught against America’s already fragile financial and compromised economic system? Well, we're in the same boat with like feelings.
In the year 2016, it is estimated that there will be 2,282,887 people turning 70 years of age in America. In 2017, the number of people turning 70 years of age jumps to 2,928,818. That is a jump of nearly 700,000 more people turning 70 than any year before and the number increases from there on. In [that] one year, there is a jump of nearly 30%. [lxxxix]
[xc]
In the picture below, you can clearly see the bump moving to the right which represents the Baby Boomers. Statistically, 10% of the US population will be over 75 by 2050. Just picture the hump as Boomer retirement accounts are liquidated from 2011-2039.
[xci]
Without a change in the minimum distribution requirements of America’s highly popular defined contribution retirement plans and/or the related ERISA laws, there will be further harm to America’s financial markets and economy. Of course, it’s highly unlikely there will be a change in the minimum distribution age, because that’s the point at which these tax deferred accounts finally get taxed. As you know, our Federal government with its dire financial straits needs money more than ever. No surprise on this point, huh?
An additional challenge to America’s Retirement system, which has become increasingly evident with the decline in interest rates and our economy, is companies that underfund their employee pension plans with the expectation that the Federal government will make up for this underfunding. In 2008, the total funding of US pension plans fell by $303 billion from an $86 billion surplus by the end of 2007 to a $217 billion deficit by the end of 2008.
[There are] more than $300 billion – or, according to Barclays Global Investors, $800 billion if more conservative private sector accounting methods are used – of underfunded municipal pension plans. Nearly all of these plans are traditional defined benefit schemes under which retirees are guaranteed a set payout for life and sponsors bear the investment and other risk. [xcii]
[xciii]
A January [2012] report by Credit Suisse Group estimated that 97% of companies in the Standard & Poor's 500-stock index have underfunded pension plans. [xciv]
Did it hit you strange that corporations are looking to the government to help bail out their pension plans? If it did, it sure should, because our Federal government pension plans as well as many other US government entities are also underfunded.
On January 10, 2012, Senator Orrin Hatch (R-Utah) released a report on state and local government defined benefit pension plans in which he detailed the risks associated with the nation’s $4.4 trillion public pension debt, calling the defined benefit pensions structure “inherently flawed in the state and local government setting.” This massive liability is dangerous for taxpayers and could mean future cuts in services, reductions in benefits, higher taxes, or a combination of these less-than-desirable options. [xcv]
This systematic, required withdrawal from Retirement plans and the increasing trend of corporations to underfund their employee plans is the fourth most impacting reason behind the continued decline in the US economy – and another compelling reason for the economic storm on America’s doorstep.
[xcvi]
The next and longest chapter will explore the American governmental branches, i.e. Executive, Legislative, and Judicial. The case is made for Political Failings, increasingly, in each branch and at most every government level, as documented since 1963. Political Failings is the fifth reason for the economic storm ahead. Is this chapter's content any surprise to you? Surely not.
The storm's rains, as you know any hard rain does, may instantly free us from more political failings. Improved leadership should emerge from what such a time offers each of us to come together and effect needed changes. Announcing this longest chapter loaded with helpful information, you may see yourself wide-eyed and looking at the most important chapter in this book. You ready to begin?
Political Failings
[xcvii]
As you've already seen, there are many powerful, compelling reasons whereby America deserves the sensational storm before us. No one group carries more responsibility for this economic mess than our elected "leaders." No one reason stands behind the hardship ahead for us, the largely innocent citizens, than the Political Failings over many, many years - no, many, many decades.
In this chapter, you will learn how America’s political leader’s failings have heightened our debts and added to our generational financial problems. You will quickly realize where - in most every branch of our US government, there has been mismanagement, fraud, and waste again and again. Of course, the political failings in many, if not most, nations' government leaders have all contributed to the coming eco
nomic storm over these United States and the world.
As you and most everyone knows, behind many of the problems faced in America today is a series of significant blunders. Each has had far reaching and adverse consequences for too many blameless persons. While you’ve already seen evidences of some of these short comings, this chapter will delve more deeply. We will attribute these perpetrated wrongs to our disappointing "leaders" - individually and collectively.
As you may recall from "Social Studies 101," America’s government is composed of three main bodies: Executive, Legislative, and Judicial. Whether Democrat, Republican, or Independent party, our Federal government in all three branches have seen an increasing incidence of Political Failings. With each passing generation of our young nation, this trend has grown worse since the creation of these United States by our founding fathers.
[xcviii]
Executive
From my education and studies, it seems our US Presidents have faltered with increasing consistency since our first 7 presidents, i.e. since President Andrew Jackson. In fact, our leadership failings have echoed the very concerns voiced by our founding fathers in their great foresight and wisdom when bringing together this Democratic experiment over 200 years ago.
In framing a government which is to be administered by men over men the great difficulty lies in this: You must first enable the government to control the governed, and in the next place, oblige it to control itself. [xcix]
Surely, a rare thinking person like you already know that the crux of these problems lie most blatantly within our Executive Branch. Our Legislative Branch and Judicial Branch share in or even expand upon these political failings. Also, as you probably know, there seems to be a trickle-down effect into our state, municipalities, county, and other local governing sources.
I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations…. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. [c]
Do you think political failings could come, at least in part, from our elected representatives increasingly moving away from their role as “public servants” and more towards that of “career politicians?” Unfortunately, in a nation as large and diverse as America since its humble beginnings in the late 1700s, politics does seem to be more of a profession, in and of itself, today.
I am concerned for the security of our great Nation; not so much because of any threat from without, but because of the insidious forces working from within. [ci]
This is a far cry from the days of our founding fathers who, if you recall, offered their time as leaders more to serve our young nation after years of business, military, or other professional, nonpolitical experience. As case in point, consider this brief recollection on our very first president, George Washington.
[cii]
As the Revolutionary War ended, George Washington was one of the very few leaders known by most of the citizenry. He was celebrated for his victory against the British on behalf of our young country. Accordingly, Washington was the only logical person to be our first president.
As a consequence, the other founding fathers pressed this additional servitude on the humble Washington. If you recall, he didn’t want the job. In fact, he made very clear that he’d served the nation through his military years, and preferred to return to his farm and his farming at Mt. Vernon without further pomp and circumstance.
With further prompting, he finally relented and consented to serve with the understanding and explicit agreement by the others that after his service as President, he would return to his farm without fanfare or bother. After his first four years as President, he reluctantly agreed to a second term.
He adamantly refused to run for a third term, establishing the custom of limiting presidential service to two terms that later became the 22 nd Amendment to the US Constitution. Though a military leader, Washington’s farewell address as President voiced his opposition to partisanship, sectionalism, and America’s involvement in foreign wars. Consider these words of Washington, as example, followed by founding father Benjamin Franklin, both here and later in your readings, which American leaders should heed:
I have no other view than to promote the public good, and am unambitious of honors not founded in the approbation of my Country…. My first wish is to see this plague of mankind, war, banished from the earth. [ciii]
There was never a good war, or a bad peace. [civ]
As the “top political position” in America, the Presidency has become one sought almost exclusively by persons who’ve spent their entire professional life since their education in the pursuit of political gain. These persons who become our president, ironically, have very little in common with their fellow US citizens who have pursued business and other professions after their education.
Further, our US President and increasing numbers of elected officials even on the state level often have little to no hands on experience in daily US commercial life, i.e. learning how to balance a budget , which should benefit them in their elected position later on. More importantly, as an elected official for life in contrast to such positions with our early leaders in this country, such elected persons benefit from our government, which becomes the sole source of their income, rather than supporting our government through taxation as virtually all other citizens do who do not receive a government paycheck.
In short, career politicians seem to be takers – not givers. This is a far cry from the service Washington and early leaders gave to this country.
Career politicians in every branch of our government, at every level of government whether Federal, state, or local, and in whatever political party, have become part of the problem behind the economic troubles now on the shoulders of every citizen. Sadly, their inexperienced efforts making economic decisions for many of us with far more experience has proved anything but the solutions we so desperately want and need.
One other critically important character quality within all of America’s founding fathers was a deep and abiding faith in God. They each seemed to hold their faith as if a foundation guiding their decisions in life. They were vocal on this subject throughout their lives as elected officials or as private citizens.
It is impossible to rightly govern a nation without God and the Bible. [cv]
[cvi]
Our Constitution is designed only for a moral and religious people. It is wholly inadequate for any other. [cvii]
Contrary to popular opinion today and changes in our US Constitution long after the founding fathers, they never coined the concept or words “separation of church and state”. In fact, our early Constitution by their hand simply said, “Congress shall make no law respecting an establishment of religion, or prohibiting the exercise thereof.” All talk since of the “separation of church and state” is a perversion of what our founders envisioned and embodied.
The Bible is the rock on which this Republic rests. [cviii]
The framers of our Constitution meant we were to have freedom of religion, not freedom from religion. [cix]
With such perversion since, special interest groups have pushed and pushed to remove any and all religious symbols from state property or prayer from government or schools. They have championed “free sex”, homosexuality, one parent households, divorce, sex changes, cohabitation, children without marriage, leaders who have affairs/adultery, alternative lifestyles, drugs, tattoos, and a continuing list of sins by the Christian Bible in this self-declared Christian nation.
Anytime you deny the acknowledgement of God you are undermining the entire basis for which our country exists. [cx]
Duty is ours, results are God's. [cxi]
If God is just, I tremble for my country. [cxii]
You probably know that these are the very attributes of the Roman Empire before its fall!
More importantly, these sins draw Americans away from the fundamental and foundational family
structure. Taking God from our schools and day-to-day life insure that Columbine, Virginia Tech, the Colorado cinema, and the Sandy Hook Elementary School shootings can only become more commonplace.
Everyone knows that when you move away from God, then sinful, wrongful qualities are more likely to be present. When was the last time you recall hearing about one of America’s elected leaders from the Federal to even our local level doing wrong?
We've all seen increasing incidences of deceptions, lies, and dishonesty by elected officials that harms the effectiveness of these leaders and the fabric of our society. President Teddy Roosevelt hit these concerns squarely on the head with these words, which we should all take to heart:
We can afford to differ on the currency, the tariff, and foreign policy; but we cannot afford to differ on the question of honesty if we expect our Republic permanently to endure. Honesty … is an absolute prerequisite to efficient service to the public. Unless a man is honest, we have no right to keep him in public life, it matters not how brilliant his capacity. Without honesty, the brave and able man is merely a wild beast who should be hunted down by every lover of righteousness. No man who is corrupt, no man who condones corruption in others, can possibly do his duty by the community.
America's Worst Economic Depression Page 5