Let’s Do The Hokie Pokie!
I had a really interesting meeting with a potential client this week. He is an attorney from the heartland of America and is very representative of the people I am speaking to daily. Most of them are just like you and me, normal, educated, successful, folks who you would hardly classify as wacko or conspiracy theorists.
What made this appointment really stand out is they were able to tell me in a very succinct manner not only why they were in my office but what their motivation for flying half way across the country was. I am going to paraphrase but the story went something like this:
Larry we aren’t being sued and we aren’t looking to avoid taxes. We are worried, we’re worried about the path our country seems to be taking and we are worried about what it will mean for us. Specifically we are worried about our retirement plan. We set up our own retirement plan years ago that we have been faithfully contributing too and investing in average investments probably like most everyone else.
But lately we have been reading a lot of articles that lead us to believe the government might take over our retirement plans in one way or another. We have read the articles that some would call a trial balloon. Some say the government should nationalize our retirement plan, or the government should take over our plans and tell us how to invest, or they should have a mandatory plan we all contribute to that they would guarantee with a small rate of return. And we are really worried the government might force us to invest in U.S. Treasury bonds as a way to finance the huge deficit, especially now we are hearing the Chinese are nervous about treasuries.
Larry years ago we met with some private Swiss bankers at the suggestion of a fellow attorney and friend who specializes is offshore asset protection. They made us really nervous when they started talking about all of the ways we could cheat on our taxes, wink wink, nod nod. Larry we aren’t looking to cheat on our taxes or do anything wrong, we just want to make sure we put our retirement plan in a position where no one can get it, where no one can tell us what we have to invest in and where we can invest it in anything we are allowed to, “that’s what this is all about”.
That’s when it hit me. It really is what it’s all about. Our clients are normal people who for the most part are educated and successful. They aren’t weird and certainly don’t want to cheat on their taxes or do anything wrong. They just want to protect themselves from the fiscal craziness that’s going on.
The next day I received an email from Bob Bauman with the note “Hey Larry have you seen this?” I have learned if its from Bob I better take a look. I hope you are sitting down when you read this:
From Retirement USA- “Working for a Universal, Secure, and Adequate Retirement System” This group just released a new working paper of particular note.
I must say I 100% agree with their conclusion-
“As the first decade of the new century winds down, one thing is clear. America’s retirement system is increasingly failing to provide retirement security for the vast majority of workers and retirees. It is time to think about an entirely new approach to retirement security, one that, together with Social Security, would provide adequate and secure retirement income for all workers. Let the discussion begin.”
Unfortunately the rest of the paper scares the heck out of me.
Principles for a New Retirement System
We offer the following set of principles as guideposts against which all proposals should be evaluated.
Universal Coverage. Every worker should be covered by a retirement plan in addition to Social Security. A new retirement system should include all workers unless they are in plans that provide equally secure and adequate benefits.
Secure Retirement. Retirement shouldn’t be a gamble. Workers should be able to count on a steady lifetime stream of retirement income to supplement Social Security.
Adequate Income. Everyone should be able to have an adequate retirement income after a lifetime of work. The average worker should have sufficient income, together with Social Security, to maintain a reasonable standard of living in retirement. ***
Shared Responsibility. Retirement should be the shared responsibility of employers,
employees and the government.
Required Contributions. Employers and employees should be required to contribute a
specified percentage of pay, and the government should subsidize the contributions of
Pooled Assets. Contributions to the system should be pooled and professionally managed
to minimize costs and financial risks.
Payouts Only at Retirement. No withdrawals or loans should be permitted before
retirement, except for permanent disability.
Lifetime Payouts. Benefits should be paid out over the lifetime of retirees, and any
surviving spouses, former spouses, or domestic partners.
Portable Benefits. Benefits should be portable when workers change jobs.
Voluntary Savings. Additional voluntary contributions should be permitted, with
reasonable limits for tax-favored contributions.
Efficient and Transparent Administration. The system should be administered by a
governmental agency or by private, non-profit institutions that are efficient, transparent, and governed by boards of trustees that include employer, employee, and retiree representatives.
Effective Oversight. Oversight of the new system should be by a single government
regulator dedicated solely to promoting retirement security. Xxxvii
Quite simply you are talking about a mandatory government controlled retirement plan where your money will be commingled and managed by the government for your own good. Of course I have said all along it means nothing but US Treasuries in your retirement plan because they know better what is good for you, and oh gee it just so happens it also happens to help finance the debt.
Politician’s are playing the hokie pokie. They put their left foot in- there have been quite a few articles over the last 6 months talking about government takeover of your retirement plan in one form or another. They have come out of government think tanks, congressional hearings etc. It’s like sticking your left foot in and you see what kind of reaction you get, then you take your left foot out and tell everyone we really aren’t going to tell you you can’t own gold in your retirement plan anymore or you have to purchase only treasuries. It was just an academic exercise in trying to figure out what is best for you. It’s kind of like a fun party game for kids, the hokie pokie with your retirement plan and your future. No one gets hurt, just play along and we’ll all have a good time…….
Liberate your IRA or retirement plan! Take it offshore for privacy, asset protection and greater investment diversification while you still can.
Larry C. Grossman, CFP®, CIMA®
727-784-4841 727-784-6181 Fax