In Touch Financial—William Lenderman, III & Jerry Lohman-Financial Mentor
Email: WL3@whc.net / Website: keepingintouchfinancial.net/
Blog site: keepingintouchfinancial.com
“Experiencing Success One Good Idea at a Time”
A Brief Analysis of myRA
In the President’s state of the nation speech for 2014, he introduced the idea of the myRA account.
For several years I have been warning individuals that IRA’s and 401k’s would become increasingly dangerous for a number of reasons. This introduction of the myRA idea is yet another step in the direction of confiscation.
As the President describes it, the new myRA will be very much like a ROTH IRA. You will first pay taxes on money placed in the account, and then supposedly watch it grow to eventually provide a future retirement. If the President and the Congress have their way, all working individuals will be signed up automatically for thismyRA.
You must understand that these new myRA’s can be invested only in government bonds. This means that the public will be required to buy a significant portion of the government’s present debt as the Federal Reserve begins to back away from this same debt in the process called tapering. I’m sure all of you clearly understand that the federal government debt is now so large that it will never be repaid. Understand also, that government bonds not only hold a substantial risk of loss but also pay a very small interest rate. Another troubling aspect is the likelihood that, when an individual is holding the myRAdies, the government will inherit the money. In this way, a substantial part of government debt will be transferred to working people who are trying to save for their future.
At first,myRA is likely to be voluntary. This means that you will be automatically signed up, but you may be allowed to voluntarily withdraw from the program. The voluntary nature is likely to end quickly as people realize that this is just another government confiscation and respond by dropping from the program.
Present retirement accounts hold as much as12 trillion dollars in assets. You can imagine how tempting it is to confiscate these funds in order to eliminate a significant portion of the government debt which is now just short of 18 trillion dollars.
To put things in perspective, Social Security has long been a government program with the stated purpose to give security to people who aren’t able to save money for their own retirement. Social Security taxes have now been forcibly collected for close to a century. These funds have not been invested or saved. They have been spent on all sorts of government projects having nothing to do with retirement. I was personally notified several years ago by the Social Security Administration that benefits were likely to be reduced by approximately 35% over the next few years due to the rapidly increasing number of people who are becoming eligible to apply for those benefits and the substantially decreased number of people who are in the work force and actively paying taxes. As many wise men have predicted for decades, the Social Security program will eventually implode. Poof!
Beware! When governments find themselves in financial trouble of their own creation, they become desperate and begin to aggressively steal from the very population they are supposed to be serving. Since 2008, a period of six years, Argentina, Portugal, Ireland, Hungry, Bolivia, and Poland have all “pillaged” private retirement accounts to deal with government debt. Poland was the last of these to do so in September 2013. The United States Congress has been considering such a move for approximately 11 years as far as I can tell.
Constant government propaganda has convinced many of us to set money aside with the intention to delay taxes until retirement. These government programs deny individuals the use of their own money for their entire working careers. This forces them to purchase using credit, which makes them subject to pay huge amounts of interest. When retirement comes, the money will have less buying power. In addition, taxes at retirement are likely to be 50% or more. Furthermore, losses in the marketplace could very well wipe out a substantial proportion of retirement funds. For the few people who manage to actually make an investment profit during their lifetime of work, interest paid on purchases they are forced to finance will likely outweigh any profits they hope to make in qualified plans.
In summation, myRa will require double taxation. You will first be taxed on the money as it is earned. This money will be misdirected to buy worthless government debt. To make matters worse, you will be required to buy highly expensive and poorly designed health insurance. This is an additional tax.
It is critically important that every one of us take as great a control of our own resources as we can. Many of you –possibly a majority—may have resources available to you of which you are not presently aware. Using these resources properly, it should be possible, to not only create significant wealth quickly and safely but also to do it on a tax-free basis.
The French have a very apt name for government debt (bonds). They call it “papier hygenique.” I probably don’t have to translate the meaning of the term for you.
To emphasize the deceptive nature of many government programs, you will be interested in the following tidbit. It is illegal for a company to itemize unemployment insurance costs on a pay stub. This is done so that employees will not know how much money is being spent by the employer for this benefit on their behalf. This money amounts to a contribution workers might find unacceptable. Obviously, this money comes out of the employee’s paycheck. The result is another addition to the impoverishment of working individuals, resulting in constantly diminishing personal security.