The Decline and Fall of the Retirement Empire"I have a pension and it'll have to be enough!" As a financial Advisor over the past 10 years I have often heard this statement. It was difficult 10 years ago to explain to future retirees why this was an impossible belief to hold. 10 years ago no one would believe the changes that would occur in our world view. Then, the economy ebbed and flowed, Bear and Bull markets were manageable. People just waited out the economic downturns. They didn't sell their stock, they held and kept all of their investments, many of which they themselves had purchased from their own jobs or were given to them as gifts from their parents.
Here we are 10 years later looking back at our retirement planning and the fallout effected by the stock market conditions of March of 2000, that changed the way we invested forever. We sold stocks, we no longer held and kept them for our lifetime. We realized the astute ideas behind exit strategies for selling stock, utilizing stop/loss strategies to protect the profits of our investments and questioned wisely, the usefulness of selling short or on margin.
Preparing for retirement 10 years ago the employee was often provided a future pension through his employer. This pension may have been provided strictly by the company profits at a time when business growth could be projected year by year. Or the pension may have included employee participation in the still fledgling pre-tax contributions to 401(k)'s offered by corporations to help the workingman provide for his own retirement.
Many people participated in the former pension because their employers provided the funding. Less took advantage of the latter opportunities because they either did not feel they could afford to contribute to the investment or they felt that the pension and/or Social Security benefits offered by the Federal Government would be enough to cover the lifestyle of their retirement future.
Either way it was certain that the employee had very little comprehension of the value of the pre-tax savings and the impact upon their future retirement lifestyle. Employers were also shortsighted looking only at the relief from having to provide an employee pension, not necessarily invested enough into the practice to assure the employee would take advantage of the benefit; and certainly not interested enough to assure the employees had options that would give them really good mutual fund choices and diversification into more than just bond funds or large cap growth funds.
Little did we realize that the pension would go away and that the pre-tax function for saving for retirement would be the mainstay of millions of Americans. A better understanding of how the 401(k) grows in relation to tax-deferred income, reducing income taxes and building a nest egg based on lifestyle needs, has improved the employees ability to recognize the importance of saving for their own retirement.
Now we need to protect our affluence. We need to keep watch over the economic impacts that will upset the continued prosperity and remain aware of the political moves that will affect the stock market. This is often difficult because of the hidden agendas of the political parties.
Some people believe that what is happening to our wealth through loss of pensions, diminishing Social Security for future generations, our current 401(k) investments and the governmental determination to spread the wealth around through taxation and distribution is considered part of the cycle of change which will somehow better the economic situation for all Americans.
Recognizing that to hold this belief means that people feel they can still control the costs and expenses of retirement by simply tightening their belts and foregoing the dreams of travel and hobbies almost inherent to the retiree. What a surprise to find they are now subsisting in a lifestyle that is denuded of the anticipation of living a better retirement life than the previous generation. The need to try to control your retirement economy begins with you, your saving, your spending habits and your debt. These are things you can control to give you the life you can expect as a retiree.
Market Gurus kept anticipating the return of the market after March of 2000. On September 11th terrorism began the decimation of our economy, societal changes from an industrial nation to a service industry as corporations outsourced more and more of our jobs overseas added to the job losses, and the economic impact of stock market underhanded graft and large investor control caused a continuing financial drag on our lives and prolonged the healthy return of our savings and our standard of living.
When I questioned myself as to how the economy would ever make a return to "normal" with increasing job losses in every sector and increasing unemployment and government takeovers by "stimulus packages," I began reading and researching. A few months later reading about the devastating impact of the American Civil War on the economy of the United States, I found the answer to the turn of the century wealth that brought our country back to prosperity after the Civil War and found that it was pretty much based on the Industrial Revolution and all of the industries that evolved so quickly because of it.
Today, we are a service-providing nation. We used to provide services all over the world and while we still do, as a Nation the services are provided through American Corporations by cheaper labor in outsourced countries that have raised their standard of living while ours has dwindled. Is all of the planned Socialization of America blamed on government policies and political issues designed to change voting habits, or on the cycle of change that will inherently make the United States of America a better place to live?
What I see is a return to a life with fewer opportunities for this generation to become more affluent than their parents through hard work, education and vision because of huge government spending and now even less interest in building new job opportunities. Our future will hold very little opportunity to travel domestically or to foreign lands because of the inability to afford the luxury of gas for your automobile or the exorbitant costs of flying and train travel. Staying home within a provincial, small town atmosphere will deny us knowledge of a better life beyond the borders and where soon you will, again, be controlled and told what to think, what to do, how to work, where to live, and expect nothing more from life reminiscent of the earlier era's when there was no middle class only upper and very low classes. History does indeed repeat itself, but I thought we were to learn our lessons.
Is it only for the conservatives and independents to learn the lessons while the liberals consider how they can make slaves of the lower class through socialism and demagoguery? Jobs have always been available in health care but today it is not in the higher echelon of Degree level Nurses but in the lower stratum of home care aides; not in the High tech industry of computer designs but designs developed by computers. While our government provided opportunities for jobs, now they own and compete for jobs against the entrepreneur, becoming the largest employer this country has ever had. Who will break up "Ma Bell" today?
Some people might say "Get over it! You have had a great life in middle class America, it's time now for the lower classes to move into your world." I'm afraid the only way this will happen is if we descend to the level of the lower classes through a loss of our retirement savings and the increase in taxes causing the demise of the middle class. Now there will only be two classes and history has repeated itself. I should have titled my article ...The Rise and Fall of the Third Reich... I mean Third Class...