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US Government To Decide How Much Is Enough For Your Retirement
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[Editor's Note: The following post is by TDV Editor-in-Chief, Jeff Berwick]
Welcome to the new US. Socialism always has the same predictable process. Once the government collectivizes a sector then the politicos and bureaucrats get to work on "improving the system". In a private enterprise, that'd mean offering more to your customers for a cheaper price. In government, it is always the opposite, finding ways to reduce benefits for their "customers".
This is why Obamacare is and will be a disaster to anyone interested in having quality medical care and choice in the US. Once the government uses its force to gain a monopoly on a sector like medical care then all of a sudden it now becomes everyone else's business what you do with your own body. You smoke? You should be stopped! Don't wear a seatbelt? You should be fined. Why? Because we are all paying for each other's medical care and so it now becomes everyone else's business what you do with your health because it could potentially cost them more money.
The same has been happening since the US government has had a multi-decade long monopoly on retirement savings (IRAs). Since they get to make the rules they get to decide just how much is enough for your retirement and that is exactly what will be happening next week when President Obama will be releasing his budget plan which will limit how much a wealthy individual can keep in those tax-reducing IRA plans and other retirement accounts.
According to a senior administration official, wealthy taxpayers can currently “accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving"...and of course in the communist administration's eyes, that's a real shame. The job of government is of course to "level the playing field" by stealing from and putting up obstacles for those with "too much."
What is the "reasonable amount" that he thinks is enough? The numbers being bandied about seem to indicate $3 million. Sounds like quite a bit, right? Well, let's look further at the proposal.
"The budget would limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million in 2013."
So, according to them, $205,000 per year is sufficient and people should not be allowed to have more than that in retirement savings. But, remember, disbursements from an IRA are taxable, so that $205,000, if you lived in any number of states where total income taxes are over 50%, very quickly brings that number down to around $100,000 after theft... or tax as they call it. Of course, that is just the beginning of other payments to the state. Your average person with a $3 million IRA probably lives in at least a $1 million house. If that person lived in New Jersey where property tax averages 1.89% of property value, then you can take another $19,000 off of the remaining $100,000 for property tax payments to rent his own home.
Of course, there will be numerous - countless really - other taxes paid over the course of the year... gasoline tax, cigarette taxes, alcohol taxes and numerous others. But, even without including those we are already below $7,000/month.
But here is the real kicker. If that person did take the $205,000/year annuity, their retirement funds would only last them fourteen years. Of course, some may state that they could and should be earning a return during that time which will extend it.
But your average person who owns mostly 2% paying dividend stocks or 2% paying Treasuries is actually losing nearly 10% per year to monetary inflation. The US central bank's current rate of money printing - which does and will turn into price increases - is over 10%. If they are losing 8% per year on that $3 million then it will only be ten years before that $3 million is actually only worth $1.3 million in real dollars.
That $205,000 per annum, at today's monetary inflation rate, also will only be equivalent to $90,000 in ten years time. After all the taxes to be paid that person would be likely eating cat food just to survive.
These are the wonders of the American Dream today. It is turning into a nightmare. They have you coming and going from all sides. And then, if you manage to survive all the taxes and inflation, whatever remaining money you have left will be mostly gutted by the death tax. Yes, there is a tax to die in the land of the free. And don't try to commit suicide either. That's illegal.
This, of course, is the warm up for big confiscation of retirement account money later on... a topic that has already been discussed openly in Congress. I can't understand why anyone would put their money in a retirement vehicle under government control. That's like putting your child in a cage full of lions for safekeeping.
A much better option would be a self-directed IRA like the one we offer here at TDV. Also, did you know that you can buy real estate with your IRA? A good option would be real estate in another nation-state since the US government would have a very hard time confiscating that. You could invest in an income-producing condo in beautiful Acapulco, for example...or you could buy investment property in our burgeoning liberty-minded community at Galt's Gulch, Chile.
You could also invest in precious metals in a self-directed IRA and get a significant amount of them into jurisdictions that are much less likely to collapse in the coming years (for more on doing that, see Getting Your Gold Out Of Dodge - free to TDV subscribers). And it wouldn't hurt to take some of those savings and invest in a foreign passport in a place that doesn't view your assets as their own.
The central planners in the US and most Western governments have and will decide how much is "enough" for you to have and if you manage to still have significant assets after that, they'll continue to whittle them away via taxation and inflation. It's all easily predictable as this is where things always go once things are socialized or collectivized.
As Winston Churchill said, "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."
We don't suggest you wait much longer before removing yourself and your assets from a system set on ensuring the equal sharing of misery.
Anarcho-Capitalist. Libertarian. Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.
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