Published October 01, 2012
The U.S. is technically bankrupt! This is a bold statement, but one which I believe is true. If you and I ran our households the way that congress runs the government budget, we would definitely be bankrupt.
How does the future look as it relates to the economy? We are probably headed into a recession deeper than the Great Depression of 1929. The Federal Reserve cannot continue to print the monies they are with current interest rates near 0%. The next bear market is just around the corner if you look at history and what governments do to work their way out of it. They raise interest rates, which causes inflation and causes the value of the U.S. Dollar to fall, as it has since 1971 when then President Nixon severed all the ties that the dollar had to gold.
It is my belief that gold prices have not gone up due to the value of gold, but to the devaluation of the U.S. Dollar. This will probably be the reason gold will continue to rise on the world markets. If you do not believe me, the value of what you could purchase with a dollar in 1870, would cost in excess of seventeen dollars today. Gold prices have risen in the past decade from approximately $250 per ounce to over $1550 per ounce as I write this article. So, how does this affect your retirement? And what can you do to help sustain the nearly three decades you will spending down your hard earned retirement assets and not be working.
The growing debt problem we face in America that many other sovereign governments face, could likely get worse before it gets better. We may be faced with the permanent lowering of our standard of living. The housing market bubble will dim in comparison to what we could be facing.
With automatic increases in spending on social programs such as Social Security and Medicare causing the current deficits as well as the necessity to defend our country in the foreign wars of the past decade, our government began to lose revenues as people began to lose jobs due to losses of jobs in the housing and banking markets. The government began to pay out huge unemployment benefits as well as the depressed stock market losses created tax deductions instead of capital gain tax revenues from profit of sales of highly appreciated capital assets.
Over 40 percent of Americans entirely rely on Social Security as their sole income source. Originally, the Social Security program was designed as a supplement to other forms of pensions, savings and retirement income. When did we learn we no longer need to provide for our needs in retirement? This misguided judgment on these Americans’ belief has led to unfunded liabilities in the Social Security and Medicare systems; in the most credible circles it ranges from $80 to $100 trillion. Americans are continuing the saga as we continue to age. We Baby Boomers will have longer life spans and need to plan for longer retirements.
What are we to do? At The New Wealth, LLC, we have been helping clients create their own retirement plans since 1984. It requires creativity, as typical safe money assets are not putting out the type of returns needed because of today’s low interest rate environment. So how can you profit over and beyond inflation in today’s economy? INCOME PLANNING IS THE ANSWER. CASH FLOW!
While appreciation of assets is important, preserving capital is the single most important key to every successful retirement plan. Our most successful clients have three similar characteristics:
1) They never lose assets they have worked all their lives to accumulate.
2) They know where they put those assets and check them often.
3) They regularly review their portfolios and returns (at least once a year).
Our most successful retirees have placed a moat around their hard earned assets. They generate substantial cash flow to never have a personal recession or credit crunch. When future price increases come, they go to a different rung of the ladder in their retirement income plan, harvest previous profits, and put them into an increased income stream. These individuals have found out how to put a brake on the possibility they will lose assets due to economic conditions out of their control, affecting the value of those assets. Also, they create more income to supplement their needs in inflationary times.
The path to prosperity! Steady returns over an extended period of time. Warren Buffet has a saying about investments that goes something like this: “You only find out who is swimming naked when the tide goes out.”
Our economic world is forever changing. Stay informed about the changes and implement strategic plans by using a strategic partner from The New Wealth, LLC. We help you determine specific steps to help you sustain yourself in these economically uncertain times! You may reach the author of this article, Ron Morley, his spouse Diane Morley, or their experienced office staff by doing to www.thenewweathllc.com or by calling 1-800-444-7321. They can demonstrate how you can create high income that will sustain you through many economic challenges and do so at a risk-tolerance level that is customized to you!