Retire with Dignity

I think one of the goals in retirement planning is to be able to retire with dignity. So what is dignity? According to the definition provided by Mirriam-Webster it is “the quality or state of being worthy, honored, or esteemed”. In other words, to retire with dignity is to retire with more than just the minimum needed to get by. Here's a stat that might surprise you: Nearly half of our nation's 41 million seniors are economically vulnerable, meaning their income is less than two times the supplemental poverty threshold. Benefit cuts to Social Security and Medicare would severely impact these seniors' ability to afford health care, food and other basic living necessities, according to a new Economic Policy Institute (EPI) study.

With all of the advancements made in our society, we are faced with a concerning problem; dismal savings rates, longevity increases that might lead to people spending more time in retirement than they did working, and a lack of financial education and literacy. There is an elephant in the room and we cannot ignore it anymore. We must create a national awareness and initiative to change the current retirement planning models used today.

The reality is that we have a retirement crisis. After a lifetime of hard work, people deserve the opportunity to live their retirement years with dignity and financial independence. But for most of the middle class, this dream of a safe retirement has become a nightmare. This nightmare will impact not only the retirees, who most likely will outlive their retirement savings, but their family members who will have to bear the burden since our government is incapable of providing decent retirement with the mandatory taxation of our wages to fund Social Security which is now bankrupt. Many analysts and lawmakers have pointed to 20 years of alleged solvency as an excuse to delay meaningful Social Security reform. However, if history is any guide to future solvency, the Social Security program could become insolvent much sooner than 2033. See also the report issued by the Social Security and Medicare Boards of Trustees. We do not have Social Security, we have Social Insecurity!

As older Americans transition out of the workforce, either voluntarily or involuntarily, many will find that they cannot afford basic living expenses. They will be forced to make the difficult choice between putting food on the table and buying their medication. The retirement crisis will put an enormous strain on our families, our communities, and our social safety net. We must focus on saving and developing true wealth and stop playing get rich quick gimmicks, stop hoping that the government will take care of us during retirement and stop playing the stock market casinos. The financial advisory industry has spent a lot of money and time to make Americans investors, instead of making them savers and truly prepare them for their retirement years.

I think this is one of the most important social and public awareness and transformation of our society. Regardless of who you are, where you work, or what title you hold, it is your responsibility to share this awareness campaign and through this process we will transform our retirement process and savings and achieve retirement with dignity.

Tax Preferred Retirement Plan Possibly Being Eliminated

The leaders of the Senate tax-writing committee are trying to reform our current tax system by putting every tax break embedded in the tax code up for review – including retirement-savings incentives. Nothing wrong with this, I personally think that there are many tax breaks that are in fact a waste and should be eliminated to help in increasing revenues.

 

However, I question if putting tax preferred retirement plans in the chopping block is a smart idea from our beloved Senators. I am in favor of a fairer tax code that promotes economic growth. However, will eliminating the tax deferral status provided to retirement plan accounts address this goal? I am not convinced. 
We must be keep in mind that the tax breaks for retirement plans are in reality tax deferrals instead of permanent tax write offs. Therefore, workers who put money into retirement plans will have to pay taxes on the funds when they're withdrawn in retirement.Should they be lumped with all of the tax deductions and credits currently overloading our tax code?
I think that we must promote all forms of financial independence now more than ever, instead of creating more dependency in government subsidized programs. Americans should be encouraged to save, specially for the older years, and if there is a tax incentive that makes sense to me is this one. We provide tax breaks to move jobs out of United States, allow companies to defer U.S. tax on their foreign income, and allow companies to siphon profits they earn in the U.S. to overseas subsidiaries, all of these tax incentive are destroying our nation. We have bigger problems than the tax preferred treatment of retirement plans.
I believe that without the tax deferral incentive provided to retirement accounts Americans would not be encouraged to save for their older years and increasing the dependency on being supported by the government. Why penalize good behavior?

Five Mistakes to Avoid Near Retirement

1. Trying to make up for lost time - if you have seen your retirement portfolio reduced and feel tempted to take unnecessary risk to make up for losses, resist. With the recent surge in the stock market you may think that is time to invest aggressively to make up for lost time, right? Keep in mind that a more aggressive allocation gives you the potential for higher returns, lower returns and negative returns. An agrresive allocation does not guarantee that you will meet your retirement goals, it could help, but it's far from a sure thing. Before increasing investment risk, consider options that will deliver a more reliable outcome: like working longer, spending less
and saving more.

2. Avoiding tax planning - One of the best investments you can make is tax planning. Meet with your tax professional to design projected tax liabilities during your retirement years and make decisions that can help you reduce the taxes. Developing a solid retirement planning now
can make a big difference down the road.

3. Claiming Social Security Without a Plan - Many Americans are potentially leaving dollars on the table due to poor planning when claiming their social security funds. A good financial advisor can help you determine when is the right time and how to maximize your benefits. While some people are simply uninformed, others are dangerously misled by the “conventional wisdom” surrounding Social Security.

Retirees often apply for Social Security benefits early then find themselves regretting the reduced checks for the rest of their lives. There’s a financial penalty for claiming Social Security benefits between age 62 and your full retirement age (66 for people born between 1943 and 1954, between 66 and 67 for those born between 1955 and 1959 and 67 for those born in 1960 and later).

4.Overspending - Many times you may feel tempted to buy that extra toy. As the economy improves you may feel that you need to show it (aka "wealth effect") and it can be a dangerous thing. Increases in your retirement portfolio because the market did well last year doesn't
mean there's now room for the latest model car — unless of course that was part of your original plan. 

Many people fail to adequately address increased longevity. The reality is that we are living longer than ever. Outliving ones' assets should be a primary concern when envisioning
the type of retirement lifestyle that one desires, and then to plan accordingly.

5. Assuming Medicare Covers all Your Health Care Costs - Assuming that you wont have health care expenses during your retirement years because you have Medicare can lead you to a rude awakening. You should estimate that Medicare will cover about 50% of your health care expenses in retirement. Also, you should not overlook the possibility for long-term care. And I'm not talking just insurance policies, though these may be important depending on your financial situation and disposition of assets. Discussions among family members are especially important ahead of time, because the emotional and financial hardships of a long-term illness can be devastating.

5 Insurance Policies To Avoid

Fear of the future and uncertainty is one of the best selling tactic used by insurance sales people. Insurance companies understand this fear and use it against you. Before I go any further, I will tell you that insurance must be included in your financial planning strategies. The key is to chose the correct insurance for your situation.

Insurance is about transferring risk - risk that you cannot take or do not want to take. Unfortunately many people waste money on insurance products that they do not need and never will use. Here I share five insurance products that you should avoid:

• Extended warranties - how many times when you go to the electronics store you are asked to buy an extended warranty. These type of policies are rarely used, particularly on small items. If you purchase a product from a reputable manufacturer, must likely it will work as advertised. So do not take the bait!
• Flight insurance - This one is completely unnecessary. Your life insurance policy should already cover you in the event of catastrophe. If you are not certain and you travel a lot, contact your insurance agent.
• Accidental death & dismemberment (aka AD&D) - Unless you are a driving calamity (constantly involved in car accidents), the use of this policy would be near zero. The coverage provided by these policies are covered by most of the reputable health and/or life insurances. Also, the manner these policies are written makes it difficult to collect.
• Mortgage life insurance - they pay off your mortgage in the event of your death. A valid concern, the desire to avoid leaving our families with debt burden. However, you accomplish this through other methods in your financial plan. If you still want to have an insurance to specifically address this concern, then go for decreasing term insurance. 
• Credit card insurance - another money waster, this one pays your credit card bills in the event you cannot pay. Interesting concept. I have a better idea, avoid running your credit cards and becoming a debt slave. This way you do not need to worry about the credit card bills.

There are a variety of insurance policies to choose from, and they all cost money. While it is prudent to maintain certain levels of insurance protection, you must be careful in selecting the right coverage. The goal is to provide your family the greatest protection against risk at the lowest cost possible. Remember the more risk you transfer to the insurance company the more you have to pay in premiums. Always read your insurance policies and ask questions to make sure you understand what you are purchasing and understand its limitations.
 

Gold prices have hit two-year lows in 2013 – so what's next?

If you are "investing" in gold right now you are probably not happy. The gold ride for gold and silver has been brutal. Currently it is trading under $1,400 which is a 26% decline from September 2011 high of $1,900.

As I mentioned on an article I wrote August 2011, Gold Is Not An Investment, 

Gold does not qualify as an investment since it does not generate income by itself when we put our money and capital at risk to acquire it. Gold has no real intrinsic value, its value is the one assigned to it. I understand there is a market for gold, just like there is a market for real estate and stocks. Gold is raw material, it does not produce income, no dividends, no cash flow. Gold is a chunk of metal while a stock is ownership in a income generating company. The performance of a company can be tracked and projected, you cannot do so with gold. The price of gold is speculative. Commodities are regulated by offer and demand, the challenge for gold is that we do not know how much gold really exist therefore the price assigned is speculative, thus it is not an investment. 


Right now there are a lot of people that are confused and wondering, What now?

The problem we have is the speculators and traders going around over-selling the idea of "buy gold now", which in turn it inflates the price and creates a bubble just like the one created for real estate. However, intelligent investors buy gold and silver to accumulate for the long term. They understand that gold is not an investment; it is money. Also, an intelligent investor understands that it is good to hold money as this world moves closer towards global bankruptcy and default.

You must stop playing the rigged casino where prices of precious metals are being controlled by a few by expanding or contracting the supply using ETFs. Ask yourself, why did the price of gold and silver took such a sharp dive last week? Some claim that "improved economic conditions", really? Others claim that the reason for the decline can be attributed to a report issued by Goldman Sachs last week that pointed to lower gold prices. 

When looking to hedge your money against the risk of inflation/devaluation you must be careful about doing so through the most popular gold ETF, or exchange-traded fund, known as the GLD. ETFs negate the fundamental incentive for hedging your cash supply since individuals cannot take possession of their investment or have it segregated or accounted for. Also, ETF is not an investment in actual gold, it does not promise that any gold is in its trust, and the legal structuring of the ETF makes it impossible to determine if its gold is being leased, as it cannot be audited. GLD’s own prospectus, states that there are no written contractual agreements between subcustodians and the custodian or the trustee, thereby making legal repercussions impossible should there be misuse or loss of leased gold. The prospectus also says that “failure by the subcustodians to exercise due care in the safekeeping of the Trust’s gold could result in a loss to the Trust." This means that if gold leasing is a component of the ETF and a default occurs, investors are extremely vulnerable and could potentially lose all their money if that metal is unable to be replaced. This is the reason why I recommend that the portion of your portfolio that you are holding in gold by physical gold. 

Is it possible that a small group of people are trying to manipulate the gold market to suppress the price of gold making illegal profits at the expense of ill advised investors who buy high and sell low. By suppressing the precious metal now an illusion of hope can be provided to the paper dollar.

There is one monetary principle that you must understand; gold is money, and the dollar is credit-of declining quality. So why do you measure your the "gains " in dollars? Why do you sell your gold for dollars?

Six Simple Tips to Develop a Savings Plan

Money is part of our everyday life. Money if used wise it becomes a great servant. However, when we allow poor money management to put a yoke on us and our family, we become the servant of money, and money is a terrible master.

One of the lessons we learned from the recent recession is that we cannot trust those in power to protect our investments and savings from the shaky hands of our politicians and the federal reserve. After being indoctrinated with the consumerism philosophy as the cure for all financial ailments learning to save money becomes a challenge for most families. It is important to know how to manage money efficiently to ensure healthy savings. It is the creation of a savings program that can help us sustain the stormy weathers that are ahead of us.

Before you start looking into an investment program, start by developing a savings program. Most of us have heard of saving money "for a rainy day", but many of us never quite get around to developing a personal savings plan. In our economic model where we focus on consumerism it can be difficult to make a savings plan a priority, but the longer we wait, the less opportunity we have to accumulate a healthy financial amount.


Here are six steps you need to develop a workable savings plan:

1. Determine a savings fund adequate to meet emergencies and achieve special goals. Develop your budget from the amount of savings you need to create a cushion your family needs for the rainy days and not from expenses you currently have. 
2. Add up your total income, including any funds you receive in addition to your earnings.
3. Figure out your total fixed expenses such as rent or mortgage, insurance premiums or car payments.
4. Estimate how much you need for day to day living expenses.  
5. Keep your savings funds separate from your operating funds.  This keeps the savings funds separate from the operating funds and you can see your savings account growing every month which provides motivation.
6. Make the savings systematic, for example you can establish a fixed amount every month  of $100 or you can establish a % of your gross salary.

Remember that you will grow richer each month as you pay yourself first. Good money management is more than financial formulas. It is controlled by the current events in our lives, so it needs to be modified as situations in our lives change. Do not be discouraged if initially your savings plan does not meet your goals. You may need to review your plan and identify the areas that need to be corrected, revise your plan and go at it again. This system works regardless of your job position and/or income level.

The Government is Watching; Every Breath You Take, Every Move You Make...

One of the reasons I started this blog was to share with you not only how to increase your wealth but how our wealth is stolen from us by the same people we hire to protect our wealth. Also, it is my intent to help people wake from their slumber and realize that the "American Dream" and
"American Safety" is turning into the American Nightmare and American Insecurity.

As I continue my studying and researching the history of the United States economic, finance, and tax policies the more I come to understand how our liberties have been violated and our freedom which we have fought so hard to achieve have been stolen. Our gold was removed from our currency, our right to bear arms is in danger, and very soon our freedom of speech can be controlled and blogs like this one could be banned. There was a time when we were
about liberty and freedom. However, the reality is that today our nation is going through a radical change. Those of us who love liberty and freedom must be watching our words and our backs. If you say the "wrong" thing on blogs you can be viewed as "terrorists" or "anti-American" and suffer severe consequences. You do not have the right to raise your children as you see fit. You do not have the right to privacy (many people live on a fantasy thinking that our emails, phone calls, and private transactions on the net are "private").

Just to give you a brief example, according to licensed private investigator Angela V. Woodhull, hospitals are increasingly using "guardianship" to strip elderly Americans of their liberty and to rapidly drain their bank accounts. Now this to me is the ultimate test to determine if our freedom has been stolen from us, a judge in Wisconsin has actually ruled that citizens do not have a right to grow and eat whatever foods they want to. The following is a short excerpt from his recent decision....

    1) no, Plaintiffs do not have a fundamental right to own and use a dairy cow or a dairy herd;

    2) no, Plaintiffs do not have a fundamental right to consume the milk from their own cow;

    3) no, Plaintiffs do not have a fundamental right to board their cow at the farm of a farmer;

    4) no, the Zinniker Plaintiffs’ private contract does not fall outside the scope of the State’s police power;

    5) no, Plaintiffs do not have a fundamental right to produce and consume foods of their choice;

When you see this type of invasion of the government in our private lives, we must wonder what happened to the "American Freedom". I don't know about you, but I don't want to end up living in a society that resembles the novel "1984" by George Orwell. 1984 was George Orwell’s chilling prophecy about the future (written in 1948). The novel is set in Oceania, where society is tyrannised by the "Party" and its totalitarian ideology. The Oceanian province of Airstrip One is a world of perpetual war, omnipresent government surveillance, and public mind control, dictated by a political system named "English Socialism" under the control of a privileged Inner Party elite that persecutes all individualism and independent thinking as "thought crimes". Behind the curtain there is a quasi-divine Party leader who enjoys an intense cult presence, but who may not even exist. Big Brother and the Party justify their rule in the name of a supposed greater good. 

Sadly, both major political parties of this country are part of this problem which is suffocating our country. Instead of protecting us against true enemies they have become our biggest threat. Instead of they protecting us against the true terrorist who may violate our freedom they have become the boogeyman and the thief of our liberties in the name of a "greater good".

Yes, we need security. However, this security must be established in a way that does not violate the liberty, freedom, honor or dignity of the American people. If the people in charge of providing us this security cannot accomplish this task without violating the human principles mentioned before, then they must resign and allow someone else to perform the task.