The ERISA apocalypse is coming soonArticle added by Karl Schilling on November 15, 2013
Ranked: #91 (744 pts)
In the most recent economic boondoggle, 401(k)s lost trillions of dollars as they were predominantly invested in the stock market. Were those losses shared by any of the Wall Street concerns or the Fed? That answer would be a resounding no.
The baby boomers have been sold a massive bill of goods. This started back in grammar school and continued right through college. This
myth was based upon certain principles that were geared to reward conformity and ultimately punish any pursuit outside the realm of the status quo. While this indoctrination was not transparent or even evident, it has clearly surfaced today and is being unashamedly enacted upon the coming youth.
The principles of financial conformity are as follows:
While some of these financial thoughts are reasonably good ideas, it has proven true that all financial strategies change over time and that
the changing of the times makes history and past trends meaningless. New pioneers are always seeking ways to improve financial returns and to create a new cycle in the free market enterprise system. When that system is artificially controlled by government intrusion, it puts the balance of order well out of whack.
- Tax deferral is always best. (This was a big lie.)
- Maxing out qualified retirement plans is your best move. (This was a white lie.)
- Diversifying your portfolio with mutual funds is wise. (This was a fee grab lie.)
- Keeping your money in the market is always best. (This was a commission grab lie.)
- Use leverage with low interest rates. (This was a banking manipulation lie.)
Today the “fool’s gold” is the belief that the stock market is an even-balanced game that can help individuals create wealth. It isn’t even
close; it is simply a modicum for institutions (banks, hedge funds, equity funds, etc.) to make huge profits while playing a totally fixed game. Wall Street continues to play a zero-sum game while passing all risk onto the individual investor. Look, the longer you try to beat the house in a fixed game, the more you lose. Of course they have to allow you a few wins in order to keep you coming back for more pain.
But I digress; the purpose of this article is to focus on the most dangerous scenario presently facing your and your clients' retirement. If you are one of the many who have monies in an ERISA-based retirement plan (410(k)s, IRAs, HR10, Keoghs, etc.), then you are sitting on a ticking time-bomb which the government fully plans to explode on you. How, you ask? In the most recent economic boondoggle, 401(k)s lost trillions of dollars as they were predominantly invested in the stock market. Were those losses shared by any of the Wall Street concerns or the Fed? That answer would be a resounding no.
Take a look at an excerpt from a 2009 U.S. News and World Report piece, Would Obama, Dems Kill 401(k) Plans?:
House Democrats recently invited Teresa Ghilarducci, a professor at
the New School of Social Research, to testify before a subcommittee on her
idea to eliminate the preferential tax treatment of the popular retirement
plans. In place of 401(k) plans, she would have workers transfer their dough
into government-created "guaranteed retirement accounts" for every
worker. The government would deposit $600 (inflation indexed) every year into
the GRAs. Each worker would also have to save 5 percent of pay into the
accounts, to which the government would pay a measly 3 percent return.
The 2014 budget proposal presented by the Obama administration
included a mandatory IRA for small businesses. This is exactly what the
Ghilarducci plan included. So get ready for the government to take control of
ERISA plans, just as they have on health insurance plans.
In fact, I dare say that the PPACA law was the precursor to see how the
American public would slowly accept government control of health insurance (not
simply health care). Just as the frog will slowly be boiled to death, the United States
public is sitting in the pot at this moment with mildly warm water. The solution
is simple, and yet it requires counterintuitive activity.
Firstly, ask yourself if tax rates will be going up or down in the future.
Take into account that the government continues to increase debt at an
unsustainable rate while also needing to keep interest rates artificially
low. Any increase in interest rates will require the government to go to the
only source of revenue is has: taxes. Therefore, taxes will have to
go up in the future and stay high for an indeterminable amount of time. Thus,
you are at the precipice of the lowest tax rates you will ever see in your
Next, ask yourself if you want to have full control over your money and
assets. Remember, the government has, at this point, a $17 trillion debt, which will be
approx $21 trillion by 2016. ERISA plans presently contain approx $18 trillion in assets. You
do the math.
And lastly, cash in the ERISA plans, pay the tax penalty and take full
control over your assets, then create a new investment strategy. Look into
using the value of cash-value life insurance with a percentage of your
portfolio, and then seek out liquid investments which spread over several
asset bases, including non-dollar foreign investments with tax favorability, and
hard assets such as gold, silver, platinum, etc. Refuse to invest in
any mutual funds. Use ETFs, which are immediately liquidm unlike
mutual funds, which can only be liquidated at the close of market. If you are
in a mutual fund that is losing ground, then there is no exit until the market
closes and they have hit whatever bottom in sight.
This is an extremely counterintuitive move, yet you will be kicking
yourself hard in 3-5 years when you are locked into a government retirement
account with no exit strategy available.
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