"Blessed are the young, for they shall inherit the national debt"

By Paul Cross

Annuity National Brokerage Co.


Back in his day, President Herbert Hoover said, “Blessed are the young, for they shall inherit the national debt.” And so we did!

Franklin D. Roosevelt, during his inaugural speech, said, “…we have nothing to fear but fear itself.”

The boomers and seniors inherited the national debt. We pulled together, worked hard, saved when it hurt and invested wisely. We built the largest economy ever with free enterprise. We built large business, small business, we put people to work, and we built the largest housing districts ever, with bigger, more expensive homes.

We created the largest windfall of tax dollars for all levels of government, and our government couldn’t manage the windfall. Our politicians leveraged the tax dollars for their own political gain, creating a nation of great dependency. And now, we are drowning in a sea of debt.

So once again, blessed are the young, for they shall inherit the national debt — the largest national debt ever.

So, what can we do? What can retiring boomers and seniors do to help the young rise up out of the state of dependency and once again rise to the challenges? To regain our status as the nation of liberty, freedom and justice with free enterprise?

The answer

Share the principles of wealth accumulation; it’s something everyone should leave as a part of their legacy.

Here's a summary of the three simple rules of wealth accumulation:

Rule No.1 — Learn to live on less than you earn.

It’s that simple. Break the habit and stop borrowing money to spend money.

We can each live the rest of our lives in either prosperity or in recovery — financial recovery, that is.

“The chains of habit are generally too small to be felt until they are too strong to be broken .” — Samuel Johnson

Rule No. 2 — Save 10 cents on every dollar.

Convert at least 10 percent of everything you earn into capital and never, ever touch your capital until its annual earnings exceed your annual income. So many people say, "I get it, but I can’t start now. I have overdue bills and my car needs repairs.

So what? You will always have bills to pay and something will always need to be fixed.

“Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not.” – Thomas Huxley
Rule No. 3 — Keep only emergency money in bank CDs and money markets.

Not only is the interest therein taxable and reducing your gain, the taxable interest can place you in a higher marginal federal income tax bracket. And in some state income tax configurations, it can cause you to pay more income tax on your hard-earned income. Search out tax-advantaged accounts.

The secret to wealth accumulation: Pay yourself first.

Convert 10 percent of everything you earn into capital and synergize the growth of your money with tax dollars — not with risk — and then pay bills and spend what’s left. It simply doesn’t work any other way.

The magic of wealth accumulation is the compounding effect of compound tax deferred interest over periods of time.

The expressway to wealth accumulation is qualified retirement plans like IRAs, that let you tax deduct the savings with compound tax-deferred growth and other tax advantaged, growth-oriented savings plans like tax-deferred annuities and cash value life insurance plans.

I expect to spend the rest of my life in the future, so I want to be reasonably sure of what kind of future it’s going to be. That is my reason for planning.” — Charles F. Kettering