A Woman's Perspective On The Times We Live In


December 6, 2013

As Goes Detroit, So Goes the Nation

     This is one of those subjects about which I wish I had been wrong.  For several years now, I have been trying to tell acquaintances not to count on their pensions and retirement vehicles.  But we Americans are so trusting in the financial wizards that we've entrusted our futures to, that we believe their empty promises and hear what we want to hear.  (I still laugh to myself when I think back to 2008, and our Edward Jones broker telling us "you need to be in the market for the long haul --- this is America; we will bounce back".
    But back in May of this year, Forbes.com was predicting "We are on the precipice of the greatest retirement crisis in the history of the world. In the decades to come, we will witness millions of elderly Americans, the Baby Boomers and others, slipping into poverty."
     Too many counted on the last three decades of so-called retirement innovations, most notably those promoted by the titans of the pension benefits consulting and mutual fund 401(k) industries.  We now know that 401ks will not provide the retirement security promised to workers.  In fact, Teresa Ghilarducci, a professor of economics at the New School for Social Research, estimates that 75% of Americans nearing retirement in 2010 had less than $30,000 in their retirement accounts.  A serious illness will wipe that out in a single heartbeat.
     As Forbes reported, even if you are among the lucky few that have a pension, you cannot rest assured that it will be there for all the years you’ll need it. Whether you know it or not, someone is busy trying to figure how to screw you out of your pension.
     And now the folks in Detroit are feeling that painful truth.  The civil servants and union members who never thought this day would come, are now finding out what happens when government entities spend too much money and can't keep their promises.  Basically, what happened is this:  the City of Detroit petitioned a Court for protection from their 100,000 creditors and was granted bankruptcy protection by the Judge.  An article on SHTFplan.com reports that unsecured creditors, such as pensioners and bondholders, will receive a $2 billion note for $11.5 billion in estimated debts — in other words, less than 18 cents on the dollar.  
     In essence, that means that the most vulnerable of those owed, the retirees who counted on that pension to see them through their golden years, will be the ones who will suffer the most.  Many of them will see an 80% decrease in the retirement funds they believed they’d receive until they died.  Add the uncertainty of their healthcare situation, due to Obamacare, and the future is looking mighty scary.  They are now facing the terrible truth that the magic spigot of imaginary money has been turned off.
     But when you look past the personal side of this Detroit bankruptcy, you realize that it is only the tip of the iceberg.  First it was Stockton, California; and now Detroit.  Waiting in the wings are East St. Louis, Illinois; Camden, New Jersey; New Orleans, Louisiana and Oakland, California -- all who have seen crime drastically rise as the city police force has been cut in an effort to stave off debt. 
     After the cities, we can expect the states that are in financial trouble to seek their own debt relief through bankruptcy.  And then, of course, there is the big Daddy of them all, our national debt.  We'd better face the reality that the Government will be forced to not only cut retirement benefits promised to federal employees, but will make the case that if they have to give up their retirement funds, you’ll have to give up your 401k, IRA or personal savings.  Think that can't happen?  Think again.... real hard!
     Congressional members have already been talking about a nationalization of America’s retirement funds, and when they are ready to do it they’ll pass the legislation just like they did when they seized 1/6th of our economy by nationalizing health care.  It's the only choice they will have!
     So, like I said at the beginning of this post, I was accused of being on the Crazy Train back in 2008, when I followed the logical progression of our national debt crisis.  Believe me -- I didn't want to be right, and it's not an argument that I wanted to win.  But I'm here to give the same warning I gave five, nearly six years, ago ... our future is not what you thought it was going to be.  Please plan accordingly! Get a second stream of income, stock up on food, and prepare for a rocky future ... Time is running out! That retirement or pension fund, and your 40l(k), are no longer the safety nets you thought they would be.  If the truth be told, retirement is a word that won't exist for many, while poverty may become the new reality.  Start swimming before this wave overtakes you.  You're going to have to save yourself!  

Ecclesiastes 7:10     "Say not, “Why were the former days better than these?” For it is not from wisdom that you ask this."

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