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Retirement Plan vs Retirement Hope

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Some advice I have recently received for mine and the missus’s retirement plan is that I should relax and not invest in my Roth IRA as much as I currently am. This person told me that social security should still be around for decades and the government will make sure I get to see the money they took from my hard earned salaries. Something tells me they are going to be a great comedian one day. That was the third hardest I laughed in my entire life, I have no idea where they got their material.

Wait what? That wasn’t supposed to be funny? Was it meant to be a joke? It wasn’t? These people are professional financial experts? They are not comedians?

Social Security Is A Fading Retirement Plan

The idea that social security is fading is nothing new. Forbes states that the funding of social security may run out by 2034. The fact that social security states that only 75% of benefits can be given by 2035 does not help disprove their argument. Many argue that social security was never supposed to be a pension for income during retirement. I must have missed that page, and apparently so did millions because their plans for retirement were placed almost exclusively on the government. Much has changed over the last few decades when social security was created and now people are worried it will no longer be around.

People’s Hopes For The Future

Many say that social security will still provide decades from now. These people say that it is supplied by payroll taxes. As long as payroll taxes are around, they will always have social security. Once again, they are relying on the delusion that the government has all of our best interests in mind. They not only believe the government wants us to not work for decades of our lives and to enjoy a comfortable and mobile life, but that they are taking our money and being frugal with it. In addition, we expect our tax codes to be the exact same as a few decades from now. Even if the government had our best interests in mind, it is unlikely that will stay the same decades from now, heck even years from now.

But either way, you are entitled to social security since you made contributions your whole life, right? Nope, the government can refuse to pay you social security at all. In the case of Fleming vs. Nestor in 1960, the Supreme Court stated that the government does not need to pay citizens any social security. And Nestor was a member of the communist party who was deported, quite literally the government can do this to anyone who they do not like. In other words, YOU HAVE NO RIGHT TO SOCIAL SECURITY, WHATSOEVER.

So let’s see, social security takes our money puts it somewhere we have little knowledge about and little to no power to withdraw it, and does not promise any returns. I’d say this is a scam, but usually scams require some consent, this does not. I do not know what to call it.

The Three Legged Stool

I constantly hear financial advisers state that your retirement is like a three legged stool. Each leg can help hold up your retirement plan. One leg is social security. The other is corporate pensions, and the final one are personal retirement funds. Unfortunately, the pensions and social security are at least cutting what every individual is going to have in the future. Relying on these two to retire is not a retirement plan, but a retirement hope.

Don’t believe me? Ask literally anyone about what they plan to do with their retirement. Chances are they will be very uncomfortable and may even be angry that you asked. They would probably be more comfortable with you asking about their sex life (seriously though do not try that). That uncomfortable and angry feeling these people have is called inner chaos, which is rooted in uncertainty. I promise you almost everyone is a little uncertain about their retirement. You need to kill that uncertainty by making sure you have a retirement plan, not just some retirement hopes.

What You Need To Do

Almost half of Americans do not feel like they will retire comfortably when they finally hit old age. But why then do almost 80% of retirees feel like they will retire comfortably? As far as I see, most retirees change their retirement plans. Most do not go golfing near the beach every day nor drive classic cars. They settle down and realize that they do not need to get everything they want to be happy. Also, I think younger people tend to panic a little too much, myself included.

Another thing that I think changes is that people do more for retirement when they are older. The last thing most people think of when they are young is retirement, so more is done when you are closer to retirement, that is why every retirement plan ups the maximum contribution you can make later on.

You Need A Retirement Plan And Hope

As much as I hate to admit it, practically every retirement plan requires a good dose of delusional hope. Hope that the markets will keep rising. Hope that your prospects go well. You need hope that you can sell your house, much less for a value above you bought it for. You need hope that you have not planned to retire when the markets crash. But most importantly, you need to have hope that the world as we know it is present tomorrow, and a few decades from now.

In most of these cases you can have a good back up plan in hopes that everything recovers. If the market crashes, the most basic back up you could have is to continue working until the market recovers (only 20% of people around the age to retire were forced into early retirement because of downsizing in the 2008 recession so for most people this can be an option). Remember, on average the economy will recover in 18 months so you do not have to wait long. You can also look into making a business or look into other work, worst case scenario maybe you can consolidate with other members of your family.

Final Thoughts

Unfortunately, the government never seemed to have your retirement interests in mind. Although the ruling of Fleming vs. Nestor may surprise you, during the Helvering vs. Davis in 1937 the supreme court stated: “The proceeds of both the employee and employer taxes are to be paid into the Treasury like any other internal revenue generally, and are not earmarked in any way.” I hate to say this but social security is a tax, not a favor.

However, the global market is still the best place to invest and grow your money. You can still take charge of your retirement. Besides, do you want the government to have a large hand on your life? I hope I am wrong about whether social security will pay us in the future, but if not, keep your hopes up for retirement. The world is changing for better and not just for worse. In the meantime though, make a retirement plan to forge your wealth.

Author: Papa Foxtrot

Most of my life I was careful with money and learned where I should invest it. I was very lucky to have parents who taught me financial literacy when I was young. Unfortunately, I am very lucky because many people lack the financial literacy I know. The purpose of Forge Your Wealth is to teach people who are just starting out in life how to obtain their wealth or anyone who just realized they may need to learn more to handle their finances. I currently have a PhD in biochemistry, just started a job in industry (will not disclose where exactly for personal and professional reasons) and am currently married to the love of my life. I am one of the lucky few people in America who graduated with no student debts, my wife was not. Over the series of a little over 3 years we paid for our wedding with no debt and paid off her federal student loans.

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