Retirement Planning Forty Years ago.
The Smart Retirement Plan for Boomers
Forty Years ago, even less than that, if you were a frugal and smart person, you had some type of Retirement plan. And, often, these were savings accounts, funds, IRA‘s and eventually 401k’s, among others, all of which offered you the option of Deferred Taxes when you drew your money out after you retired.
Along with all of your other company benefits, if you were lucky enough to have the extra income, you were allowed to put a certain amount of your income into an IRA or 401k which are government approved and tax deferred savings plans.
These retirement plans were, what our government, our employers, our bankers, our investment counselors, even our friends told us, were the THING TO DO!.
And, I did it what everyone called the smart thing to do! What a great sounding thing, it seemed, at that time!
I was also told, by my employer that my company medical insurance would cover me until I reached the ripe age of 65.
You see, I was told that, at that point, my Medicare Insurance that, by the way, I had contributed an enormous of money to each year of my career, would take over and my company insurance would, then, be cancelled.
I asked why, because I had worked all of those years with my company Insurance, and why couldn’t I keep it for my Golden Years?
Well, Silly Man! Because Medicare would be my primary Insurance carrier, and my company Insurance would be redundant to my new Medicare coverage.
Being a trusting soul, I plodded along, working those long hours that my employer required of me, and putting away a little cash whenever I could, for those little luxuries I would want in my retirement years.
Doing this, I was told, I could live the Good Life when I retired, with Social Security and Medicare paying my basic bills and Health costs while my Savings would be there for those extra luxuries when I needed or wanted them
Oh, Yeah! I was on track in my quest for Retirement Nirvana! And, by the way, those deferred taxes were nothing to worry about!
I was told that this was because I would not be working at a “Real Job” anymore and my real income would be very low.
With this lower income, the taxes on what I would withdraw each year, would be so low, as to be negligible. Nothing to worry about! Boy was I set!
But, as I grew older and closer to my retirement age, something started to smell funny, whenever I looked at my iron-clad retirement plan.
The Raping of Social Security and Medicare
The Raping of Social Security and Medicare Benefits for Boomers was a subtle and devious thing, perpetuated by politicians who cared nothing for the future of America, or a whole generation of Americans.
Whiile our generation were working away, with our hopes and dreams for our retirement years, You know the old adage, with;
Our Eye on the Ball,
Our shoulder to the Grindstone, and our
Hands on the Wheel,
While we were keeping the country running, what we didn’t watch was the way our government was slowly but steadily raping our financial future.
Our Congress was slowly placing newer and newer limits on our future SS and Medicare benefits over time. they did it with all of their little amendments, they were happily and insidiously stuck at the end of the other bills and laws they passed.
Each of these changes slowly chipped away at my and my peers’ futures. And we just kept on working with our delusions of retirement security.
Just like the Snake Oil Salesman, who, while grandly telling and showing you one thing, was at the same time, smoothly slipping other things past you; our Congress was doing the same thing to us with those little amendments and additions to Bills that were literally stealing our rightful future benefits from us.
First, and most importantly, they raped the Fund that we all contributed our monies to for our retirement and left us an IOU.
An IOU from us to us.
Even a Snake Oil salesman would be embarrassed by some of the things that our supposed representatives did to us, behind our backs, while we worked on towards our retirement.
Our ancestors fought for their independence against a government that, among other things, taxed them multiple times on certain items.
We Boomers, on the other hand, barely lifted our eyelids when our Congress started collecting Income taxes on Social Security payments.
We, the American public now pay; Income Taxes, Social Security Taxes, and Medicare Taxes, taxes on our savings interest, Stock dividends, whole life insurance interest, and more, not to mention what many of the states also collect, out of our salaries. Who knew it would come to this level of taxation before we even reitred?
Now, unlike the original SS plan, and the promises we were given about our future security, our government just keeps on filling their coffers with increasing taxes of every kind.
I, personally,consider this situation of our to be as bad as double Taxation, and it hurts.
It hurts because my original retirement plan never included the loss of an additional hundreds of dollars of what was my projected retirement income, to be stolen from me.
An IRA, by the way, that I had two plans for.
First, I planned to withdraw a certain percentage from my IRA each year for “FUN THINGS“, like; a little vacation, visits to the Kids and Grandchildren (that happen to live several states away), maybe a little cruise for the wife and I, and other such of the dreams of a future retiree.
Second, I was comfortable that I had enough money to pay for those CATASTROPHIC things that happen unexpectedly in life.
Things like; a new Furnace/AC or a new roof on the house, a new car when the old one was worn out, and such other “luxuries”.
These are all things that happen over to time to us or anyone else, and we need to be prepared for them, or we can get into serious financial trouble very quickly. Right?
Here’s the problem; the IRS wants their cut, and they want it without exception, and they want it the year that you take out any of your IRA money.
The Reality of Deferred Taxes hits YOU whe it’s too late.
So, lets say that you live in the South and your AC dies, or you live in the North and your Furnace dies. Or, some other major, unplanned expense rears its ugly head.
Anyway, lets use an AC, and I mean the thing dies, Kaput! So you call the repair guy, he eventually shows up in his shiny white truck, removes the covers from the unit and starts checking things.
Finally, not able to stand the suspense another minute you walk around the house and there he stands, at attention, his ball cap in his hand over his chest as he slowly says a prayer over your old unit.
He turns to you, forces a small tear from his eye, and proceeds to go through a litany of problems that cannot be repaired and suggesting that you need a totally new unit.
OK, I got a little melodramatic there for a moment, but let’s say you need a new AC; so you call around for the best deal.
And, BAM! It hits you.
Your old AC has died after 15 years of faithful service, and even though you suspected that you might need one soon, you had no idea of the present PRICE for a new unot!
Your old AC originally cost a third of what a new one costs today. And this inflated expense was never in your emergency planning. I mean, inflation? In the future? Nobody told me to plan for Inflation!
You know that you don’t really have as much in your savings as you once planned, because that ugly thing called inflation has already pushed your everyday expenses to the point where you can barely get by.
You have already given up many of the “Luxuries” that you once enjoyed, like;
- Instead of eating out at a nice restaurant, occasionally, you now go out to a fast-food restaurant, if you go out at all.
- Instead of playing a round of Golf on a nice course every week, you now use a coupon at a cheap course maybe once a month. And even this is getting hard to justify.
- Instead of going to the Doctor when you have a physical problem and getting it fixed, you now have to delay many of your trips because you have to pay your 20% that medicare doesn’t cover.
- And, oh yeah, you had to drop your supplemental insurance last year, when even though the price of everything went up, somehow the CPI stayed stagnant and you didn’t get any increase in your Social Security. So, you couldn’t afford that extra insurance expense anymore.
- Instead of eating a balanced diet including lots of Fruits and Vegetables and an occasional steak, you now eat canned foods along with lots more starches and fats in your diet, because they are cheaper. And, now it’s; Bologna, Hot Dogs and Hamburgers, not steaks for your meat, if you eat a meat at all.
- And, the belt tightening goes on and on and on!
So, you look at what you have to cover this new cost and the only thing you have left is your IRA. Your IRA and your withdrawal plan, that no longer supports the real expenses of a retiree is not the size it should be and you have been forced to take more each year than it will support.
You obviously just don’t have much in it, but now, you need to get some more money out to replace that bad AC.
So, here is where many Retirees end up with their IRA money. YES, they understood that they had to pay taxes on their IRA money when they took it out.
But, NO, they never dreamed that;
- The value of their IRA would shrink so quickly. The investors usually put seniors in low-risk investments that inherently grow slower than inflation.
- So many of the allowed deductibles that they were used to seeing thirty or more years ago would be removed, one after the other, from their taxes
- The costs of Food, clothing, and medical care would increase so much by the time that they retired.
- Congress would so dramatically attack the benefits that so many Seniors counted on for a safe future.
So, here you sit, pulling out much more of your IRA, than you ever dreamed you would need, for yet another major expense, and at the same time you have to pull out enough to pay the taxes that you will owe on what you removed, when next April rolls around.
A week later, you sit in your hot house, with your sick wife, eating a meal of the cheapest foods you can find at the store, and try to give thanks for what you have.
You choke up a little, thankful that you have taken care of a major household problem (this time), that they will be installing, now that you gave them your check.
But, you look at your future as a Retiree, and wonder, how long and how many more emergency situations will arise before you are like those other old couples that you see in the news.
- The ones without Heat or AC in their homes.
- The ones without adequate food to maintain their health
- The ones without that basic 20% that Medicare requires, so they don’t even go to a Doctor.
- The ones that are just ….. without ……….?
Because, you did what everyone told you to do. You worked your whole life, saving for your retirement and a little bit of the good life before you died.
Now, you just sit around at night, in front of your old TV and wonder about so many things that scare you.
Will you or your wife accumulate so many medical bills (you know your 20% of a cost that is increasing a a pace far in excess of any CPI (which is flashed in your face as a fair measurement of costs) that the hospital or a collection agency takes your house from you and puts you out on the street.
Will one of you die and the remaining one have to live on even less money when the other ones SS check goes away. Even though you had originally planned for that IRA money to be there for just this, now circumstances have changed to where you are using it up so fast, so early?
You sit and you wonder; What the HELL happened to my life and who did this to me?
Why Friend, Congress did it to us all, as they;
- put their blinders on and reduced the deductibles that the average American used for Income taxes,
- taxed and keept increasing taxes on our Social Security so that we get less and less to subsist on,
- pinched the coverage that Medicare provides down so far that more and more conditions are not covered at all.
- reduced the payments to doctors and hospitals to the point that many do not even want to take retirees, and the ones that do, push you through their office so fast that your head is spinning as you are shown the door.
So, yeah, take that extra income tax from me on my meager IRA dollars.
And, please, use it to subsidize “pickle growth” experiments, or use it to protect some damned snail in some creek out west, or just send it in large trailers to Afghanistan and other nations that hate Americans, to be divied out to the corrupt officials there.
Meanwhile, I, and my fellow retirees, along with the millions in our country without jobs, and the children that are not getting adequate food?
Why, we are happy to stand and stare through the containment fences our congress has built around us and watch our government say; damn the home-front, let’s spend these fool’s monies on the frivolous things that we love.
Tax my IRA!
My shrinking IRA that was sitting in a bank and available for loans to so many other Americans, for home improvements, home loans, car loans, etc. (any one of which would make a contribution to OUR ECONOMY).?
Please help me deplete it as fast as possible.
Then my wife and I (and many of my fellow retirees) can go onto the Federal dole as soon as is possible.
Then You can really take care of us; you the few remaining taxpayers, our children and grand-children, while you wait for us, the poor retirement planners, to all die off!
Isn’t that what you want to do?