The Collapse of Retirement Funds

Article Summary

John S Veitch
The Network Ambassador

We have all been encouraged to save for our retirement. The whole notion of putting money away for a rainy day, is faulty.
When people leave the work force they still need to have income. That income must come from the economy at that time.
You can't shift the income from the present to the future, all you can do is try to "buy" assets, and hence the right to sell those assets in that future market.
There are no guarantees about how that will work out.
In a housing boom, too much money is invested in relatively unproductive assets called houses.
In consequence, debt rises to high levels and the real productivity of the economy falls. By the time the boom bursts, the damage is done.
The houses exist, but now they are worth less than it cost to build them. At the same time, the values of other assets shares and bonds are also falling.
If you are going to "retire" you need to live off the sale of the assets the retirement fund purchased on your behalf.
You can't be sure of generating retirement funding in the future by buying bonds, shares or real estate.
Some companies have also tried to limit their pension liability.
Prudent companies that have substantial assets for future employee retirement funding can become targeted for takeovers.
The company may have acted in good faith, but others may see the assets as "ripe" for picking.
The 2009 Depression may have the effect of wiping away most of the retirement savings people have.
A retreat to GOLD is suggested by some. If that was to become a general pattern of behaviour it would deepen the recession.
It is my own view, that even if you or your retirement fund, build asset, those assets still have to be sold on tomorrow's market.

If you need the original article it's here.