Is government at the state level really concerned about your retirement or are we about to see a robbing of Peter to pay Paul incident. What is the real reason states want to get involved in your retirement?
There is no question a retirement crisis is coming. 1/3rd of Americans have nothing put back for retirement. 60% of American workers have less than $25,000 in savings including cash and retirement assets. There are so many dynamics working against Americans when it comes to retirement. So, the Federal Government and State governments get involved.
This past week President Obama rolled out his MyRA retirement plan nationwide. Touted as a starter account for retirement, it provides a means of saving without any minimums or investment fees. I would hardly call a plan that allows for you to save any dollar amount into a Treasury bond fund that might average 1 to 2% going forward a retirement plan. However, it could make a good savings account. The word retirement should not be even remotely attached to this plan. Thus far, this is the federal government’s answer to the future retirement crisis.
How about states stepping in? The State of Illinois is going way over to the opposite end of the spectrum with their socialist styled plan. Starting in 2017 they are requiring businesses of 25 employees or more without an employer retirement plan to deduct 3% from employee paychecks forcing them to save money into a state run investment fund. Of course, the employee can opt out. After all, they don’t want it to appear too much like socialism.
The state of Illinois is the closest state to going bankrupt. They have a pension crisis on the horizon. They are the purest example of socialism in the country. That of course is why they are going bankrupt because socialism doesn’t work. I find it interesting that they are going to create massive amounts of cash-flow into a state run investment fund (i.e. the state bank accounts) through employee deposits at a time that they desperately need money. It would appear to me that they are taking a page out of the federal playbook with social security and robbing Peter to pay Paul. How confident would you be in a state run investment fund managed by a state that is about to go under?
The government wants you to believe they are there for you with solutions. Look past the marketing and the hype and you might just be looking at a big money grab. Before investing into any type of investment program government or otherwise, make sure that you are putting money back into something sound. Any of these government run programs look like a way to take future dollars to fund current expenses.
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