When this first appeared in our research we couldn’t believe what we were seeing.
This analysis was conceived when we asked the question…What did people do with their money before IRA and 401k plans existed?”
We believe it’s where Americans were lured off track of how to save and protect their money from banks, Wall Street and the Government.
In looking at the failure of our retirement system, and the 10,000 baby boomers a day entering retirement and only half have enough money to last until they die, we asked the question where did we go wrong.
How The Triangle Works
Here is what we see…Take a look at the triangle
Down in the bottom left corner
We will call that 401ks, and IRAs.
Now before 1974 there were no IRAs and 401ks. But then the tax laws changed and through a tax deduction, the Government under the influence of Wall Street lured Americans to take their money out of what were safe places, and through the lure of a tax deduction to put it into risk filled Wall Street retirement accounts.
So now, money in these accounts is locked up for over half a lifetime.
And yes there might be losses, but there are certainly fees in Wall Street plans, over $150,000 in fees according to Demos.org.
Top of the Triangle
But let’s go back to where we went wrong with money in America.
Now the average working American family locks up 90% of their liquid savings in retirement plans like this. Because of that, they now have to go to banks to finance their life.
Cars, homes college educations, etc. Because they don’t have access to their own money, American’s will shell out over $500,000 to banks during a lifetime for financing costs.
Now think about this for a moment.
Would you ever buy a car, sign a contract and drive it off the lot without knowing the purchase prices to the penny?
Would you ever buy a house, sign a contract and move in without knowing the purchase price to the penny?
Of course not.
No sane person would ever do such a ridiculous thing.
But think carefully.
Now we get to the bottom right hand corner of the triangle:
That is the government. In the final years of life, when it’s time to take money out of IRAs and 401k’s, the government holds a blank check against those accounts.
Americans have been lured into purchasing one of the largest financial commitments in their lives, and the charge to use it, has not even been determined. Meaning, the government has not even told us what they will charge us to pull our own money out of these accounts.
If you have IRAs, or 401ks, or if you want to leave these accounts to your children, think about what I just said.
Seems like the government has a plan for your retirement assets.