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Monday, May 2, 2016

Now You See It ????????

Friday, September 12, 2008

Most of you can finish the line from the title of this story. "Now you see it, now you don't." It is an old magician's statement as he completes a "slight of hand" magic trick. One moment you see the object, the next moment it is gone. Somebody out there has been doing some "slight of hand" with our 401K's lately!

It seems like it was only a short time ago, that the stock market was flourishing. Actually, it was less than a year ago to be exact. Sometime last fall, the market topped out just above the 14,000 point mark on the Dow Jones. Everyone who had a 401K, or some other annuity investment was feeling pretty good.

Then the "now you don't" reared its ugly head. The market plunged week after week until it finally began to flounder in the mid 11,000 point range. That is a "now you don't" drop of just about 20 percent in the past year.

It was just a few years ago, that the administration in Washington, proposed that we begin to phase out the Social Security System. They wanted to let people have private accounts to put their money in, instead of letting the Social Security System take care of the money. I don't think I have to convince any of you now, what many of us thought back then.

Yes, it is a great idea to give citizens a tax break on 401K's and other retirement annuities. It is good in the long run for the economy and the future retiree. But for all this, the idea of scraping Social Security just doesn't make sense.

The markets will rise and fall. The economy will flourish and languish.

Like life, the world we live in is not a safe or secure place. That is why it is so important to our country to defend and protect the Social Security System.

It is not a perfect system. It often has to be adjusted and changed to meet future needs. Still, it is, and has been for the past 73 years, the backbone of retirement for our citizens.

There is one problem that most Americans are only vaguely aware. The Social Security Trust Fund, which is where the money for our future is supposed to be, has been periodically fleeced by our fast spending congress.

You don't have to make this a political issue. Both parties have been involved in this larceny. They simply cannot stand to look at the money that begins to pile up in the Trust Fund, without salivating.

Every politician tries to get his own district their share of the kill. Like animals in the wild on the Discovery Channel, these scavengers love to clean the carcass of Social Security.

If you are one of those workers who is putting some money into a 401K Plan, do not completely despair. There is a light at the end of the tunnel.

Unless you are really close to retirement, or have already retired, the problem with the markets will eventually turn around. Not only that, but while you have seen your account balance values going down, something else has been happening for the good. The people who manage your funds, are still buying investments for you. The prices are cheaper now, so when they do go up down the road, things will look a lot better.

I asked a friend who knows a lot about investments, what happened to all the money we have been putting into these IRA and 401K accounts. His answer was immediate and right on the mark.

The credit/real estate markets are to blame. Banks and other fund managers got tipsy over the rapidly rising real estate markets of the past few years. Home loans and home equity loans were advertised and sold everywhere.

Remember that commercial? The one where the family is trying to buy a home and they have all these papers to fill out? Then the company that was doing the commercial, shows their form, which is only one or two pages.

We sold a lot of paper to a lot of people, and now it has lost a lot of our money. It will take time to recover. The government just this past weekend, has come in to bail out the Freddie Mac and Fannie Mae systems.

It sort of reminds me of the savings and loan crisis of about 20 years ago. It just seems like every few years, we can't help ourselves. We loan too much money, on too little real value. Then the proverbial "ax" falls.

So here we are in a mess again. The markets are down, and everyone says we are in a recession. If there was ever a reason for our government to back, or bail out something, how about Social Security?

I have a problem with bailing out these lending institutions once again. If we keep on doing it, they are going to get used to it. Why practice safe and responsible banking practices? The government will come in and save us, if things get bad.

We have put too much time and money into our Social Security System to let it fail. We need to do whatever it takes to make it work. Retirement accounts are ok as icing on the retirement cake, but the "now you don't" scenario isn't something we want to have to depend upon!