Retirment Plan Safe?
Once upon a time there was a
man named Joe who decided he wanted to be a fisherman.
He went out looking for work and found a job on a fishing
boat. Joe was very dedicated and hardworking. He planned
on working on the boat the entire day. After all, the
boss had promised extra incentive for those who would.
During the middle of the day his boss came to him and
said, "Joe, you're a terrific employee. I can provide
you food and shelter while you're on the boat, but I'm
not going to be able to pay you that extra incentive
at the end of the day. However, here's a net. Throw
it out there and hope for the best."
So Joe found a good spot to the side of the fishing
boat and threw out his net. Lucky for him, he put out
his net in a place full of all kinds of fish. Periodically
he would look over the edge at the net and was pleased
that the amount of fish was growing.
Finally it was time for the boat to return to shore.
Joe started to draw in his net when he noticed something-all
of the fish were slipping out into the water! How could
this have happened? Everything seemed to be going so
well. But upon closer inspection, Joe realized his net
had a very large hole in it. Joe had not thought to
check it before he threw it out, because Joe really
didn't know that much about fishing. Now Joe had to
go home, empty-handed and hungry. As far-fetched as
this little parable may sound, it's not too far from
the truth when it comes to retirement, at least according
to several key people in the finance industry. You see,
we are no longer in the age of pensions. We don't receive
a monthly paycheck at the end of our working years (that
extra incentive that was promised Joe). We live in the
age of Employee-Funded Retirement Plans, also known
as 401ks, IRAs, and Roth IRAs. We are expected to provide
for our own retirement (here's a net; hope for the best),
which would be fine if we had some idea of what we're
doing. But, alas, we don't, and most of us failed to
check our net before we threw it into the stock market.
Yes, the stock market. Investing in 401ks and IRAs is
investing in the stock market. Most people don't really
know how to invest in the stock market, but they think
they're doing a pretty good job of "fishing", as Robert
T. Kiyosaki, author of the Rich Dad, Poor Dad series
of books, explains in his book Prophecy: Why the Biggest
Stock Market Crash in History Is Still Coming…and How
You Can Prepare Yourself and Profit from It!. The problem,
as he and other financial leaders see it, is that the
stock market growth is being propelled by the numerous,
albeit investment-ignorant, Baby Boomers, all desperately
investing in order to "save something for retirement."
The law that allows this, the Employee Retirement Income
Security Act (ERISA), is, at least for now, fatally
flawed-and here is where the hole in the net comes into
play. ERISA forces people to start withdrawing money
when they reach 70 ½ years of age. The first of the
baby boomers reach this point in the not-too-distant
That's a pretty big hole in the net, because we all
know that there are more baby boomers working than there
are workers to replace them. So what happens when there
are more people who are being forced to sell their stocks
and convert it into cash to live on than there are people
to buy that stock? The price of stocks declines (the
old economic law of supply vs. demand). People start
noticing that their portfolios are dropping in value,
rather rapidly. People get nervous. People sell. Stock
values decline further. The cycle continues until you
have a full-blown stock market crash. Sorry-despite
what you've heard, diversifying will not save you. No
sector will be safe. Everything you've worked so hard
to "save" in the stock market could easily be wiped
out in a very short period of time, as many people learned
in the stock market crash of 2000.
There are other factors that Mr. Kiyosaki discusses
in his book that could hasten this crash, but they will
not be discussed here. The simple fact is, most of us
have no idea what we're doing when it comes to "investing"
in the stock market. In fact, it's pretty safe to say
that we're not "investing"; we're trying to use the
stock market as a savings vehicle, something it was
not designed to do. At the first sign of major trouble,
most of us will turn tail and run, trying to "get out
"while we can.
However, all is not lost, but you must take the power
back into your own hands. If you are truly interested
in protecting yourself from this coming crash, you need
to get educated about investing, not saving. You need
a way to have residual income, regardless of what the
stock market does. Check out some of the Resources links
on this website to find books and other resources to
help you become informed. After all, your future is
at stake, and you don't want to go home at the end of
the day hungry and empty-handed.
© Simple Joe, Inc.
Chemain Evans is a quality control specialist for Simple
Joe, Inc., makers of the popular Simple Joe's Expense
Tracker PC software. Expense Tracker is a quick and
simple way to keep track of your expenses and stay within
your budget. Expense
Tracker is ideal for tracking personal, business, home
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