Retirement, Is Government The Only Way?

The question should be asked, “Is Government The Only Way” to secure money for retirement?  To answer this question, we need to take a look at how Social Security and Medicare came into being…  And how did people provide for their retirement prior to Social Security?  What about Medicare, passed into law in 1965 by the Johnson administration?  And how secure are these programs going to be in the future?  Something to think about, especially if you are 50 years of age or younger today.

At one time, people saved and invested their money to provide for their retirement.  Usually with a combination of stocks, bonds, and savings accounts.  Back then, banks generally paid 3% interest on savings accounts, which with compounding, effectively “grew” your money in the account over a period of years.  Then came 1929 and the crash of Wall Street.  Stocks became almost worthless with time.  Corporations that had issued bonds also took a severe “hit”.  In some cases the company simply went out of business which made the bonds themselves worthless.  A modern example of this was the fate of bondholders who held GM and Chrysler corporate bonds and/or stocks.  In effect, when President Obama “bailed out” the two automobile companies, the bondholders lost their assets while the crash of the stocks of these companies did the same thing to those who held GM or Chrysler stock.  Proof if any is needed that you should never put all of your assets into one “basket”.  Those who had spread their assets over a number of companies did take some loss, but nothing that they couldn’t recover from with time.  Quite a bit different from the Great Depression where there was a massive failure of businesses and a lot of banks also “crashed” (went bankrupt and closed their doors for good).  Back then there was no Federal Deposit Insurance Corporation as we have now to make things “good” again.  Still, there is a limit to how much even the FDIC could do in a true depression of the sort that occurred back then.  Most likely the government would just end up “printing money”, which would reduce the value of everyone’s assets that are held in dollars.  And in the case of Social Security and Medicare, these two programs do not have “money” as such in some supposed “lockbox”, but merely hold claims against the Treasury which can met only through taxation or borrowing money from other countries.  Of course if the dollar itself was to “crash”, that would be a real disaster that would make the Great Depression look like mild recession in contrast.  It would be a true national disaster and might result in the sort of political upheaval that brought Hitler to power in Germany…

However, this sort of disaster is unlikely to happen, but what is likely to happen is that sometime in the future those dependent upon Social Security and Medicare will see “cuts” in these programs.  Perhaps “means testing” for Social Security and “rationing” of medical services available through Medicare.  In any case, you’re better off having a separate source of income than just Social Security and Medicare.  A source of income that is independent of these two programs.  This is where investment comes in.  The best and safest way to do this is through “index funds” where “risk” is spread over a large number of investments.  The best known provider of these is “Vanguard”, which not only provides these index funds, but also shows you how well these funds performed both over the last ten year and all the time since the index fund came into being.  My advice here is that you should look at all of these funds as a “long term” investor.  How did the fund “do” since 2007?  The stocks took a considerable “dive”, but the long term bond index funds did much better this way.  The only real “risk” in these bond funds is that they will “suffer” if there is a high rate of inflation as we now saw during the Carter administration.  However, in such a case, stocks will tend to increase in value as will precious metals such as gold and silver.  The objective here should be to create a source of income that is not dependent upon the federal government.  Obviously, you have a lot of choices here, but “risk spreading” is the only way to go if you want a secure retirement.

There is also the issue of “rationing” of health care services paid for by Medicare.  I suggest obtaining a book such as “For Dummies” on “Medical Tourism”  You might find that the day will come when in order to receive the medical services you need, you will have to go outside the USA to obtain these services in a reasonable period of time.  This hasn’t happened “yet”, but it is wise to play it “safe”.  The growth in the cost of Medicare and medical services in general here in the USA has dire implications for the future.  At some time in the future, there will be “rationing” of health care services here in the USA. This will be a problem, especially for those who require the more expensive services and find that they will have to wait months to have these services done.  Or find that the only doctor willing to perform these services is “charging all the traffic will bear” for doing them…  This is why you should now consider “all your options” as to obtaining medical services, including flying from the USA to other countries to obtain service either not available here within a reasonable period or time, or because the cost of these services here in the USA is prohibitive, which is also increasingly a problem for many people now.  Also check out sources of medical drugs outside the USA for the same reason.  In many cases the same drug that you buy here in the USA will be far less costly outside the USA.  The free market is your “friend”, whereas “government enforced monopolies” are not.  And the USA is increasingly a “plutocratic republic” where the government serves the rich, the “special interests”, and the big corporations, not the citizens of the United States of America!  Nor should you expect the political parties to do anything to help the situation.  The Republicans now serve only the rich and the big corporations, and the Democrats worship the “State” far too much to be concerned about you or your freedoms to live the sort of life that you want to lead.  Only the Libertarian Party believes in “you”!






About muskegonlibertarian

77 year old retired owner of a security guard agency. Member of the Libertarian Party.
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