I have been warning employees and retirees of government entities that your retirement funds are at risk. City and State employees typically do not contribute into Federal Social Security, thus city and state retirees cannot receive US social security benefits. Thus when a city or state goes into bankruptcy, employees and retirees can lose some or all of their accrued retirement benefits. This is demonstrated in the Detroit City bankruptcy.
Judge: Detroit eligible for Chapter 9 bankruptcy
Many hardcore survival peppers advocate against any retirement investments in non-tangible investments, such as stock, bonds, mutual funds, and ETF’s. Some say, put all your investable assets in gold and silver. I don’t agree with this. I, like many, am employed by a company that offers a retirement play. My company offers a 401(k) plan, where the company matches a portion of the contributions. In a situation where a company or organization matches a portion of the contributions, it is utterly silly to not take advantage of this free money. If you company matches up to 3% of annual contributions, a minimum you should be contributing up to the matching amount, or 3% in this example. You are provided with an immediate 100% investment return for the matching amount. There is typically a vesting period before the company commits their matching funds, commonly 5 years. After 5 years, the company matching funds are yours to use, when you retire.
While I am greatly worried about the potential of an economic collapse and for the 2nd Great Depression to occur, I still invest money in the stock market. If I were to remove my retirement funds now, long before the minimum retirement age, I would be responsible for paying the full tax on the withdrawals, plus a 15% penalty. If I were to withdrawal my qualified retirement investments at this point, I’d face the loss of 50% of my retirement investments. Some say losing 50% is better than losing 100% when US house of economic cards falls. But I can not bring myself to making the withdrawal. There are several reasons why I will not withdraw my retirement funds, and use the funds only gold and silver. The reasons include:
I’ll immediately hand over 50% of the retirement funds to the tax man. This defeats the purpose of having retirement investments.
- As I moved from job to job, I have rolled over the 401(k) and pension plans into IRA accounts. I have control over the IRA accounts, where I had little or no control over 401(k) and pension accounts.
- If I see a situation where the economic collapse is about or is occurring, I can move my IRA investments to cash, gold ETFs or silver ETFs. Gold and silver ETFs are not as good as holding physical coins.
- If I see the economy worsening, I can always liquidate my retirement accounts later.
- I am able to continue to take advantage of compounding interest and dividend reinvestment in my retirement accounts. That is not possible when holding physical gold and silver.
- I am able to continue receiving the matching contribution from my employer’s 401(k) plan.
- This is a distinct possibility that the economic collapse or 2nd Great Depression will occur after I die. Thus I need to hedge against the possibility of a good economy. If you only prepare for the worst case events, then you are not prepared for the best-case events.
My main suggestion to you with all aspects of financial investments, retirement planning, and survival prepping is: Don’t put all your eggs in one basket. Do not put yourself at risk by having a single points of failure, which you cannot recover from.
For employees of government agencies, I’ll suggest that you do not rely solely on the government pension for your retirement income. If you work for a government entity, some suggestions include:
- Save money outside of the government saving plans and retirement plans.
- Develop a side business that you can run from home to gain additional income.
- Stay out of debt. If you lose your job and pension while carrying debt, often you cannot recover from that.
- Make small and incremental purchases of gold and silver coins. A good plan might be to purchase one silver Eagle dollar and one US Eagle 1/10 ounce gold coin each and every month. The money outlay for this monthly purchase is currently at $160 per month (at spot prices). $160 per month is not much, if you are working full-time. In 5 years time, you will have accumulated 60 ounces of silver and 6 ounces of gold. This would be a valuable fall back position in the event of a full economic collapse. If the economic collapse never comes, use the gold and silver to fund your retirement. Or pass down your gold and silver to your children and grandchildren.
- If and when you leave government employment, consider taking a full rollover of your pensions. Get the money out of the government hands, if possible. Then possibly you could buy your own annuity or make your own investments. But do not spend your rollover. Remember, it is your lifetime savings and is not to be spent immediately. Don’t buy a boat or take an expensive vacation. You will need every penny of your retirement funds to pay for shelter, food, and medicine.
- Anticipate that you could live in retirement for 20, 30, and even 40 years. For this reason, I’m a strong advocate of lifetime annuities. And if you have sufficient retirement assets, create ladders of several annuities, which will start paying out at different stages of your retirement. This will provide some protection from inflation.
- When you retire from the government job, don’t stop working. Take up another job in the private sector. Consider becoming a consultant back to the government agency you left. Use this time in a 2nd (post retirement) career to further build your retirement investments outside the control of a government agency.
- Many sure your primary home and vehicles are paid off before your retire. Entering your retirement years while you are still carrying a mortgage and car payments is unwise.
All these recommendations above hold true, if you work for a charitable or religious organizations. Charitable and religious organizations can to bankrupt as well.
If you work for public (non-governmental) company, you likely have more flexibility. That is unless you are part of a trade union. If you are part of a union, you might have little control over your retirement funds. And you need to take the recommendations listed above.
If you are self-employed, own your own business, work for a public corporation, or otherwise have greater control over your retirement investments, there is a different set of possibilities, including:
- Build up investments in tangible assets where possible. This includes real estate, especially rental properties that provide a stream of income.
- Build up post-tax retirement investments, such as tax-free ROTH IRA accounts or individual 401(k) plans.
- Accumulate after-tax, non-retirement investments. This included post-tax purchases of gold and silver coins, guns, and ammo. This might include purchases or ownership of direct investments, such as timber land, producing farm land, oil and gas MLP’s, etc.
- Pay off the mortgage on your primary home as quickly as possible.
- Invest in a 2nd home or vacation home, which could also serve as your bug-out location or survival retreat.
- Cash is a wonderful investment unto itself. But don’t keep more than $250,000 in cash at any one bank, which is the limit of FDIC insurance. But you do need to plan for inflation. So you don’t want all your savings in straight cash. You’ll need some investments into income producing items.
- Monitor your banks and brokerages carefully and frequently. Set up automatic news alerts to notify you by email if your bank or brokerage has any news worthy events. At the slightest sniff of any trouble, be first in line to move or remove your cash and retirement investments from a bank or brokerage. If and when an economic collapse occurs, you want to close your bank accounts the day before a bank holiday.
- Keep a significant amount of cash at hand for your living expenses. Often 3 months of expenses is a good recommendation. Obtain a strong vault or hiding place in your home, where cash can be securely stored and without risk of discovery by thieves. And maintain strong security at your home — always. This includes alarm systems, watch dogs, alert neighbors, strong doors, locked windows, no sliding patio doors, and your own firearms.
None of these potential suggestions discounts the need to store lots of water, fuel, food, firearms, ammunition, and medical supplies.
This article is provided for educational and entertainment only, and not as specific advice for your situation. Seek qualified and experienced advice pertaining to medical, legal, and financial matters. Your individual situation will vary greatly, so you must adapt any suggestions to want is appropriate in your situation. If you make an action plan from just this article, you are doing yourself a disservice. Use this article as a basis to ask questions, and not as your answers.
I hope your retirement is long, productive, and filled with the love of your family.