Do You Live Off A Pension? Not For Long!

One of the most difficult things for me, personally, is seeing what is going on, knowing (more or less) where it is going and then talking to people who have no idea what is going on and are absolutely unprepared.

I often receive messages via email, through our website or on places like Facebook, which say, “I currently live in the US and survive on a pension that pays me $3,000/month which doesn’t go very far in the US and so I want to look at expatriating to a cheaper and nicer locale, what should I do?”

Of course, for what I see coming, I recommend anyone who can to get out of the US now while they still can.  But, in the case of those on pensions, I fear that they are being irrationally comfortable that their pension will still exist even a year or two from now.  And, because of that, I fear they may move somewhere and just find themselves in a new place, unable to speak the local language, without a group of trusted friends and family around them, who are dead broke… penniless.  I have visions of American street people, homeless, around the world, begging for money.  Of course, that’s a big reason why we have set-up TDV Groups, which is a worldwide network of libertarian expats, to help… but I think people are being far too casual in presuming their pensions will just keep rolling in for a long time to come.

First, obviously, is that I don’t expect the US dollar to be around in its current form in the next few years.  We’ve covered here for the last five years how the US dollar is one or two black swans from being turned into toilet paper, like in Venezuela.

Secondly, though, is that most pension funds are or will be in serious trouble.  Certainly Social Security (or as it should be called, Socialist Insecurity) is already bankrupt.  It is a true ponzie scheme now that only can pay out because the government continues to take in money from those who will never see a Social Security cheque.  That is the true definition of a ponzi scheme.

The Congressional Budget Office (CBO), itself, is predicting that if nothing changes dramatically, that entitlement spending (Social Security, Medicaid) and interest payments will surpass the entire US government’s tax revenue base by 2025.

entitlements by 2025 social security medicaid

And that is assuming that interest rates stay near 0%.  An increase to a mundane level of 5% would mean that interest payments alone would be nearly $1 trillion per year which would overwhelm the system completely and that number where expenses exceed revenu would go from 2025 to something closer to 2016!  What happens then?  Either Social Security payments are cut dramatically or the dollar is hyperinflated… neither one is good for those depending on their Social Security cheque.

What about private pensions?  Well, the great majority of pension funds in the US have their assets mostly in the overinflated stock market and in government bonds that have nowhere to go except down in value.  And many of the pension funds are geared to only be viable if they can achieve a large rate of return that just isn’t possible in the current environment without taking extreme risks.

The only thing, in my estimation, that has a chance of surviving are personal retirement savings such as 401ks and IRAs but even those now are being targeted by the government for nationalization (and then likely put into US Treasuries which pay 0% interest and lose, at current rates, about 10% per year in monetary inflation terms).

Just last week, famous economic prognosticator, Martin Armstrong, who is also expecting some sort of a calamity by the fall of this year wrote about how a recent Supreme Court decision paves the path for the government to grab 401k’s and IRA’s.

He stated, “Between the (Supreme Court) court ruling and the Obama administration’s push for stronger fiduciary rules send a strong message that government can much easier seize the pension fund management industry of course to “protect the consumer.”

There are trillions of dollars sitting in 401k’s and IRA’s that have yet to be taxed that the government, as it gets more desperate, will see as a lifeboat to save itself (drowning you in the process).

For this reason I have said for years that if you have funds in an IRA or 401k and can withdraw the funds (even if it means a big tax hit) that you should do so and immediately put into hard assets preferably outside of the financial system and outside of your own country to make it more difficult for the government to grab (and of course we recommend various ways to do this at The Dollar Vigilante newsletter).

If you are locked into an IRA or 401k where withdrawal is not allowed there is one other option still remaining to get it clear form the coming collapse.  That is something called a Self-Directed IRA (see more here on getting started immediately).

Once you have your funds converted into a Self-Directed IRA you are free to invest those funds anywhere in the world into almost any asset.  You can buy investment property in foreign countries, you can purchase precious metals… you can even buy racehorses in Dubai as an investment should you so choose.

I recommend this and have already done this personally with my own retirement account assets (although I am Canadian and there they call them Registered Retirement Savings Plans) and I recommend anyone with a sizable amount of funds in IRA’s/401k’s to look into this option as soon as possible.

And if you are currently subsisting solely off of Social Security or a private pension plan in the US I suggest that you stop assuming that it will “always be there”.  The numbers show for Social Security that it won’t.  And while each private pension plan is different the great majority of them also risk massive problems as things unfold.  I suggest you look to earn another form of income now so that you are prepared.

I hate to be the bearer of bad news and seem so “doomsday” like but I truly believe that everything I stated above can and will happen and it is better to know now than to be left shocked and struggling when it does happen.

Originally Appeared At The Dollar Vigilante

One comment on “Do You Live Off A Pension? Not For Long!
  1. Chris Randolph says:

    You can’t even spell “Ponzi” let alone define a Ponzi scheme. A Ponzi scheme requires exponentially more people to pay into a system that pays returns out to the smaller numbers previous investors as pass-through. That in no way describes Social Security, which is run more akin to insurance. If SS were a Ponzi scheme it wouldn’t still exist now after nearly a century. And SS has been so successful that the rest of the US federal government has borrowed/stolen from the fund since Reagan.

    If you’d like to discuss how the Pentagon has stolen from the fund, or how Obama has attacked the fund by decreasing SS payroll contributions (while leaving the war and corporate welfare taxes untouched)… that might be valuable.

    Of course judging from the spelling in this piece you aren’t an American & can’t be expected to have overly much knowledge of the system…

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