Advice to those saving for retirement - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 6 February 2014
Advice to those saving for retirement A  A  A

Mumbai, India

Stocks fell hard on Monday, bounced on Tuesday, and came to rest on Wednesday. Which way does this market want to go? We don't know. But so far there was not much follow through in either direction. So we wait...glance up at our "Crash Alert" flag from time to time...and watch...from the sidelines, of course.

Meanwhile, have you opened your MyRA account yet? As you remember from carefully following Barack Obama's State of the Union address, there's a new way save for your retirement. The LA TIMES explains:

    The president signed a directive Wednesday ordering the Treasury Department to create MyRA (my retirement account). A pilot program is expected to be rolled out this year.

    The MyRA effort is designed as a "starter" program in which employees can accumulate up to $15,000 before transferring savings to tax-free Roth individual retirement accounts.

    Money would be invested in a government bond fund that's been offered to federal employees for years. Principal would be protected so that workers would never lose money.

    But they probably wouldn't earn significant returns. In 2012, the fund had a 1.47% return. The 10-year average annual return was 3.61%.
Wait just one cotton pickin' minute. This program has a familiar...and sinister...sound to it.

Ten years ago, we guessed that the US economy was following Japan into that long, dark passage...We wrote about it so often readers got sick of hearing about it.

--- Advertisement ---
Top 3 Buy-and-Forget Small-Caps For this Fluctuating Market...

The current fluctuating market has left many investors looking for steady income opportunities...

Now, we both know that stocks can never offer guaranteed income.

However, we do have 3 "Rare" Small Caps that have paid regular dividends... year after year.

In fact, one of these has paid regular dividends for more than 100 years.

Plus, all 3 of them are fundamentally strong businesses with high long-term growth potential too!

So, Why Delay?

Click here to find out how you can get full details on these 3 "Rare" Stocks Right Now...

And then, we looked like an idiot when, instead of stalling after the crash of 2000, the US seemed to take off. Instead of a Tokyo-style bust, we got a Las Vegas-style bubble...complete with million dollar house trailers and enough mortgage backed securities to blow up every major player on Wall Street. It didn't seem at all like Japan.

Now, we discover that all that sound and fury of the last decade signified nothing. Household incomes fell. No new jobs (net) were added. Almost zero real growth happened. For all the sturm and drang, it was a lost decade in economic terms. Just like Japan, in other words.

And now, too, we seem to be locked into a low-growth pattern, with little consumer price inflation and an aging population that cares only about preserving the benefits it has misappropriated for itself.

And like Japan, the US economy holds off the day of reckoning by borrowing money at super-low interest rates. Rates are low partly because the feds force them down by buying bonds....and partly because no one really wants to borrow and spent in such a funky economy.

Japan's government debt is now the highest in the world -- 230% of GDP. How will it ever pay it off? When last we looked, the feds spent twice as much as they collected in tax receipts.

"Don't worry about it," answer the pundits. "Japan owes the money to itself."

That is more or less true. Japan's government bonds were bought by its own old people (or their pension funds). They put their savings in the safest possible place - government bonds - to be used to finance their retirements.

How will the Japanese government make good on all these bonds? The answer is the same as the answer to this question: how will this debt-financed hullabaloo turn out? Answer: Japan will stiff its own grey-haired creditors. Either by inflation or by default.

Argentina, by the way, is already ahead of the game. It nationalized private retirement funds - to 'protect' them, of course.

And now, Mr. Obama aims to protect US retirees in the same way.

Advice to those saving for retirement: stay away from MyRAs...

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Get The Daily Reckoning directly
in your mail box.
Just enter your e-mail address » 

Read our Privacy Policy and Terms Of Use.

Equitymaster requests your view! Post a comment on "Advice to those saving for retirement". Click here!


Recent Articles:
Which Gods Will Bring Down the US Empire?
August 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Will They Haul Off Trump's Statue, Too?
August 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
Farm Loan Waivers: Why Bad Economics Makes for Good Politics
August 14, 2017
It is because the negative effects of the waivers aren't clearly visible.
The Most Important Innovation in Finance Since Gold Coins
August 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.