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The Stock Market, Your 401K, and the Economy: Is the Market Artificially Inflated for the Government’s Next Sinister Plan? April 12, 2010

Posted by seeineye in : Politics , add a comment

by Bungalow Bill

Have you looked at your 401 K statement lately? Chances are you are coming out of your 401K depression, although you probably aren’t all there yet. The market hit 11,000 today, and everything looks good right?

I am not sure I agree with that. While I am not an expert in Wall Street by any means, the economy doesn’t seem strong enough to drive up the value of stocks 36% over the last year. Doesn’t it seem curious in the least little bit, that there has been no real growth in the economy outside of government growth—artificial stimulus. Is the market strong? I have my doubts.

What bothers me more is the fact the government is talking about confiscating all American’s 401 K plans. Haven’t you heard? The United States under Barack Obama’s crazy spending sprees has become a credit risk. We are losing our credit worthiness around the world, and the countries that used to purchase our Treasury bonds are scrambling to get rid of them. With a country creating debt faster than any time in its history, the United States government is looking at possibilities to fund the debt and one of the possibilities is taxing your 401K at 100%. There’s nothing in the Constitution that prevents them from doing so.

They will claim they are doing it for the security of your retirement claiming the last few years have proven to risky to 401K investors, and the government can provide a much more secure plan for your money. They will reinvent Social Security this way, and they are already drawing the plans to do so. Of course the hundreds of thousands of dollars your 401K promised you will be gone in a matter of months as the US government robs Americans once again of what is rightfully theirs.

Oh, you will see traces of it when you retire. You will see what the government says you need to see to live an impoverished retirement void of RV trips to Branson, Gatlinburg, or wherever you can park it.

Some in the government are planning to take your 401K and invest it into US treasury bonds to further fund the national debt, and like Social Security, there will not be a lock box—just trillions and trillions more in unfunded liability they will eventually forget about because we already know they are hinting at healthcare rationing. The sooner you are dead, the less they will be required to pay back of your confiscated 401K.

So as the market hits 11,000 today, I am reminded of this 401 K confiscation plan which Newt Gingrich commented about a few weeks ago. I am wondering today, based on the little private sector activity in the economy, if they are driving up the market with stimulus money to give us hope in our 401K plans as they plan to confiscate them through a new Social Security tax. The problem I have with mine is I can’t touch it without leaving my job.

Obama’s Budget Plans to Nationalize 401K Plans February 28, 2010

Posted by seeineye in : Politics , 1 comment so far

by Bungalow Bill

I warned you a week ago. The United States government is looking at 401K plans to fund the national debt. Obama is calling for establishing automatic workplace pension plans. This means the government will force you to pay another retirement tax, just like they did with Social Security through the FICA tax.

It’s was reported last week, the government was looking at confiscating all 401 k plans to help fund the debt, in exchange for US Treasury bonds that pay interest. Now Obama is pushing the plan.

They are calling Obama’s plan a way to protect your retirement savings. I told you this was coming in the name of security. An early analysis of Obama’s plan, shows the following disadvantage to Obama’s plan.

From the Daily Market:

This proposal is in the 2010 Budget and may be a start of a Government takeover of the American 401k and Retirement Account system. Obama is giving retirement, IRA, and 401k savers something to monitor closely….

President Barack Obama is calling for establishing automatic workplace pensions and expanding unemployment insurance as part of his spending plan for the U.S. Labor Department next fiscal year. We liken this to an “Obama 401k Plan”

The budget “lays the groundwork for future establishment of a system of automatic workplace pensions, to operate alongside Social Security, that is expected to dramatically increase” retirement and personal savings, Obama’s Office of Management and Budget said in its outline, without giving details on the costs.

Obama 401k Plan: What it entails

The plan would force employers that don’t offer retirement plans to enroll employees in a “direct-deposit IRA account,” with the option for workers themselves to opt out. Currently, 75 million working Americans, or about half the workforce, lacks employer-based retirement plans, according to the administration.

The troubling thing to me is that the government would pay a 3% fixed interest rate on the accounts as opposed to the diverse mutual fund offerings in a traditional 401k plan. In effect, this would create a “Social Security” type structure to your retirement, IRA, or 401k.

The lack of equity options in your 401k plan would dramatically affect the possible returns, especially over an extended period of time. Just think, the average equity return over the stock market’s history is somewhere between 9-11%. Do you think that you would be happy with 3%?

A traditional 401k Savings Plan vs. an Obama 401k Plan

$10,000 invested over a 30 year period at a 3% interest Rate

Final Savings Balance:$ 24568.42

$10,000 invested over a 30 year period at a 8% rate of return

Final Savings Balance:$ 109357.30

That is a $84,789 Difference to your disadvantage!

$10,000 invested over 30 years with an annual contribution of $2,000 at 3%

Final Savings Balance:$ 121302.74

$10,000 invested over 30 years with an annual contribution of $2,000 at 8%

Final Savings Balance:$ 356756.97

That is a $235,454 Difference to your disadvantage!

That is $235,454 less you will have on average with the Obama plan, if Obama is successful in replacing the 401k with another government retirement program. I will pull my 401K and pay the less taxes than let the government confiscate it with a 100% tax.