By Edward Leone Jr. DMD MBA CFP RFC
Contact Information: leonee@vzw.blackberry.net
It is very apparent that in order to see expanded growth in the US economy, focus must be placed on facilitating industries which have a potential to grow in the current global economy. For the US, these industries revolve around energy, information technology, agriculture, tourism, natural resources and manufacturing. These industries must grow to expand the employment base, be competitive globally and promote consumer interest. This can only happen to a great extent if Government interference is reduced. It is amazing to me just what progress industry is making in spite of current barriers established as a result of government policies. Things will look much better when consumer confidence is increased, consumers have more discretionary dollars to spend and demand for housing, durable goods and other consumption items increases in the US and globally for that matter. Our most recent blog for February takes note that emerging economies appear to be struggling a little and it is developed economies that may lead the pack this year as far as expansion goes if tax burdens, trade imbalances, deficit issues and government spending patterns in developed economies can be contained. Engagement in a free market capitalism environment has been through out history, the key to prosperity for all. Current reporting from the US Senate Budget Committee states that 11 States now have more people on welfare than are employed with the average support for the US household bellow the poverty line at $168/ day from these programs which exceeds the average US household income of $137/ day by $30/ day. There is clearly a lack of incentive to seek work for some as a consequence of these perhaps too generous programs which appear to make people more comfortable in poverty.
We are in a sustained climate in which retirement saving is a challenge. The trend away from defined benefit retirement plans and toward defined contribution plans as a result of government regulation and current economic conditions create difficulty for many in the struggle to build wealth which will support those retirement years. 401K and other defined contribution plans in which the employer has flexibility regarding contributions or matching incentives are suffering due to employers’ cautious participation under current economic pressures to the disadvantage of the employees’ effort to grow retirement savings.
Retirement savers need to focus on a discipline dedicated to continued savings build up, the method by which plan administrators and financial advisors are compensated ( fee or commission based and the pros and cons ), rates charged, quality of recommendations and strategy employed as it is designed to meet the clients’ needs regarding time horizons and risk tolerance along with expected return over a reasonable period of time. Other issues regarding the sustainability of the Social Security System and its utility by beneficiaries must also be in consideration for future retirement planning. Such issues as when is the individual’s full retirement age, what will be the benefit to the recipient and perhaps the spouse, is early retirement a better strategy for benefit structure long term or is delayed retirement a better option, what survivor’s benefits are available a what are the income tax impacts on the Social Security benefit come into play. Get qualified professional help to navigate this journey!
On the subject of taxation, according to Milliman, an insurance industry consulting firm, it is a little know fact that one of the impacts of the affordable Care Act is the imposition of $150 billion in additional tax burdens on insurers, state governments and individuals will occur over a ten year period. We clearly need much more information on ACA before it unfolds and not as it unfolds!!
For The Record:
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Suggested Reading: “Engage” by T. Elaine Gagne
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