Americans retirement future is in crisis mode
Americans are facing a retirement crisis. Most are ill prepared for the realities of retirement. Here are some sobering statistics:
- 10,000 baby boomers a day turn 65
- 45% of US retirees live below the poverty line
- Poverty is higher among women
- 90% of Americans do not own their own business
The situation is largely a caused by our 20th century world view. My father and grandfather were taught to get a good education, get a job with a good company, live on less than you earn, and save. For all of their good intentions, this is the recipe that led to mass poverty. In nearly all of human history prior to World War 2, people remained in close family units. They worked together to build a life. They worked to pass it on to the next generation. My great grandparents would have eaten dirt rather than sell their land. They valued giving it to the next generation. Today, family units are scattered. We rarely see each other much less work together.
A new business paradigm for retirement in a new century
Harvard Business Review recently published an article Why the 21st Century will belong to the family business. Big corporations take the short-term view of the next quarters earnings reports. CFO’s will sacrifice long-term good for short-term gain. Family businesses are the opposite. They sacrifice now for the long-term. They look to add lasting value. Their motivation does not come from the stockholder but rather making the family secure.
The Wall’s paradigm shift to retire with a family business
My husband and I do not think like average Americans. We chose a different path. We decided there would be no excuses and we will do what it takes to succeed. We studied for two years before we started our business. We realigned our resources. We cast a vision and set a goal. Here are some of the changes.
- We sold all of our stock and stock options and got completely out of the market
- I got my Realtor’s license
- We invested in property
- We moved in with our children and rented out our house. This move cut $4,000 per month from our expenses, added $1,000 per month to our income and provided massive tax breaks on the property.
- My oldest son rehabs property, builds advertising and networks.
- My husband plans and executes long-term activities.
- My bother is the construction manager.
- My sister-in-law keeps the books
- I meet with bankers, investors, buy property, etc.
- My youngest son is in the Marines but has a law degree in tax and business entities. He has an MBA and will come home to the business.
- My brother, both sons, my husband and I pooled our financial resources into an LLC to expand the business.
We act differently because we want a different outcome. It is paying off. Our retirement is realistically 4 years away. It has been difficult. We have made mistakes but we always fall forward. Our passion is to help those around us achieve their own financial security. If you read my blogs from that perspective, you will understand our soul.
We look forward to helping you on your journey to financial independence.
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Social Security is half the income for 61% of Americans
You must have your own passive retirement income. Social Security is anything but what its name says. It is estimated the $2.8 Trillion in reserves will be depleted by 2034. While 85% of Ameicans say Social Security is important, the facts are the remedy to the problem are political suicide. Neither Congress nor the populous have the will to take action. Kicking the can down the road makes the problem worse. I am not betting my future on the hopes of millennial’s generosity to raise their taxes. Passive income that you control is your own security trust fund.
Congress has embezzled $2.5 Trillion from Social Security
Congress has not met a spending bill it did not like. The large trust fund sitting there waiting on your retirement was too tempting for them to avoid. Buy votes today and leave an IOU in the cash register. The reason Congress wants to cut or delay benefits is they do not want to face accountability of paying the money back. The fact is they know it cannot be paid back. The only real choice will be to raise taxes and remove the contribution ceiling. Congress was not fiscally trustworthy for the last 50 years. Taking more money from the people will not cause their ways to change.
Passive income is exempt from Social Security tax
Earned income is subject to social security tax. Currently, unearned income is not subject to the tax. Investing in passive income streams like real estate gives cash flow that is exempt from social security. Take you income stream out of the path on Congress. Wise financial planning would dictate you make it as difficult as possible for them to steal your savings. Real estate passive income when held in a real estate business also lowers your overall federal income tax. Not only are your social security and income taxes lowered but you get equity build up with renters paying off your mortgage. Moreover, the income increases with inflation. We have recently raised the rents on all of our properties in-line with current market trends. Our percent return increases each passing year.
Experts speculate Congress might raid private 401k’s
I am not a doom and gloom conspiracy person. However facts are that desperate governments do desperate things. The crisis will not go away and it will only get bigger. Each day 10,000 baby boomers turn 65. Socializing retirement funds is one possibility for the government to remain solvent. While it seems fanciful now, a Greek style crisis in America may cause a drastic shift in policy. I have moved my 401k to be self-directed. Moreover, we only contribute enough to get my husbands company match. Our real estate business provides more than enough tax deductions to make our passive income tax free. There is no need to defer taxes in a 401k. There is no need to pay taxes on it in the future. I am free to use it now, before 59 1/2 . In addition, the money is in a corporation rather than a retirement account. The corporation lives forever. The children already own much of the stock. The money is out of congresses reach in a retirement fund. It will not be subject to a death tax when we die.
Take action now building passive retirement income
The time to prepare is before Winter comes. Those of you who watch Game of Thrones heard winter is coming for several seasons. Winter finally arrived. Protect your sunset years from a harsh fiscal winter looming on the horizon. Educate yourselves and take action today building you passive retirement income.
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