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You can't transfer todays income to the future. All you can do is buy an asset today that you can sell at some future date. There are no "safe" options.

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The Collapse of Retirement Funds by John S Veitch

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We have all been encouraged to save for our retirement. However, the whole notion of putting money away for a rainy day, is faulty. The money "saved" is used immediately by someone else. The retirement fund buys assets with your money; property, shares or government bonds for instance. Those who sell those assets spend the money of something they choose to have.

When people leave the work force they still need to have income. That income must come from the economy at that time. You can't shift the income from the present to the future, all you can do is try to "buy" assets, and hence the right to sell those assets in that future market. There are no guarantees about how that will work out.

If the government pays the pension to retired people from current taxation, you are drawing the funds directly from the economy at that time.

In a housing boom, too much money is invested in relatively unproductive assets called houses. Not enough money is invested in productive investments, or saved. In consequence, debt rises to high levels and the real productivity of the economy falls. By the time the boom bursts, the damage is done, and cannot be undone. The houses exist, but now they are worth less than it cost to build them. At the same time, the values of other assets shares and bonds are also falling. If you are going to "retire" you need to live off the sale of the assets the retirement fund purchased on your behalf. Those assets have also fallen in value. That is a common problem.

The two largest retirement funds in California, perhaps in the world are the California Public Employees Retirement System (CalPERS), and the California State Teachers Retirement System (CalSTRS). CalPERS is the largest fund in the USA and the fourth largest in the world. In October 2007 it had assets valued at $260 billion, which by December 2008 had fallen to $186 billion. Because of the collapse in the housing bubble CalPERS is now the largest owner of undeveloped residential land in America. The Teachers fund CalSTRS, has suffered losses too but only 21% compared with CalPERS at 29%.

It's now obvious that you can't be sure of generating retirement funding in the future by buying bonds, shares or real estate. Governments everywhere have been encouraging people to "save" for their retirement, trying to avoid a heavy future state liability for retirement pensions.

Some companies have also tried to limit their liability. Prudent companies that have built substantial assets on behalf of future employee retirement funding can become targeted for takeovers and then asset stripped. These companies may have acted in good faith, but others may see the assets as "ripe" for picking.

The 2009 Depression may have the effect of wiping away most of the retirement savings people have. We can't be sure how bad it will get. A retreat to GOLD is suggested by some. If that was to become a general pattern of behaviour it would deepen the recession.

In New Zealand, the Retirement Commission's free, independent website and related resources is intended to help New Zealanders of all ages understand money matters and manage their personal finances throughout life. Like governments all around the world, the NZ government became concerned about future population projections that predict an ever growing proportion of the population "retired" from the work force, and a ever smaller number of taxpaying citizens who will need to fund pension payments out of income. The need to "save" for your retirement is apparently "obvious".

It is my own view, that even if you or your retirement fund, buy assets today to produce income tomorrow, when tomorrow comes, those assets still have to be sold on tomorrow's market to the same smaller work force that we are told can't afford to pay those extra taxes. So I ask, can they afford to buy the assets the retired folks want to sell? At what price might they be willing to do that? I think there's an ideological and political game being played here. Buying of assets today to sell in the future to provide income is sensible, but it's NOT a guarantee of future income stability.

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