Your investments: The Jerusalem strike and your retirement

For some reason, even after demonstrating total ineptitude, we have been trained that we are unable to solve our own problems and that we need to turn to politicians to solve them for us.

Garbage in Jerusalem (photo credit: MARC ISRAEL SELLEM)
Garbage in Jerusalem
(photo credit: MARC ISRAEL SELLEM)
“Government’s first duty is to protect the people, not run their lives.”
“The most terrifying words in the English language are: I’m from the government and I’m here to help.”
– President Ronald Reagan
As I am writing this, I am looking out the window onto Rav Kook Street in the center of Jerusalem and watching a team of municipal sanitation workers trying to clean up a huge pile of garbage. They have been at it for over a half an hour and need to bring in another truck because the first truck is full. This scene is being repeated over and over throughout the city as the strike, which crippled the city, has been halted for at least the next few days, when hopefully a solution will be found.
I am not here to take sides, because in my opinion, both Finance Minister Moshe Kahlon and Mayor Nir Barkat are to blame. Kahlon has been in hiding during the strike, sending out his minions to face the media. It’s clear that he reneged on promises of transferring money to Jerusalem. Barkat is to blame for how he managed the strike, as well as needing to take responsibility for waste that goes on in the city. In fact, I think it’s safe to say that government is to blame.
While the mounds of garbage were a smelly nuisance, what really brought out the wrath of residents was when the municipality decided to close down kindergartens and the afternoon day-care centers. The irony of closure of the afternoon day care is that up until a few years ago they were private. Then it was decided that the municipality should take control of them. Now they are part of the strike, and parents are stuck.
There isn’t nearly enough space to list the failures of government, but I want to share a small story that happened to me a few days ago to symbolize government waste and incompetence. I am the president of my small synagogue, and I received a letter from the city to pay the annual “sign” fee. On the outside wall facing the street there is a sign with the name of the synagogue. The letter gave a whole explanation of the annual fee and even had a picture of the sign. Then when I looked to see how much we needed to pay it said... zero! The municipality spent money to send someone to take a picture and send us a letter all to say that we don’t have to pay anything. Hello?
Government to save the day
When government says it will help us solve a problem, we need to say thanks but no thanks. For some reason, even after demonstrating total ineptitude, we have been trained that we are unable to solve our own problems and that we need to turn to politicians to solve them for us. Why would anyone think that someone sitting in Kikar Safra or in the Knesset knows what’s better for us than we know ourselves?
What, you ask, does this have to do with your retirement? You can’t imagine how many people’s retirement plan is: “The government will take care of me.” I will get Bituach Leumi or Social Security, and that’s what I need. No it’s not what you need. Bituach Leumi will not provide you with a comfortable retirement. In Israel, government pensions were created with the purpose of preventing elderly retirees from being thrown out in the streets.
While there were never any promises that these pensions would make you rich, there was the assumption that the payments would pay for the living expenses of the elderly. I am sure that the NIS 3,000 a month from Bituach Leumi will allow you to live the retirement you always dreamed about!
You need to take control of your retirement. Start taking responsibility and begin a savings and investment plan. As financial planners like to say, “Pay yourself first.” This means that when you set up your budget, include savings as part of your expenses.
Try and save 10% of each paycheck and have it go directly into an investment account. Then speak with a financial adviser. He will help you work out a long-term personal financial plan and determine how much money needs to be saved, monthly and annually, and at what rate of interest to help you achieve your goals.
If you haven’t started to plan for retirement yet, or you think you are short-changing your savings, speak to your adviser and put in place a plan that will help you retire comfortably, without having to rely on the government.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.
Aaron Katsman is a licensed financial professional in Israel and the United States who helps people with US investment accounts. He is the author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing.