Individual responsibility, tent protests and retirement

Your Investments: It is vitally important for individuals to plan for their own retirement rather than rely on anyone else to do it for them.

By AARON KATZMAN
Tel Aviv housing price protest 311 (photo credit: Ben Hartman)
Tel Aviv housing price protest 311
(photo credit: Ben Hartman)
Turn on your TV or open up the newspaper and the main story you will see is the protest over housing. These tent protests have captured the eye of the media (or maybe they are to blame for fanning the flames and creating the story in the first place) and have created a nationwide stir.
There is no question that when you go to the supermarket you are paying a lot more for food than you did a few years ago.
Want to buy an apartment? No need to talk about the continuous rise in real estate. Israel continues to have very high tax rates, and that puts a squeeze on the middle class.
What do all of these problems have in common? Government policy and bureaucracy created them. Or, as they say in the vernacular, “the government’s the problem, not the solution.”
As complaints mount for affordable housing, I often think back to one specific case that would have made a huge impact in solving our current situation.
When the Safdie plan, which would have created more than 20,000 units in western Jerusalem, was killed four years ago out of environmental concerns, it was hailed as a victory by the “greens” and deemed unnecessary by planning committees, who said there was no need for the project.
Haaretz ran an article at the time that said: “Currently available land reserves should be able to supply Jerusalem’s housing demand until 2020, an Interior Ministry study revealed on Monday.
The study was commissioned by the national building and planning council in order to settle the controversy surrounding the Safdie plan.”
Boy did those government agencies get it right. No housing shortage in Jerusalem! While I agree with some of the issues that the protesters have brought to the forefront, the solutions they would like to see will ultimately cause more damage.
For some reason one very commonly held belief among many people is that the government will solve all of our problems.
Such people put their faith in politicians, rather than believing that the power to find the right solutions lies in their hands.
In the same way, a common response among people toward the idea of retirement planning is, “I don’t need to plan for retirement because the government will save me.” But when we look at the figures, we see that the government doesn’t have the greatest track record when it comes to efficiently helping out its citizenry. For this reason, it is vitally important for individuals to plan for their own retirement needs rather than rely on anyone else to do it for them.
Will there be anything left?
Government pensions were created with the purpose of preventing elderly retirees from being thrown out into the streets. While no one ever said that government pensions would make their recipients rich, there was always an assumption that the payments would cover the basic living expenses of the elderly. Unfortunately, however, after decades of mismanagement and skyrocketing deficits, there is a real possibility that the government will not be able to meet its long-term obligations.

Does the government help?
Looking at the headlines, we see many cases where the government does not help. For example, in Sderot, which has been the target of Kassam rockets for years, in spite of continued pledges, the government has not taken sufficient protective measures in schools or nurseries.
Other examples of poor government assistance center on the residents in the North who received little or no help during the Second Lebanon War and the evictees from Gush Katif who have been living with broken government promises for years.
Individual responsibility
In many facets of our lives we need to start taking individual responsibility. Part of individual responsibility also means understanding what we can and can’t do. If an apartment in central Tel Aviv costs NIS 2.5 million and I don’t have that kind of money, I can’t buy an apartment there. I can’t complain that it’s not fair, because it is fair. That’s how much it costs.
Taking responsibility of your financial situation is critical.
When paying monthly expenses pay yourself first. The first expense you should pay every month is to your savings. Make sure you take advantage of a matching contribution from your employer on retirement plans, and fund them to the maximum each year.
Since no one else is worrying about your future, it’s time to take these issues in hand by yourself. Then, with proper planning, you will be able to retire with or without the government’s help.

aaron@lighthousecapital.co.il
Aaron Katsman is a licensed financial adviser in Israel and the United States who helps people with US investment accounts.