Snow, freedom and your retirement

In Israel, government pensions were created with the purpose of preventing elderly retirees from being thrown out in the streets.

By AARON KATSMAN
Money cash Shekels currency 521 (photo credit: Reuters)
Money cash Shekels currency 521
(photo credit: Reuters)
‘But when it comes to economic freedom, we are less forgiving of the cycles of growth and loss, of trial and error, and of failure and success that are part of the realities of the marketplace and life itself. Increasingly, we have let our elected officials abridge our own economic freedoms through the annual passage of thousands of laws and their associated regulations. We see human tragedy and we demand a regulation to prevent it. We see a criminal fraud and we demand more laws. We see an industry dying and we demand it be saved. Each time, we demand “Do something... anything.”’ – former Florida governor Jeb Bush
Where’s the salt? If this past week’s snow storm that paralyzed Jerusalem wasn’t enough proof of the ineptitude of government, I don’t know what is. Readers of this column know that I am no big fan of government, but it continues to baffle me why every time there is some kind of “event” they look to government for salvation... and time after time they come away disappointed.
Amazing that it was teenage kids, community councils and good Samaritans who were shoveling snow to clear streets and providing warm meals for homebound elderly people who were without electricity. When the storm first hit it was anyone with a four-wheel-drive truck who was shuttling stuck travelers from one end of the city to the other. People in my neighborhood are still asking, “Where is the salt?” Then we have certain City Council women who were pushing to open schools when getting there was treacherous – doing so not in the name of education, but rather almost as a babysitting service for parents.
(Although if you look at how Israeli kids are testing on standardized tests, maybe that’s what school has turned into.) On Tuesday there was a headline about a principal who fell on the ice on her way to school. Then the aforementioned politician took to Facebook to report that fewer children were hurt on the ice Tuesday than on Monday – and the conclusion was that it was because schools were open.
So now apparently school is some kind of injury free zone: Not safe to keep your kids home; they may get hurt. Then we had some parents calling for the city to provide entertainment for the kids. Huh? Ever hear of having your kids read a book, play a game or have them wrestle with each other for hours on end? Have we been so trained that we are unable to solve our own problems, and we need to turn to politicians to solve them for us? Why on earth would one think that someone sitting in Safra Square or in the Knesset knows better how to take care of oneself than the specific individual? Retirement 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 (National Insurance Institute payments), 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. 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.
Throughout the rest of the world, governmental fiscal irresponsibility has left social security and other similar programs on the cusp of insolvency. In certain respects, social security is like a Ponzi scheme. Workers pay in now so that retirees can take out their share.
You need to take control of your retirement because it’s not realistic to rely on others to do it for you. Start taking responsibility and begin a savings/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 percent 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 that 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@lighthousecapital.co.il
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.