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    The Government Doesn’t Want You To Be Able To Afford To Retire

    No one ever really knows what the future might bring. But when the future is so opaque that the fear of the unknowns overcomes the optimism of positive possibilities, little good can be expected to follow.

    This applies to any endeavor, including running a business or investing for retirement.

    When companies are making plans or investors are deciding where to place retirement assets, risk is what keeps everything in check. Risk keeps companies from stepping up sales or production efforts as well as hiring new employees, as survival becomes an ever more crucial primary objective.

    And risk is what keeps investors from trusting the markets or even an individual stock. Few of us can afford to lose big after the past few years’ general market gyrations.

    We all need and crave certainty, particularly when it comes to capital. In the absence of complete certainty, we can still come to measured and educated judgments that allow and justify putting money to work for our companies and our retirement portfolios.

    But increasingly, even the most adventurous business leaders and investors are becoming more terrified of what might be coming out of government.

    This is completely lost on Congress and the White House. They seem to think that if they get more involved with individual companies, markets or even the whole economy, then businesses will be compelled to expand and investors will put their retirement capital back into the markets.

    Perhaps President Barack Obama should read more about President James Madison and less about President Woodrow Wilson.

    Madison was focused on limited government, which is documented in his contributions to the Federalist Papers. (You can read them for free at the Library of Congress website.) His focus was much in line with that of the Founding Fathers. A century later, Wilson sought to radically expand the powers and responsibilities of government.

    Considered one of the leaders of the so-called progressives, Wilson’s legacy seems to be exploding with the current government, whose operating motto is: There’s a program for every problem.

    The results are showing up repeatedly in the markets and the economy.

    Take, for example, one of the most crucial of industries: energy. In regard to mining or drilling, existing laws and regulations clearly establish operating guidelines for energy companies.

    The energy industry has experienced multiple fiascos that didn’t have to happen. The deaths and destruction in the Gulf of Mexico (thanks to BP), deaths in collapsed mines in Appalachia and major petroleum pipeline ruptures are examples.

    But the government would rather point fingers and campaign for additional laws and regulations after a disaster than do its job beforehand.

    So instead of sending inspectors to enforce rules on off-shore drill sites before something else goes wrong in the Gulf of Mexico, the government ignores existing rules and regulation enforcements.

    Rather than sending out inspectors to mines around the Nation (many of which are on Federal land), the government focuses on other issues. In fact, when Governors of States with troubled mines (such as Virginia) have pushed for Federal action, the Obama Administration’s appointees overseeing the mines actually have stepped in to deny further investigation and Federal inspections.

    And when the Supreme Court has to step in (as was the case last month to make sure that existing mining laws are upheld), the Administration voices its disapproval. 

    If you’re in the energy business (perhaps even running operations on Federally leased lands), how are you supposed to know what might be coming your way? Should you invest further on safety or just keep drilling and digging? If you lose favor with the Administration, might you come under attack, resulting in your stock getting whacked?

    That’s just in this one industry. In the financial markets, there’s a glob of who knows what inside the financial-regulation legislation being pushed by the Administration.

    Money center banks, credit unions and even brokerage companies are facing a labyrinth of unknowns because the Administration doesn’t want to use existing regulations regarding capital and reserve requirements or long-standing market rules and regulations.

    Because the Consumer Financial Protection Bureau regulations are not yet complete, banks and financial organizations have no idea what’s coming their way.

    Some banks might thrive; others will likely be crushed. Like their peers in other industries, the entities that make it will do so only if they have the right lobbyists getting the right audiences at the White House and on Capitol Hill.

    None of this is good for the markets.

    Companies in just about every industry are now facing who knows what — all at the political whims of the government.

    Yet the Administration is perplexed when companies aren’t eager to invest to expand and even hire more workers.

    From regulatory purgatory to healthcare policy uncertainty to continued massive tax code changes coming our way this year and in the years to come, it’s no wonder business investment is far from robust and it’s no wonder that companies are scared to death to hire any new employees, even if they need them.

    Risk For Your Retirement

    The results have been dire for your retirement. Because of such uncertainty, no one is able to make any sort of rational judgment as to what might be in the future for just about any industry in any market.

    So we keep going. On one day, a few brave traders might bid up some of the stock index leaders, only to see everybody panic the following day at the drop of a hat or a whisper of what might be coming out of Washington or from governments in Europe or beyond.

    Perhaps this is just a secret plan by the government to keep you working. If you keep working, then you’re paying more payroll taxes and you aren’t demanding cash from the government’s Social Security scheme.

    If the government were to actually encourage the economy and the markets to succeed, where would the need be for the next big program or the next big bit of campaign legislation? Keep everybody jittery, and the government can keep the new regulations coming.

    When it comes to your retirement, you shouldn’t have to worry whether your stocks are from companies with good lobbyists with connections at the White House or on Capitol Hill.

    Perhaps one of the best ways to protect yourself is to make sure you have some big-income-paying dividend stocks that have nothing to do with the U.S. government or even the U.S. market.

    Even better, how about a company that is profiting from its local government actually getting out of the business of controlling its citizens’ retirement savings?

    Yes, imagine being in a market and a nation that doesn’t sequester income under the guise of retirement investing, as has been theoretically the case in the U.S. Social Security program.

    A Super Plan For Retirement

    Australia is an interesting market, if only for its social pension system. In the United States, we get taxed and really have little control over the proceeds and distributions. And whether you’re retired or working toward retirement, who isn’t concerned about our Social Security system?

    It may bankrupt us, cost us more in taxes and/or give us less in benefits.

    Australia has a different plan. The nation’s retirement deal is called Superannuation, which is a fun name for everyone’s personal retirement account.

    Unlike Social Security, which takes cash out of worker’s paychecks and gives it to the government, workers in Australia have to sign up for either a company’s retirement account or one on their own.

    From each paycheck, companies deduct cash that goes to a worker’s superannuation account, which gets invested according to the will of the worker. When a worker leaves a company or joins another, he transfers his superannuation account with him.

    The key is that every Australian owns his own retirement account, which is protected and mandated by law.

    The largest company by its network of advisers in the business of the private social security plan called superannuation is AMP Limited, which trades in the U.S. market under the symbol AMLTF.

    AMP Limited (AMLTF)

    AMP Limited

    The firm administers these accounts as well as managing assets, and it even provides banking services to its clients around the nation. And it does so increasingly well.

    The assets in the company continue to climb at a rate of 7.7 percent. It has an insurance division that is increasing its business even more, by 18.2 percent. Overall, the revenues are climbing by 15.4 percent for its core products and services, including the superannuation services.

    But it gets better. Not only is the company growing its business along with the expanding economy and workforce, but it’s doing so on a more efficient basis. In banks and financial firms, one of the better indicators of a profitable company is its efficiency ratio.

    The efficiency ratio measures how much a company spends to make a dollar. The lower the number, the less it costs to make each dollar and the greater the efficiency. AMP has been moving to bolster this number. It’s improved annually by nearly 7 percent and is now 47.3 percent, a level that many of its peers in the United States only dream about.

    AMP pays a dividend of 5.7 percent. That amount should be even bigger coming back to U.S. dollars with a stronger Aussie dollar over time.

    It might well be a super way to get a bit of your retirement outside of the clutches of Uncle Sam and his minions.

    — Neil George

    Neil George is the editor of By George, an investment advisory publication. George was the editor of Personal Finance for many years. In addition, he served as editor for a collection of other investment journals published in the United States, Germany and other selected nations. Prior to his career in media, George worked for more than two decades on six continents in senior positions with a select group of financial institutions in investment banking, bond trading, brokerage and asset management. The institutions included Merrill Lynch International Bank in Europe, Asia and the Americas, as well as U.S. Bank and British- and Chinese-based Investec PLC. In addition, George worked to build a collection of independent public and private brokerage and fund-management companies in Los Angeles and New York. He also currently serves as an adjunct professor and board member of Webster University's Walker School of Business and Technology. George earned an MBA in international finance from Webster University in Europe and a bachelor's degree in economics from Kings College.

    | All posts from Neil George

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