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It's official!  The baby-boomers are retiring.

Jeff Brown, San Diego-based real estate investments broker and all around good guy reports from the BawldGuy Talking Blog:

This is no small event people. Your gonna hear about this lady non-stop and I’m sure, with gleeful overkill for at least the next week. It’ll finally run outa steam Sunday morning on all the talking head political shows. Run outa steam? I meant just the first round.

What does this mean for the average Joe and Mary? Plenty.

Yawn? 

Hell  No !      Baby boomers are the country's biggest influencing demographic.  Their influence on the economy has been compared to watching a basketball travel through a python.  Among others, Jeff Brown and I know that the baby-boomers are woefully underprepared for the financial demands of retirement.  They are living longer, taking care of ailing parents, and, in some cases, still providing for adult children and their offspring.

So, let's go back to Jeff's question.  "What does this mean for the average Joe and Mary?"

Higher Taxes.  Jeff calls it here:

Politicians are about to go into a feeding frenzy, and they’re gonna do their best to demagogue this into the first Tuesday of November of 2008. Both sides will take this and create a tsunami of confusing rhetoric, designed to scare the holy you-know-what out of voters — especially, and ironically, Baby Boomers themselves.

They’ve been waiting for this event. It gives them entree into the ‘we must raise taxes’ room, with solid cover.

What's the solution?   Get your money out of a 401-k or IRA and start getting you retirement assets into assets that the government won't try to confiscate in retirement.  I said this over on Laurie Manny's Long Beach Real Estate Home, six months ago:

Hailed as the answer to corporate pensions, the 401-k plans, sometimes called thrift and savings plans, allow a worker to contribute a portion of his earnings, on a pre-tax basis, to a self-managed account.  It was the perfect tax break for the "working man" and encouraged savings for a consumptive generation (The Boomers).  The savings can't be withdrawn without a penalty and taxation until you are 59.5 years of age.  At 70.5 years, a person MUST start withdrawing from the account.

That is just what the government wants.  It allowed the government to "bank" taxes to supplement a dwindling social security system.  It further sets up a potential benefit reduction for middle income retirees (which I believe is coming).  The government will harvest taxes in the next 40 years and potentially reduce benefits to retirees who draw on those accounts.  It is essentially the perfect storm and it was carefully constructed to deal with the Boomer retirement problem.

Here is the problem you face today.  If you've been a diligent saver, using the IRAs and 401-k plans, you could potentially pay a huge amount of taxes in your retirement. You see, your account has been growing in a tax advantaged account; many of you have a sizable fortune in those plans.  The government stand to profit well off of your thriftiness.

Today was the shot across the bow; take cover and get prepared for the 40 year war.

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Brian.Brady 1 feedback »

Comment from: Arlington VA Condos -- Jay [Visitor] · http://www.justnewlistings.com/

After so many great posts I've read from you at bloodhound I'm officially looking for the RSS on your site right now to subscribe directly! 

Please keep me up todate with your posts on the NAR internet compliance crapola in the pipeline....They would not like many of my posts I'm sure...especially my regular lists of overpriced condos.  They are shooting themselves in the foot.  Tranparency is what will win the loyaly and respect of the consumer.  RE bloggers are high up on the chain in the chain of trust factor by consumers compared to most realtors....

Peace out,

Jay

Permalink October 16, 2007 05:02:20

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