US Government wants retirement savings in US Bonds

Why the US Government wants retirement savings in US Bonds

According to financial research firm ICI, total retirement assets in the USA now exceed $23 trillion. $7.3 trillion of that is held in Individual Retirement Accounts (IRAs).

[box type=”alert” style=”rounded”]The U.S. government just passed $19 trillion in debt[/box]

Unfunded Social Security entitlements the government estimate is another $42 trillion. The US national debt has increased by roughly $1 trillion annually over the past several years. According to the Federal Reserve own weekly financial statement, the Fed’s solvency is at precariously low levels (with a capital base of just 0.8% of assets). US taxpayers own the largest share of the debt, mostly through various trust funds of Social Security and Medicare.

Given the $42 trillion funding gap in those programs, it’s mathematically impossible for Social Security to continue funding the national debt. It’s not like government spending is going down anytime soon; it already takes nearly 100% of tax revenue just to pay mandatory entitlements like Social Security, and interest on the debt. Plus the government itself estimates that the national debt will hit $30 trillion within ten years.

[box type=”info” style=”rounded” border=”full”]Financial reality puts the US government in a difficult spot. $7.3 trillion in US IRA accounts is too large for them to ignore.[/box]

And if you think it’s inconceivable for the government to borrow your retirement savings, just consider the following:

1. Borrowing retirement funds is becoming a popular tactic. Forced loans have been a common tactic of bankrupt governments throughout history. Plus there’s recent precedent all over the world; Hungary, France, Ireland, and Poland are among many governments that have resorted to ‘borrowing’ public and private pension funds.
2. The US government has already borrowed federal pension funds. During the multiple debt ceiling fiascos since 2011, the Treasury Department resorted to “extraordinary measures” at least twice in order to continue funding the government. What exactly were these extraordinary measures? They dipped into federal retirement funds and borrowed what they needed to tide them over. In fact, the debt ceiling debacles were only resolved because the Treasury Department had fully depleted available retirement funds.
3. The US government has paved the way to invest your retirement savings in US Bonds.

Example: Two years ago the government launched a new initiative to ‘help Americans save for retirement.’ It’s called MyRA which invests retirement savings in US government bonds.
A number of legislative reforms ‘encourage’ American businesses to sign their employees up for MyRA. Congress just last week introduced the “Making Your Retirement Accessible”, or MyRA Act, which would charge a penalty to employers whose workers don’t have a retirement account.  The proposed penalty is $100. Per worker. Per day.

Imagine a small business with, say, 10 employees who don’t have retirement accounts. The penalty would be a whopping $30,000 PER MONTH. Obviously when facing a $30,000 monthly penalty, an employer will invest in US government bonds. The US Government wants your money invested in US Government Bonds.

[box type=”tick” style=”rounded” border=”full”]Your total control is in our recommended IRS and FATCA category Self Directed IRA registered foreign investment account.[/box]

The Internal Revenue Service, the U.S. Treasury and FATCA acknowledge this foreign investment account on W-8BEN-E box 29e. That means you are free to invest in the tax free environment offshore without U.S. person blockage to investments globally. Contact us today for the free whitepaper.

Photo credit: ClaraDon via Visual Hunt / CC BY-NC-ND