New Wealth Strategy
Solves the Middle Class Retirement Dilemma
Back in 1974, Washington bureaucrats met behind closed doors to solve the “pension problem.”
What’s the “pension problem?”
Well, it first became apparent in 1963 when failed automaker Studebaker Corporation closed down its U.S. assembly-line facility.
Studebaker’s pension plan was so underfunded that one-third of its workers got axed from their jobs with no pension at all.
Another third of the employees only received 15% of their vested value.
Then President John F. Kennedy appointed a commission to look into fixes for this problem.
Ten years later, the US Congress came up with plan that was supposed to save the day.
Unfortunately, it would be the doom of the many middle class Americans.
If you lost money in the 2008 stock market crash (or any previous crash), you’ve been victimized by it.
But the real threat to the Middle Class from this menace is yet to come. We’ll reveal that in a minute, along with a sensible solution. (If you can’t wait, it’s right here).
But first, we need to track down the roots of this middle class threat.
Congress’ Failed Attempt at
Pension Reform: ERISA
The Employee Retirement Income Security Act of 1974 (ERISA) introduced Individual Retirement Accounts (IRAs) to the American middle class.
The promise was to allow individual investors the opportunity to reap the capital gain rewards of the stock market that had previously been the domain of the wealthy.
It all sounded good on paper.
The big problem was that nobody bothered to teach sound investing techniques to the little guy.
Up until that point, most people didn’t invest on their own. They got a job. They worked themselves up the company ladder. And they retired with a pension.
All for the same company (which is almost unheard of these days).
The key was the pension.
A pension was an actual pool of money that employers and employees put into the pot.
Companies hired professional investors to manage the pension funds. These managers did all the investing.
The workers simply contributed, trusting that when they retired, the pension would be there to take care of them.
For the “Builder” generation it worked. At least for the most part.
But the Studebaker incident revealed some massive flaws in the system.
And the government commission that studied pensions found the problem was more widespread than they thought.
Hundreds of large companies employing hundreds of thousands of workers were under-funding their pension plans and using that money for other purposes.
Strangely, ERISA only partially addressed that problem.
Under ERISA, companies were no longer required to offer pensions to their employees.
But companies that did faced a whole new set of onerous regulations to follow.
As a result, companies began abandoning traditional pension plans rather than meet the stringent requirements of the new law.
The Move Away From Pensions…
Into Individual Retirement Accounts
So for the “Boomer” generation, retirement options changed. With pensions becoming a relic of the past, large corporations pushed employee 401(k) plans instead.
And everyone was advising individuals to take advantage of the new, wonderful opportunity that an IRA offered.
Since the average wage earner knew nothing about how to invest, large Wall-Street firms took charge.
They recruited wide-eyed, wet-behind-the-ear, young college grads, gave them minimal training.
They armed them with a small set of financial products (usually mutual funds) and sent them out to “help” this new flood of investing prospects.
Financial planners sprang up like mushrooms in a manure pile…
…and began convincing every “Middle Class Mary” and “Blue Collar Bob” that they needed to put money into an IRA…
…which meant investing in the stock market through mutual funds.
That, too, worked for a while.
In fact, a whole generation of Boomers turned 40 and 50 something watching their money double, triple … even quadruple every 5-10 years, just holding it in the stock market.
It really didn’t take much know-how either. Almost anyone could do it.
All Good Things
Must Come to an End
But that was the old model. It worked for awhile. But not anymore.
Most people still (mistakenly) think a buy-and-hold strategy in the stock market will just magically start working again.
It won’t. At least not for a long, long time.
What most people didn’t realize back then (and still don’t today) is that the 1980’s and the 1990’s were the biggest bull run in the stock market ever.
Stock valuations got out way out of proportion because so many people were piling into the market.
But everything changed when dot-com bubble burst.
After that debacle, many an investor sat at his kitchen table at 2:00 AM, unable to sleep, staring blankly at his latest investment fund statement.
Depressed. Scared. Despondent.
Unfortunately, many investors who lost their fortune in the dot-com fiasco didn’t get smarter – they just got more stubborn.
Their financial advisors gave them the standard pep talk: “you just have to tough it out. This will correct itself. Stocks always go up.”
They’d even try to convince themselves with little internal mantras … “I know it works because the stock market has always worked!”
In one sense, it’s understandable.
No one taught them how to invest … how to read the warning signs.
And who was supposed to teach them?
School teachers who were living paycheck to paycheck on the low end of the pay scale? Their parents? Grandpa and Grandma?
How were they supposed to know about investing? They grew up in the pension era. And they all got clobbered too!
So the Middle Class limped along, taught by under-educated financial planners (who usually made less than they did) that the stock market and IRAs and 401(k) plans were still there to help them.
Wall Street’s Dirty Little Secret
Meanwhile, Wall Street laughed all the way to the bank.
You see, they knew that allowing a huge pool of rookie investors into the market was the best gift they could get.
It was like dumping a bunch of helpless minnows into a tank of hungry sharks.
And big Wall Street firms have been gobbling up the middle class’s money ever since.
For example, in 2011, Goldman Sachs awarded over $15 billion dollars in bonuses to its employees. That’s an average of $430,000 per employee!
Even first year, junior analysts at Goldman Sachs received an average bonus of $56,000.
And that’s not even counting their annual salaries! (usually twice the amount of the bonuses).
Oh … and let’s not forget those mutual funds that every Middle Class worker was wooed into buying.
The average mutual fund manger receives a $436,500 salary annually (not including bonuses)…
… even when their fund loses money for the investors (like 70% have since the year 2000)!
It’s enough to make you sick to your stomach … or make your blood boil.
How to Get Revenge on Wall Street…
The stock market was once a “safe” place to park long-term investments.
But those days are long gone.
Nowadays, you need a new plan. A set of proven strategies to take control … and get revenge on those Wall Street cronies.
The Elevation Group offers you the strategies and the plans.
Plus, we’ve got experts standing by to help you implement those plans and adapt them to your own unique situation.
Now is a great time to (finally) take control of your own finances…
Invest in real assets that you have control over…
And completely bypass Wall Street on your way to Easy Street.
The stock market will likely get hammered in the coming years. There’s really no solid foundation to it. It’s all pumped up with funny-money the Fed’s been dumping into the system.
And hidden in the ERISA act is a provision that forces retirees to withdraw money from the market at a set age.
When millions of Boomers start doing that in the next few years, it could get really ugly.
In the meantime, the stock market is going to be an incredibly volatile ride.
In those conditions, only the Wall Street sharks make money…
…while Middle Class investors get fleeced.
Don’t be a victim.
Your Partner in Prosperity
The EVG Research Team