by Bobby Shockley
The administration of President Obama appears to be developing a proposal for mandatory automatic enrollment in individual retirement accounts for those who do not currently have one, which could be supported by the creation of Treasury-issued retirement bonds. On the surface this may appear to be innocuous, but upon further examination, one quickly notices the inherent reasoning behind such a shift.
U.S. Treasury securities are the primary instruments used to finance the federal government’s debt. President Obama wants to spend more on his programs, thus he needs to find a way to get more money. I value such freedoms as free speech. With every dollar my wife and I choose to invest through our participation in 401k, 403B, TSP and other investment vehicles, we are making a conscious decision to grow wealth not maintain wealth. With this action, we are speaking with our dollars.
Having peoples monies involuntarily used to purchase bonds presents three problems for me: First, you are not allowing them to seek a better return on their investment, thus you are legislatively stymieing their economic growth; second you are mandating how people spend their money and third you are creating more debt.
Because I am fairly young, my financial advisor has advised me to be more aggressive with my investments. The reasoning behind this is that the market will produce a better rate of return over the long haul and since I am not planning on retiring any time soon, this strategy should bring me the highest rates of return. Conversely, he also said that as I get older I want to be less aggressive, since I would be moving closer towards retirement. If I were required to put all of my money in bonds, I would be receiving lower rates of return and would probably have to work longer than I may want.
America is still a country where individual rights mean something. I, not the federal government, should decide if I will or will not invest my hard earned dollars and I, not the federal government, should decide what path I want such an outlay to take. Last I checked, democracy is about people having a say in what is to take place.
In my view, America already has too much debt. We should be looking at ways to decrease not increase our debt. And having it shifted from foreign owned to American owned means nothing to me- debt is debt regardless of who holds the notes.
If the administration is truly concerned about people having enough to retire on, instead of producing a separate mandatory account, how about investing a portion of social security in the market, since it is already a mandatory investment for the working class? This may also be a better venue since Social security currently has a surplus and being able to gain a higher rate of return would help to generate future solvency.