July 16, 2012

Here we go again folks. Freedom 55 is back on the radar screen. Funny how many of the experts now characterize this icon of financial planning as an old outdated belief that has been hit like dinosaurs by one of Darwin’s bullets.

One of the recent comments in the Vancouver Sun suggests that retirees and those who save are paying for this recession. Now, that opinion struck me as being a bit peculiar because nobody in Canada has yet admitted there is a recession. We’ve heard about the economy slowing down and blaming the debt crisis on Greece and other European countries but not a recession.

Retirees have been excoriated by experts and public officials for everything from escalating health care costs to an unsustainable pension plan but not until now we’ve been told that retirees and savers are paying for the economic downturns because they’re not getting the returns.

No mention, of course, the federal government’s initiative on household debt by attacking 30 year mortgages which, in the minds of many, will likely create a recession – a made one in Canada.

Finally, nothing has been mentioned about the $486 billion owed in consumer debt – you know, the pesky little audit trail left behind by credit cards and credit lines that more than anything else tells us something is wrong in the homes and bedrooms of the nation. Our dependency upon credit to meet the basic costs of living such as housing, food, gas, education clothing and daycare; the all-time high cost to raise children while coping with inflation and perpetual tax increases digs deeper into the root of the matter – the impoverishment of the middle class over the last 35 years which logically evolves into retirement with seniors struggling with the same expenses and debt payments as they did when they were younger. The inflationary and the debt spiral keep twirling up, up, up while incomes - wages and pensions - fall behind, behind, behind.

It boggles my mind how this dynamic equation of income vs. expenses = growing consumer debt levels continually gets sidetracked. What is needed is interest relief on the consumer debt and a more equitable tax system that properly funds the social programs so essential to the national fibre of Canadian society and a new approach to administering and delivering social programs, not just the same old same old.

This idea that people have to work harder and longer is the product of a new public mantra that ignores the real financial realities of people already working harder and longer – both parents working, scrambling to make car payments, daycare and housing costs, leaving their children in the hands of babysitters, nannies or other hired professionals or they sit in front of a computer or television, or both or, they wander through the streets, parks or shopping malls completely unsupervised. This sadly accounts for much of the dysfunction in today’s disintegrating family unit which adds fuel to the burning flames of disappearing assets for future generations.

These are the ashes that many seniors walk upon today – precepts charred by broken dreams, beliefs devastated by divorce and marital breakdown and now the false promise of Freedom 55, a fundamental financial tenet worshiped by financial planners, banks, insurance companies and the consuming public for half of the last century. 

And, by the way, the fall of the investment world was not a result of hard working individuals and families but inflicted upon society by poorly regulated investment firms and experts who profited for years by profligate business practices which now have been thrown back into the faces, arms and empty bank accounts of all of those who worked hard and saved all of their lives. I, for one, do not say goodbye to Freedom 55. Rather, I say hello – to respecting hard working individuals and families by protecting their retirement from fraud and misfeasance.  Let us say thank you to the citizens that have made Canada one of the best countries in the world by protecting their pensions and hard work.