Your Investments: No financial worries: The politicians will take care of you

Your retirement is no one else’s responsibility— especially the government’s.

By AARON KATSMAN
Paper slips from the 2015 election, at a voting booth in Jerusalem (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Paper slips from the 2015 election, at a voting booth in Jerusalem
(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
“Elections should be held on April 16 – the day after we pay our income taxes. That is one of the few things that might discourage politicians from being big spenders.” –Thomas Sowell
We have entered the home stretch of Tuesday’s general elections. The highlight of this election cycle has been watching the election commercials with my kids. It’s hilarious watching the ads, produced with a smartphone in selfie mode, or created using PowerPoint, of the small and obviously underfunded parties which no one has heard of. My kids just roar with laughter at the amateur quality. It reminds me of the time a few years ago when channel surfing during Chol hamoed Pesach, I stumbled across the 1956 epic The Ten Commandments, with Charlton Heston playing Moses in all his glory. In my excitement, I called the kids over. Sitting on the couch, they burst out laughing. When I asked them what was so funny, they said the special effects were a joke. They could create something much cooler on the computer, they said. And then, as they often do, they proceeded to make fun of me being old!
WHAT MAKES ME cringe every election cycle is how the politicians go around making all kinds of expensive promises, and the electorate eats it up. It’s as if people are willing to abdicate their own financial sovereignty because they believe that politicians will take care of them. Whenever I hear politicians blather on about how they will solve our problems,  I am reminded of the brilliant quote from former US President Reagan who said, “The most terrifying words in the English language are: I’m from the government, and I’m here to help.”
Can the government help?
Instead of taking individual responsibility, many people look for the government to solve their problems. As if some politician has the secret sauce and knows what is better for you than you do. If anyone needs reminding how inefficient government is, just look at the high-speed train from Jerusalem to Tel Aviv. Opened a decade later than planned and way over-budget, the train is finally up and running during very limited hours – and to Ben-Gurion Airport only – when it’s not canceled due to technical glitches. Want another example? Ask the 8,000 evacuees from Gush Katif how well the government took care of their emotional and financial needs.
Time after time, the government has failed us, and yet many Israelis keep coming back for more.
So why would anyone think that when it comes to personal finance issues the government will be able to get things right? They wouldn’t know a balanced budget from a $2 bill. Governments can just print more money and leave it to future generations to pay the piper. An individual implementing the same policy would file for bankruptcy and lose all his possessions within a few months.
You would think the lesson would be learned. Alas no. Often when I speak to people about retirement planning, I am met with the common response: “I don’t need to plan for retirement because the government will save me.” Good luck with that! That NIS 2,500 from Bituach Leumi won’t even pay for the A/C in the summer.
You need to take control of your finances, and create a disciplined approach to saving. The first step is to draw up a budget. This will provide a clear picture of how much money is coming in versus how much money is going out. Wouldn’t it be nice if the government did this too? The next step is to determine how much needs to be saved and invested, on a monthly and annual basis, to reach the long-term net worth which will allow you to achieve your goals and needs.
Let me illustrate this. If you invest $15,000 at the age of 25, and add $2,000 yearly with a return of 5.5%, by the age of 65 you will have amassed $415,000. I encourage you to search online for “compound interest calculator.” Plug in your own numbers and see what needs to be done to get you where you want to be financially.
But start today.
Your retirement is no one else’s responsibility— especially the government’s. Since no one else is worrying about your future, you need to take charge and start implementing the basic principles to get yourself on the path to financial security.
And don’t forget to vote!
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995, visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.