invest or retire with nothing
A Government works like a business, but unlike a good business, it is running insolvently in Australia and many other countries.
It has revenue and expenses but its expenses are greater than its revenue, and it is getting worse. A surplus is when there is more revenue than expenses, a deficit is where there is more expenses than revenue.
The Government and any weak and failing business keeps borrowing money to pay the deficit, which is why government debt is on the rise.
The main issue which everyone is talking about at the moment is as follows; over the next 20 to 40 years, expenses will out way revenue for the Government, it already is. The burden of funding the pension for the baby boomers who have failed to provide for themselves anything more than a mere existence rather than a good life is enormous. Health as well as the pension will bring the Government to their knees, making up for the inaction of the majority of the population who failed to invest or invest wisely and end up on the pension.
The government have four choices (or combo thereof):
1. Increase revenue (via higher taxes)
2. Decrease expenses
3. Sell assets (you only have a finite asset pool to sell though)
4. Borrow
Options 1 and 2 is what concerns me, as it will negatively impact on my kids and future generations, and is therefore arguably the most politically sensitive.
People in general don’t like to be taxed more, and do not want to be disadvantaged by having reduced entitlements and services.
Most Governments lack vision as they simply focus on the current term in office, and they rely on their citizens to bail them out by succumbing to sacrificed services and higher taxes.
I have often told people there may not be a pension as we know it in the future. It is so important we take action to help ourselves and of course support a Government that has values, integrity and honesty. The last word honesty in same sentence as Government is an oxymoron I think.
Thanks to S McKnight for his contribution to the above.
The question you MUST ask yourself is this.
Is the fear of doing something now for the future more overwhelming for you than the fear of doing nothing?
