As Obama signs a historic budget deal into law, a measure providing a $900 billion increase in the $14.3 trillion U.S. borrowing cap by the end of this year, the severe budget cuts to match that $900 billion are poised to put a substantial strain on financial planning, saving for retirement, and an already volatile Wall Street.
Instead of indicating relief at Obama's signing of the deal, the stock market responded to the news with the Dow plunging nearly 300 points, marking a record eight-day loss streak not seen since 2008.
Baby boomers are already voicing their fears of outliving their retirement savings as they struggle with planning their future. According to a recent Wells Fargo survey, the average person in their 50s looking ahead to retirement has savings of only $29,000 to rely on once they stop working.
And, the other findings in this survey were just as dismal:
• 72 percent of adults expect to work during their retirement years
• 39 percent of Americans will HAVE to work during their retirement as savings will be gone
• Adults in their 60s have met less than 10 percent of their financial planning goals
Moving forward, Washington’s debt debacle has only sent them spiraling further into a limbo of financial indecision and retirement planning inertia.
While avoiding financial default was critical to the United States’ AAA credit rating, the new debt deal currently calls for the creation of a Super-Congress to “fast-track” legislation with basically no oversight. This quick fix eerily foreshadows a scenario that famed economist, Robert Wiedemer has been warning about since 2009 — a scenario predicting severe budget cuts, higher taxes, and soaring inflation, making saving and planning next to impossible as Americans face the aftershock of Washington’s drastic debt reduction.
This isn’t the first time Wiedemer’s predictions have come true. In 2006 Wiedemer was one of three economists who co-authored a book correctly warning that the real estate boom and Wall Street bull run were about to end, and that the stock, credit, and private debt markets would collapse. But the American public didn’t heed these predictions as financial leaders such as Ben Bernanke and Alan Greenspan didn’t support them, nor were they championed by the mainstream media. Consequently, just two years later in 2008, the financial bottom dropped out.
Realizing the worst was yet to come, Wiedemer and company penned Aftershock in 2009, which quickly became an Amazon best-seller. In this book, Wiedemer outlines precisely what Americans are facing today due to a national debt bubble that had yet to burst.
Once again, his financial predictions are right on target.
According to Wiedemer, the United States will have no financial ability to borrow, causing the government to make massive and unpopular spending cuts. Social Security will become a welfare program, so for those who actually have income, assets, or retirement savings, don’t count on qualifying. Furthermore, public and private pensions will dwindle, leaving an entire new sector of people without retirement savings — leading to even more of the population vying for Social Security, welfare, and Medicaid. The government will be in a position that leaves no choice but to make these unpopular cuts.
The only thing worse than these major budget cuts will be big tax increases. And, Wiedemer also predicts that tax hikes will be unavoidable. With so many out of work, the tax base will go into further massive decline. That will force higher taxes on those with jobs, putting a dent in their own retirement savings and stalling any financial planning. But this “dent” could wind up being substantial — Wiedemer states that the government could potentially take nearly 70 percent of taxpayers’ income. At that point, saving for retirement will become nearly impossible and planning for the future will be a crap shoot.
In the midst of a partisan debt struggle, all of Wiedemer’s predictions are either happening or on the verge of happening right now. And this book was written THREE years ago.
What’s more, just before Aftershock was publicly released, the publisher yanked the final chapter, deeming it too controversial for newsstand and online outlets like Amazon.com.
Despite appearances, Aftershock is not a book with the singular intention of scaring the hell out of baby boomers. While it does depict a harsh outlook for the financial future of America, the true value lies in the wealth of investment tips, analyses, predictions, saving for retirement, and sound financial planning advice that people can act on immediately, offering a preventive strategy and a ray of recovery hope.
For a limited time, Newsmax is currently showing the Aftershock Survival Summit and supplying viewers with free copies of the Aftershock book, including the final “unpublished chapter” (while supplies last).
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