The other idea is to confiscation 401K and IRAs. If you haven't noticed how our country really works, it's crony capitalism in the good times and crony socialism in the bad times. During severe economic weakness and Social Unrest we will see the outcry from the public, most of whom will have already spent their 401Ks to live off of while the Social Security system is going broke.
Over the past 50 years, the US government has trained society to believe it's the government's roll to be the provider of last resort from everything to economic stimulus to healthcare to retirement. The masses may cry to further socialize retirement for all by confiscating the remaining 401K and IRA plans, which will only be held by those of wealth in a few years.
Therefore, by making the fundamental tax decision to take money out now to avoid higher tax rates we know are coming, you also protect yourself in case the government insanity gets so bad they come after your retirement plans. And remember this idea, much higher taxes in the future is a confiscation of your 401K and IRA without actually taking it.
Two of my readers wanted to know my thoughts regarding Roth IRAs?
1) Regarding confiscation potential: If the social outcry is as tough and as intense during social unrest as I think it will be, I doubt the government will view IRAs, 401Ks, and ROTHs in a different light. If they come for one, they probably come for all retirement type plans.
2) As it relates to an investment plan for moving money out of a ROTH it's totally different than IRAs. Since the money going in has already been taxed, then you really don't need to plan on taking the money out until you really think confiscation is a more viable outcome. In that light, I would use a deflationary cycle confirmation trigger. Something like the Dow Jones Industrial Index falling below 6,000.
Even if we get to confiscation of retirement plans, it should be a few years down the road. Higher taxes in theory should come first.
Another reader asked the following: How do you propose to live in the coming age of unrest? Where?
In social unrest, the populated areas will feel it at a different degree than the rest of the country because there will be crowds of unemployed broke people essentially living on top of each other, which intensifies social unrest. So, you really have two choices on where to live to avoid social unrest at the most intense degree.
1) Expatriate to a country where it's relatively cheap to live. My parents snow bird each year in retirement. They spend 6 months in the United States and 6 months in Mexico. Even with some of the crime and gang activity in Mexico, they know where to go where it's safe. But you can really chose any number of countries south of the USA. Within some countries, there are large cities that are more European like than anything else, and quite often you can live off your Social Security check in these areas.
2) The other option is to expatriate within the USA! What you ask? My parents have chosen for the time being to spend 6 months a year in a small farming community where they grew up during the 1950-60s. This little town of 300-400 is the middle of nowhere. It's literally 5 hours to a Starbucks, a mall, or an airport. In these pockets of the USA, you will be far removed from every day America and the Social Unrest of the masses.
As it relates to the question on how to live in social unrest? I recommend that you live frugal to protect your wealth but to look like your poor so your not a target.
Hope all is well.
J.D. Rosendahl, Rosey