Me, Mr. Moneybag

Whoopee! I’m in the money! It was a good news week when I received the April Raymond James’ Retirement Account Summary report. I had to contain my joy as I realized that my investment funds were back to where they started in June 2004.

And to think it was just a short while back in September 2007 when Rick and I had our monthly chat on the economy and he brought up the fact that ‘we’ had reached the goal set up when I spooned over my cashed-out pension fund and the 401(k) account with my ex-employer.

Last month when I called Rick to query any recommended changes in the direction of investments, he assured me the current allocations would be good for the short-run, to which I assumed was another way of saying there aren’t any safe bets in the markets right now.

In normal times it would be odd to be relieved that after five-years the value of your retirement savings is at near zero in gains, but these past 18 months of economic distresses are anything but typical. I struggle with resigned acceptance and remain doubtful the recession nightmare will soon be over as predicated by guru economists still floating their boasts on an overcrowded magic carpet.

It seems foolish that people rejoice when economic indicators aren’t as bad they could have been, especially when April’s figures put another half million workers freshly beating the pavement in the chilly climate of hiring freezes and more gotta-let-ya-go’s. It’s strange days on high-ballin’ Wall Street and lonely nights for the homeless in the back alleys off Main Street.

Therefore, as I’ve done quite often, I ponder the thought of aggressively invading my retirement account on a hunch that the next big dip in the markets will again deflate my financial ego. Even a low interest-bearing MMA or CD (FDIC insured way beyond my funds) would be better than what I perceive lies ahead. If I don’t act now, I’ll have to invent a time machine, go back to 2007, retroactively clear out a huge chunk of money, bury it in the back yard and get an automatic assault weapon to protect my non-investments. Oh well, the SEC, IRS and ATF would be on me faster than Obama can take ownership of yet another private enterprise.

No, it’s not a good idea to take out funds from a 401(k) or IRA. It’s the 10% penalty on an early withdrawal that keeps me from acting foolishly, as if I were a rich man. Although there are withdrawal penalty exemptions prior to reaching the age of 59.5, the tax bill still comes due.

Retirees and those with disabilities got some bad news this past week when an announcement confirmed Social Security recipients won’t be getting an annual cost of living adjustment (COLA) increase next year. The Congressional Budget Office forecast also indicated the same for 2011 and, with inflation expected to remain low over the next few years, an increase might not be given until 2013, although President Obama’s budget calls for a 1.4% increase in 2012. The 5.8% increase received in January will have to suffice for a very long time for the more than 50 million Americans on Social Security, many who will be faced with higher monthly premiums for Medicare Part B and prescription drugs. The grim situation could be resolved if the government stopped raiding Social Security and paid back the $2.5T that’s already been confiscated from the fund, over $200B in 2008 alone.

Individuals on SSD/SSI will receive their share of Obama stimulus package with a $250 payment this month. They’re pretty much tapped out on their retirement accounts so it won’t last long or go very far in easing their personal financial crises.

Consider the prospect of presently ineligible Americans being able to withdraw funds from their IRA’s without penalty. The Katrina Emergency Relief Act of 2005 did just that, allowing those affected by the hurricane damage to withdraw up to $100,000 of their retirement savings without penalty. That’s quite a big chunk of change when the typical account value is $45,000.

There are murmurs that Obama should consider this same action to ease the financial devastation that’s fallen on most American households, perhaps avoiding foreclosures and bankruptcies. According to a recent study by consulting firm Watson Wyatt, early withdrawals rose from 15% in October 2008 to 44% last month.

There’s $2.5T waiting to be purged from retirement accounts nationwide. Two years ago Americans had $4.5T in those same accounts. So, why wait until it’s gone as never before? What the heck, let’s all withdraw every last penny from each of our retirement accounts and have one great big final WHOOPEE! And save a few bucks for a whoopee cushion – you’re gonna need it.