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Financial Planning > Behavioral Finance

Courage of their convictions

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“To see what is right, and not do it, is want of courage, or of principle.”
– Confucius

As the American presidential election season gets into full swing, it is both astonishing and troubling to see that neither major party is talking about solutions to the fiscal crisis facing our country.

United States Comptroller General David M. Walker recently told 60 Minutes that the federal government’s fiscal crisis is so great that it threatens the future of the republic. He embarked on a mission to take his message directly to the people because, he says, politicians don’t want to hear about it — much less act.

During MDRT’s Boomertirement Industry Summit, Dr. Alan Greenspan conveyed a very similar message about government inaction. He said the federal government will find it increasingly difficult to keep all the financial promises it has made through Social Security, Medicare and other programs. At the same time, however, he said solutions do exist. For example, he stated that the problems with Social Security could be solved in about 20 minutes — with 15 of those minutes spent on pleasantries.

It’s very simple: We either have to reduce benefits or increase contributions. Otherwise, Social Security, Medicare, health care and other financial challenges — converging with the coming wave of 78 million retiring baby boomers — are going to devour the federal budget.

I believe the candidate who has the courage to talk honestly about this issue and the solutions (cutting services or increasing taxes) without dramatizing it, will gain credibility and traction. So, why is neither side of the political arena addressing this issue? As my experiences as a state senator showed me, many politicians believe that honest talk about cutting services or increasing taxes is the “third rail” of politics.

As leaders of the life insurance and financial services industry, it’s up to us to make it happen. We must join together to encourage political candidates and leaders to address our growing fiscal crisis.

We must also ensure they better understand and appreciate the role our solutions — annuities, life insurance, retirement programs, etc. — play in preventing even more people from needing the government’s financial support. Because insurance and financial services companies may seem to politicians like easy targets for increased taxation, we must raise awareness that taxing the benefits these companies provide will actually increase the number of people beholden to the government for financial support.

Finally, while we can encourage and hope for changes that will allow the government to keep its financial promises, we must counsel our senior clients that they can’t count on it, and help them take action on their own behalf to secure their financial futures.

For me, this election is all about courage. Can we find a leader who has enough of it to acknowledge that these problems exist, and to offer a solution that doesn’t hurt the manufacturers of critical financial tools?

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