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Three-Legged Stool, My Ass

Sep 11 • Categorized as Self-Directed IRAs

3 legged stool
How secure is your retirement?

3 legged StoolI’m not the most tolerant person on the planet.

I’ll let folks cut me off in traffic. I won’t say a word as they try and take two dozen items through the ‘ten items or less’ lane. What I can’t stand is the nonsense that gets thrown around from leaders and businesses who know what they say isn’t true.

The one that got me today was at my bank: “Social Security is one part of your ‘three-legged retirement stool’ – Social Security, a Pension, and your Personal Savings.”

They’re delusional. We all know it. If you’re sixty or younger and like most Americans your “Three-Legged Stool” looks more like a stick with a burr on it.

A Pension? Where do I sign up for one of those?

Most of us don’t have a pension at all. People who , don’t usually expect it to cover monthly expenses in any real way… not surprising, considering health care costs continue to climb at three times the reported rate of inflation. The states’ pension plans are starting to look awfully shaky too. If a retiree can cash out of those as some ‘one-time-opportunity,’ I think most advisers would say they should very seriously look at doing so.

The bottom line is that if you aren’t already collecting a pension check you should be very concerned about getting what you’re expecting; if you’re planning on getting a check at all.

That’s one leg just plan gone for most of us.

Social Security? Yeah, that’ll work.

It’s broke. Haven’t we all seen the charts? It is literally burning cash every year from now until collapse. Its savings account is made up of US Government debt. Everybody trying to get elected talks about it being a crisis. Everyone who is elected seems to decide ‘it’ll be okay.’ For those keeping score at home, this is not a good sign.

Whatever it is able to pay (projected to be at a higher retirement age and at approximately 75% of promised benefits depending on your current age), it is very unlikely to be something you can count on for a meaningful retirement (nor was it meant to be).

People like to believe that even though they don’t have enough money, everything will be fine. Maybe they made bad investments. Maybe they were counting on extra earnings that never showed up. Whatever the case, a great number of people are living off Social Security right now and you don’t want to be one of them… because what they are getting relative to the cost of living is much better than what people in the coming decade and beyond will get.

Social Security will be something; but it sure isn’t a leg to bet your future on. It should be considered ‘extra’ money only. You must strive to not need a penny of it if you want to still be sleeping well in the future. If this isn’t how you feel about Social Security right now, please, study it more. Facing bad news before it hits gives you some time to plan and adjust. Hoping against all odds (and data) isn’t fun. Social Security will be ‘something’ … but it isn’t the something we have been told it’ll be.

Personal Savings – Your IRA/401K and Your Best Shot at a Retirement You Want

Now for the one leg you can count on: your own money that you control. I’m not talking about money some fund manager handles for you. I’m talking about investments you choose. Gold, real estate, a farm, equipment, private placements, offshore holdings… no one cares about your money as much as you do.

Taking some time, be that a month or a year, and learning how to take your current talents to become a better investor is the best investment you can make. If you haven’t struck out on your own yet, don’t be afraid to. Right now there are more opportunities for success than there have been in decades. You can do it.

If you are ready to take action, be that venturing out on your own for the first time, or just improving your retirement account so you can have a solid foundation to build bigger (and faster) during this window of opportunity, we’re here to help.

Anyone who posts on this thread below will receive a gift to get them started (or further along) on their journey.

Post a question you have about investments. Post why we’re wrong and Social Security will magically be okay. Post what you’re doing outside the stock market and what you think of it. Just start taking action. Those that don’t will suffer tremendously in the coming years, and those that do will be rewarded greatly for their effort.


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  1. this is a crass and cheap attempt to panic folks into buying into your gloomy vision of the future and thus your ¨services¨ without any transparency and authenticity. Shame on you, you aren’t the sharp end of the pencil mate!

  2. This topic has been consuming my waking hours for several years now.

    We own our retirement condo outright, with annual property taxes of under $1K , and monthly association dues of under $300.

    Our cars are newish and in good repair, and we also own them outright.

    We have no credit card debt, use the cards for travel mainly, and pay the balance off each month.

    We are still working, and banking our Social Security checks meanwhile (we are both over 65).

    We own about $5K worth of stock, which, in spite of the tanking market, is still showing a modest profit. We have no other investments.

    What do we do next, to begin to ensure a reasonable continuing income after we retire from the work force, within the next 18 months to 2 years?

  3. LOL on your Three-legged stool comment! I’ll be 64 next week so I’ve been trying to learn about investing for last 4/5 years. I don’t have much to invest but there really isn’t anything that pays much to invest in. I’ve read your 5 part article about purchasing houses. I have a 401K and earlier this year I began a Roth 401K – I only wish I’d have done it sooner. I can’t decide whether to retire next year or wait till I’m 66. I’ve always liked the idea of rental properties as you described in your 5-Part series. I definitely need to do something to supplement my SS as it certainly won’t be enough to retire on and as you say, how long will it really last. I don’t want to give my money to someone else to invest – I’ve had IRA’s before and they hadn’t done well over the years.

    Truthfully, it’s very difficult for someone who doesn’t have a lot to invest with to decide what to do with their money because we cannot afford to lose much if any so the decision can be frightening. I’d thought about stocks that pay dividends but the market is too volatile. I’ve tried CDs with foreign currencies and now they are down. So, I seem to be learning the hard way. Can you offer any suggestions?

    Thank you, Lucy

    BTW – I really enjoy your articles…

  4. At 56 i cannot depend on the government, a rich uncle or parent’s estate to help me with my retirement security. I have come back from a bancruptcy 7 yrs ago. I owned a $500,000 home (i purchased for $285k) a beach condo and had cash in the bank. I was set…until a wife took it all.

    I sold the house …rented and banked $100k in home profits, proceeds from selling all I owned and moved on determined to make it for me and my daughters. Now, I earn $100k working 60hrswk and save $1000k per mo in my 401k. Im not rich but moving in the right direction.

    I agree with the author….the bottom line is to take action for yourself. It is the ONLY thing you control for your security in the golden years….

    I am now looking to invest in properties that will produce income for me without having a lot of leverage. NO way do I want to be in debt when Im 70 and cannot afford to make a mortgage payment when the tenant bails! I am all ears for the person who can teach me that..

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