Many families cannot afford to save in both college funds and retirement funds. If it comes to a choice between the two, it is often better to choose the college fund. College is a more immediate cost and it pays off it families focus on one goal instead of unsuccessfully trying to save in investment funds for both college and retirement. If the second parent returns to work when the kids enter school, then it becomes feasible again to save in both investment funds. During this time, they can choose to amplify their savings to compensate for lost time.

When planning for college funds for a family with one income, it is best to make your plans on the current income. While it may be likely that a second income will come later, there is no way to guarantee this or that the income will meet your expectations. With one income and saving first in a college fund then retirement fund, your calculations will likely put your retirement age up a few years. Later, if the second income comes (or a raise), then you can recalculate and boost your savings to the college investment fund and retirement.

Hungary was one of the first nations in the former soviet block that opened up its financial industry to investments from foreigners. As trust of the government’s treatment of investment fund savings erodes, so does the confidence of investors – and at a time when Hungary needs most to bolster this confidence.

The criticism of Premier Orban doesn’t just stop with the way he dealt with retirement investment fund savings. The European Union also criticized a law he passed which restricts the media and many have questioned his high taxes on banks which is the current highest in Europe. Andras Jenei, who analyzes politics with the Center for Fair Political Analysis in Budapest, said “Concern over the security of savings is justifiable for higher income earners.”

These irregular methods for lessening the budget have compromised the nation’s budgetary stability and the independence of the banking system. However, the yields on the Hungarian benchmark 2016 investment fund bond rose to 8.36% after the controversial retirement fund decision. It has dropped since then to 7.21%.

While politicians are citing the need to send private investment fund moneys to the state, increasingly more money is headed out of the country. The Raiffeisen Bank in the small border village of Andau in Austria said that they have had a wave of many new clients. Many Austrian banks are now even accepting forint and it seems like this trend in investment fund savings outside of Hungary is going to increase with the discontent for the nation’s economical strategy.

Amongst the many reforms planned to the health fund, officials want to alter the way drug subsidizing. The OEP must make these reforms in wake of much bad press, often for matters to which they have no control such as the shortage of flu vaccines.

From July 1st, Hungary plans on raising taxes to pharmaceutical companies to 20% from the previous 12%. The goal of the plan is to reduce the health fund over the course of the next three years. Under this plan, the state only supports expensive drugs if they are effective in therapy. Secretary for Health Miklos Szocska said that this plan will reduce burdens on patients while making pharmaceutical companies more responsible.

Some of the criticisms that this plan has evoked is that it puts too much pressure on doctors who will have to show the effectiveness of treatments. The plan also does not address a problem of over-prescription of medicines in Hungary. Some opponents argue that a doctor’s fee would help reduce the health fund deficit as well as the number of unnecessary prescriptions.
Even with the reforms to the public system, it is unlikely that Hungary will move towards private health fund investments. Even many expatriates from Hungary are reluctant to invest in a private health fund. Plus, there is always the treat that the Hungarian government would do the same thing to private health funds as they did to the private retirement funds and basically coerce citizens to use their savings for covering the national debt.

In most western countries, your retirement savings funds will not be taxed. This means that you can save a considerable amount of money while building up your means. However, there are strict rules regarding retirement savings funds especially in regards to withdrawals, transfers, inheritances and setting aside funds for your children. In the US, you will pay a 50% fee for taking out funds for a reason which isn’t approved. There is usually another fee of 10% if you make a withdrawal from your retirement savings fund before you are 59.5 years old.

Diversifying your investment funds is crucial for lowering risk and ensuring for the future. Many employers have 401ks with matching programs where they will match the amount you put in. That means you are getting free money. While subject to eligibility, investing in Roth IRAs is a great way to let your funds grow without taxes but still have access to them at any point. You may want to consider rolling your retirement saving funds into an IRA, especially if you are planning on leaving your current job in the future. An IRA is much more flexible than a 401k and can be used for college tuition, emergencies as well as retirement saving funds.

Regardless of what the citizens choose, they have a lot to lose. If they return to the state retirement plan, then their pensions will be held in individual accounts and spouses will not be able to inherit them. Those who decide to stay with the private retirement funds will lose their rights to the part of the state retirement fudn which they would have gotten as based on their future contributions.

Hungary is not the first to pull this tactic in a desperate attempt to get out of debt. Argentina did the same in 2001 when it took approximately $3.2 billion from retirement funds before they were able to stop paying their debts. In Europe, Poland, Bulgaria, Ireland and France are also dipping into the private retirement funds like personal piggy banks.

While Hungary may not be alone in their decision, the deal they are offering citizens is particularly bad because the losses for remaining in the private sector are so great. As Zoltan Torok, an economist with Budapest’s branch of Raiffeisen Bank said about the deal pushing Hungarians towards the state fund, “It’s probably enough to ensure that no one is going to stay in the private pension fund system in his or her right mind.”