Did I just say, “don’t save for retirement”?
Yep. But maybe I should have said, “don’t JUST save for retirement.”
I think the government and financial industry, whether unconsciously or not, have perpetuated the retirement savings scam. Through the creation of retirement plans, like 401Ks and IRAs, and financial instruments, like mutual funds and index funds, these organizations want you to put your money in a lock box and pull it out, at the point when you’re least likely to enjoy the benefits of wealth.
For the financial industry, this makes sense because the longer it takes you to build wealth, the longer they have to siphon their take away.
For the government, it keeps people financially dependent and reliant on its agencies and decisions. It also keeps people slugging away in cube farms and on factory floors. That’s why they penalize you with fees and taxes if you pull out money in those accounts to… I don’t know… enjoy your life.
These positions, which may be based on good intentions, are no longer tenable. For two reasons:
- Wealth generation should not be crimped in this economic environment. People should be able to invest and use the proceeds of those investments.
- As advanced technology increases, the life span will increase, too. Our savings will then become the carrot that the government will eternally keep out of reach.
I don’t propose to eliminate 401 K and IRA plans. I don’t believe mutual funds or index funds should be eliminated, either. I don’t believe we should penalize people for creating wealth, either. A fairer tax structure that inspires wealth generation should be implemented. Flat tax, sales tax and even a graduated tax structure that protects your ability to compound your money makes more sense than the current confiscatory tax policy.
And, I think that’s the key: the most powerful financial tool you, the average investor, has is the ability to compound money. Go head and tax the money that is taken out of an account as a form of income, don’t tax the saved and growing money.
How hopeful am I that we’ll live to see this day… or even retire to see it? Not very hopeful. People are creatures of habit, to begin with, and most folks have been taught to fear technology and finances. Jealousy also plays a role. People won’t want to see other people get wealthy by making the right decisions.
But I am hopeful that what we’re creating at Online Investing AI will be so powerful that it, in addition to smart personal tax strategies, could render the penalties on investment meaningless.
Until that day… Keep adding to that 401 K.