Retirement kills more people than hard work ever did.
Malcolm S. Forbes
Malcolm S. Forbes
You know it seemed like nobody in any position of life, 3rd grade to senior citizen, could finish a statement without ending or beginning the statement with something to the effect, “during this economic downturn.” Surely if any statement had a negative connotation, then it had to be preceded or concluded with a line about our economic hardships. For example, “Man, I have had diarrhea for like two weeks, it’s because of the economic decline, I guess.” I am glad the media has finally tired of the topic; they just about have everyone convinced that we are leveling off now. I am willing to bet the media is shutting up about “economic hardships” because some Gallup Poll indicated that the average American would change the channel in 0.7 milliseconds if they heard any sort of phrase regarding the topic. Here is a guaranteed truth for you - the media will do ANYTHING for attention and will likewise do ANYTHING to keep your attention. Just look at the ads of today. You can’t go two segments of commercials without seeing the following ads.
1. Some sort of miracle drug which will help you lose weight or make your penis 15 feet long which will generally lead to nausea, drowsiness, dizziness, anxiety, trouble sleeping, loss of appetite, weakness, tiredness, sweating, yawning, unusual or severe mental/mood changes ( such as agitation, unusual high energy/excitement, thoughts of suicide), uncontrolled movements of the lips/tongue, shakiness , restlessness, inability to keep still, decreased interest in sex, changes in sexual ability, blurred vision, numbness/tingling and death.
2. Delicious beer on top of an ice cold mountain. Said beer now has a safety mechanism built in to the cap or wrapper which will tell you if it has been contaminated with the swine flu for your drinking pleasure.
3. Car commercial in which the driver is manipulating the vehicle only the way people drive rental cars. But don’t worry, in case you lose your job because you went to jail for driving your car like a rental car, the auto manufacturer will now make your payments for you……which you will have to pay 3 times over in the long run. For your convenience that little clause is in the fine print.
4. A gecko with an Australian accent trying to make some kind of point about insurance. Unfortunately, that point is never understood by the intended audience. Ever.
From these advertisements, which are reflections upon today’s societal needs, I can derive a couple of things. Most people that have money need drugs, beer, and a new car with insurance. Although younger generations would like those things, they can’t afford it, so it is not a stretch of the imagination that most advertising is for people over 30. Most of the working population could easily be comprised of people over the age of 30. Here is a little known fact; drugs, beer and a new car do little more in life than help you get distracted from something. The media wants to distract you from this depressing notion because it sucks sooo bad! Here is what they are all trying to distract you from- You can never retire!
Disclaimer #1 for today’s blog- I am not an economist, statistician, historian or have any other kind of training in making stuff up.
When, in the history of mankind, has the concept of retirement existed? Retirement, as we see it today, has never ever existed except within the last 100 years. 100 years ago, retirement meant a couple of different things about someone:
1. This person is so physically/mentally challenged that he/she can no longer fulfill previous working duties.
2. This person is so wealthy he/she no longer has to do any kind of mental or physical labor. He/she finally just called it quits.
3. This person hated work so much he/she was even willing to live with his/her kids again.
4. This person hated work so much that he/she is willing to nearly starve until death.
This is why people used to have so many kids!! Not because they didn’t have birth control, because they wanted to retire!
Only within the last 100 years have we had such an abundance of wealth that people can work towards building up their stool. Not poop, a three-legged retirement stool. See for the last 60 years we have been told to work towards building up 1) social security contributions, 2) employer retirement benefits programs, and 3) personal savings and investment. Like any three legged stool if you take away any of the three legs, it is a difficult task to keep balanced atop the stool.
Social Security
This is the biggest sham of them all. Keep in mind that you can opt to decline to make contributions to social security resulting in no future receipt of social security funds. Like most stupid people, I guess I like donating to charity or gambling because that is what my social security contributions are good for. The initial intention for social security (The New Deal, 1935) is that the government can take that money you give them, invest it in our economy today and since we are such a rockstar country, we can turn an interest greater than typical cost of living interest and pay you off with interest for the future. Reality is that as fast as we can dump money into social security, it is being used by the inheritors of today. There is no investment, the money goes straight from our pocket to someone’s mouth. Many say the baby boomer generation gave great hope for social security because they invested so much into social security; unfortunately, no economist was smart enough to look to the day when they would retire. Simple fact is: we have too many people retiring at too young of an age for today’s contributors to rebalance the spending equation. Money is going out faster than it is coming in. Year 2018 is the current prediction for social security’s day of reckoning. I am sure the government’s response after that point will be the same response during most economic crises. “Print more money and keep it quiet!”
Employer Retirement Benefits Programs
This was a successful program within the U.S. when we could compete with global manufacturing. Circa 1970, that status changed. Since about 1970 every company has been trying to figure out the same thing; how do we maintain these rates of profitability and vie with our competitors for creating a product people will buy? Most manufacturing and resource producing companies got smart and said, “Why would I pay an American $15 per hour plus benefits to cut down a tree when I can pay an Indonesian $0.50 per hour to cut a tree of similar characteristics and ship it to the U.S. for $0.23 per pound?” Few manufacturing companies survived that crunch within the U.S. It was a smart move for business owners here in the U.S. at the time to outsource. Our dollar was the strongest currency around, the business owners could manage from the U.S. and still sell the product within the U.S. and make a killing. Profits were never better. The few remaining companies of the U.S. were either extreme high technology manufacturers that can’t be operated in 3rd world countries or service oriented companies that can’t be outsourced. For the companies that remained here, they couldn’t outsource their labor so they were forced to cut costs somewhere else. The first item on the chopping block was your retirement benefits. The first wake of no retirement benefits caused people to change jobs to ensure retirement benefits. Soon all companies had written off their retirement programs so if people wanted a job they had no choice but to just work some place with no benefits. Today the only entities that still provide retirement benefits are about 0.000008% of companies and the government. You don’t even have a chance at keeping this leg unless you’re a G-man.
Personal Savings and Investments
Social security was the sham, retirement benefits are an unattainable quest, and personal savings and investments are the biggest rip-off your anus will ever feel. Please do not be confused that 401K’s,IRA’s, stocks, bonds, annuities, fixed income investments, or savings sponsored by your company are retirement benefits programs, they are like savings accounts nothing more nothing less. Many good people I know work within this industry, so I am sorry to let people know the truth. When I think of wealthy people, this image of scrooge comes to mind in which he has attained this mass of money and is able to lend it, invest it, swim in it, save it, and do all of these “money things” and POOF…… one hundred dollars turns into one thousand dollars. Most people could be described as “challenged economists” at best. Compound interest, simple interest, inflation composite versus commodity indexes, deflation, depreciation recapture , appreciation subperiod, continuous uniform cash flow, net profit ratio accounting, finite amortization schedule, incremental cost/benefit ratio. Learn these terms very well, for these will be the terms that your investors will use to help you understand where all those nickels and dimes you gave them went. They have developed a system of confusion to help themselves make pretty spreadsheets that simply confuse the layman. It just means they can screw you in more dynamic ways. Companies came up with 401K’s to make more money and keep people around that wanted some hope for retirement. Essentially companies take some money from you and, on paper, match a certain amount and give that money right back to themselves. If you work for the right company and have the opportunity to cash in on the high tide, you do very well. For the rest of you with 401K’s you will find yourself needing to cash in at a low tide or during an extremely low tide. It is convenient that it is never convenient, financially speaking, to retire. The system has to keep it that way. The same thing goes for all IRA’s, stocks, bonds, annuities, fixed income investments, or savings sponsored by your company. I will use the classic 30 year loan as my example for how poorly run the finance industry is. Let’s say I want to buy a house for $150,000. I get a 30 year loan at 6%, pretty good eh? That means I will pay right at $900 per month for the next thirty years (neglecting the tax man’s portion of course). I will end up paying out $323,759 when it is all said and done. Even when you consider the fact that an average yearly inflation of 3% is going to occur, banks will still make a TON of money. Where does all that money go? I don’t know. I can figure only two things: 1) banks have staff meetings in which they simply flush money down the toilet and feel very smug about doing it, or 2) banks don’t know how to manage money and are just paying themselves now and have nothing to invest for the future. I am going with the latter of those two. In fact, all investment schemes are the same way today. They promise you 5% to 13% guaranteed by their skewed charts and misinterpreted statistics. We fall for it because hey, this is their job it’s not like I just give them $10 and they will put it in their back pocket without any further consideration. No, they lose their “profits” in other magical and “unpredictable economic downturn” ways, but in the end they might as well have stolen it from you. Mismanagement. Their industry is living on borrowed dollars just like every other U.S. industry. The truly sad thing is we just have the faith that things will get better, so we keep investing and keep giving them our money when we probably are better off just opening a simple saving account or putting it under our mattress. It is statistically proven that every 11-18 years we will experience an “economic downturn.” This is the time where these investing entities liquidate on paper what they already spent a long time ago. “Oh I am sorry Mr. Smith, this was a bad _________________( choose one: year, decade, lifetime) to invest, we thank you for your business and understand why you will be transferring your funds to __________________ (choose one: Edward Jones, Bear Stearns, Merrill Lynch, Morgan Stanley, etc.). I am sure they will do the same to you as we have done to you, good luck!”
So, I hope you still have all three legs on your stool just like me. Yeah right! Do the smart thing. Save up about 6 months of livable savings and set it aside forever, after that point live it up like you are going to die tomorrow- at least you will enjoy where your money went to instead of funding a terribly unhealthy retirement existence. When it comes time to retire and you have no retirement built up, buy the fastest motorcycle commercially available and give me a call. We can go cruising together on some cliff-riddled, mountainous roads together. Can you just feel the wind just whipping through your non-existent hair?
1. Some sort of miracle drug which will help you lose weight or make your penis 15 feet long which will generally lead to nausea, drowsiness, dizziness, anxiety, trouble sleeping, loss of appetite, weakness, tiredness, sweating, yawning, unusual or severe mental/mood changes ( such as agitation, unusual high energy/excitement, thoughts of suicide), uncontrolled movements of the lips/tongue, shakiness , restlessness, inability to keep still, decreased interest in sex, changes in sexual ability, blurred vision, numbness/tingling and death.
2. Delicious beer on top of an ice cold mountain. Said beer now has a safety mechanism built in to the cap or wrapper which will tell you if it has been contaminated with the swine flu for your drinking pleasure.
3. Car commercial in which the driver is manipulating the vehicle only the way people drive rental cars. But don’t worry, in case you lose your job because you went to jail for driving your car like a rental car, the auto manufacturer will now make your payments for you……which you will have to pay 3 times over in the long run. For your convenience that little clause is in the fine print.
4. A gecko with an Australian accent trying to make some kind of point about insurance. Unfortunately, that point is never understood by the intended audience. Ever.
From these advertisements, which are reflections upon today’s societal needs, I can derive a couple of things. Most people that have money need drugs, beer, and a new car with insurance. Although younger generations would like those things, they can’t afford it, so it is not a stretch of the imagination that most advertising is for people over 30. Most of the working population could easily be comprised of people over the age of 30. Here is a little known fact; drugs, beer and a new car do little more in life than help you get distracted from something. The media wants to distract you from this depressing notion because it sucks sooo bad! Here is what they are all trying to distract you from- You can never retire!
Disclaimer #1 for today’s blog- I am not an economist, statistician, historian or have any other kind of training in making stuff up.
When, in the history of mankind, has the concept of retirement existed? Retirement, as we see it today, has never ever existed except within the last 100 years. 100 years ago, retirement meant a couple of different things about someone:
1. This person is so physically/mentally challenged that he/she can no longer fulfill previous working duties.
2. This person is so wealthy he/she no longer has to do any kind of mental or physical labor. He/she finally just called it quits.
3. This person hated work so much he/she was even willing to live with his/her kids again.
4. This person hated work so much that he/she is willing to nearly starve until death.
This is why people used to have so many kids!! Not because they didn’t have birth control, because they wanted to retire!
Only within the last 100 years have we had such an abundance of wealth that people can work towards building up their stool. Not poop, a three-legged retirement stool. See for the last 60 years we have been told to work towards building up 1) social security contributions, 2) employer retirement benefits programs, and 3) personal savings and investment. Like any three legged stool if you take away any of the three legs, it is a difficult task to keep balanced atop the stool.
Social Security
This is the biggest sham of them all. Keep in mind that you can opt to decline to make contributions to social security resulting in no future receipt of social security funds. Like most stupid people, I guess I like donating to charity or gambling because that is what my social security contributions are good for. The initial intention for social security (The New Deal, 1935) is that the government can take that money you give them, invest it in our economy today and since we are such a rockstar country, we can turn an interest greater than typical cost of living interest and pay you off with interest for the future. Reality is that as fast as we can dump money into social security, it is being used by the inheritors of today. There is no investment, the money goes straight from our pocket to someone’s mouth. Many say the baby boomer generation gave great hope for social security because they invested so much into social security; unfortunately, no economist was smart enough to look to the day when they would retire. Simple fact is: we have too many people retiring at too young of an age for today’s contributors to rebalance the spending equation. Money is going out faster than it is coming in. Year 2018 is the current prediction for social security’s day of reckoning. I am sure the government’s response after that point will be the same response during most economic crises. “Print more money and keep it quiet!”
Employer Retirement Benefits Programs
This was a successful program within the U.S. when we could compete with global manufacturing. Circa 1970, that status changed. Since about 1970 every company has been trying to figure out the same thing; how do we maintain these rates of profitability and vie with our competitors for creating a product people will buy? Most manufacturing and resource producing companies got smart and said, “Why would I pay an American $15 per hour plus benefits to cut down a tree when I can pay an Indonesian $0.50 per hour to cut a tree of similar characteristics and ship it to the U.S. for $0.23 per pound?” Few manufacturing companies survived that crunch within the U.S. It was a smart move for business owners here in the U.S. at the time to outsource. Our dollar was the strongest currency around, the business owners could manage from the U.S. and still sell the product within the U.S. and make a killing. Profits were never better. The few remaining companies of the U.S. were either extreme high technology manufacturers that can’t be operated in 3rd world countries or service oriented companies that can’t be outsourced. For the companies that remained here, they couldn’t outsource their labor so they were forced to cut costs somewhere else. The first item on the chopping block was your retirement benefits. The first wake of no retirement benefits caused people to change jobs to ensure retirement benefits. Soon all companies had written off their retirement programs so if people wanted a job they had no choice but to just work some place with no benefits. Today the only entities that still provide retirement benefits are about 0.000008% of companies and the government. You don’t even have a chance at keeping this leg unless you’re a G-man.
Personal Savings and Investments
Social security was the sham, retirement benefits are an unattainable quest, and personal savings and investments are the biggest rip-off your anus will ever feel. Please do not be confused that 401K’s,IRA’s, stocks, bonds, annuities, fixed income investments, or savings sponsored by your company are retirement benefits programs, they are like savings accounts nothing more nothing less. Many good people I know work within this industry, so I am sorry to let people know the truth. When I think of wealthy people, this image of scrooge comes to mind in which he has attained this mass of money and is able to lend it, invest it, swim in it, save it, and do all of these “money things” and POOF…… one hundred dollars turns into one thousand dollars. Most people could be described as “challenged economists” at best. Compound interest, simple interest, inflation composite versus commodity indexes, deflation, depreciation recapture , appreciation subperiod, continuous uniform cash flow, net profit ratio accounting, finite amortization schedule, incremental cost/benefit ratio. Learn these terms very well, for these will be the terms that your investors will use to help you understand where all those nickels and dimes you gave them went. They have developed a system of confusion to help themselves make pretty spreadsheets that simply confuse the layman. It just means they can screw you in more dynamic ways. Companies came up with 401K’s to make more money and keep people around that wanted some hope for retirement. Essentially companies take some money from you and, on paper, match a certain amount and give that money right back to themselves. If you work for the right company and have the opportunity to cash in on the high tide, you do very well. For the rest of you with 401K’s you will find yourself needing to cash in at a low tide or during an extremely low tide. It is convenient that it is never convenient, financially speaking, to retire. The system has to keep it that way. The same thing goes for all IRA’s, stocks, bonds, annuities, fixed income investments, or savings sponsored by your company. I will use the classic 30 year loan as my example for how poorly run the finance industry is. Let’s say I want to buy a house for $150,000. I get a 30 year loan at 6%, pretty good eh? That means I will pay right at $900 per month for the next thirty years (neglecting the tax man’s portion of course). I will end up paying out $323,759 when it is all said and done. Even when you consider the fact that an average yearly inflation of 3% is going to occur, banks will still make a TON of money. Where does all that money go? I don’t know. I can figure only two things: 1) banks have staff meetings in which they simply flush money down the toilet and feel very smug about doing it, or 2) banks don’t know how to manage money and are just paying themselves now and have nothing to invest for the future. I am going with the latter of those two. In fact, all investment schemes are the same way today. They promise you 5% to 13% guaranteed by their skewed charts and misinterpreted statistics. We fall for it because hey, this is their job it’s not like I just give them $10 and they will put it in their back pocket without any further consideration. No, they lose their “profits” in other magical and “unpredictable economic downturn” ways, but in the end they might as well have stolen it from you. Mismanagement. Their industry is living on borrowed dollars just like every other U.S. industry. The truly sad thing is we just have the faith that things will get better, so we keep investing and keep giving them our money when we probably are better off just opening a simple saving account or putting it under our mattress. It is statistically proven that every 11-18 years we will experience an “economic downturn.” This is the time where these investing entities liquidate on paper what they already spent a long time ago. “Oh I am sorry Mr. Smith, this was a bad _________________( choose one: year, decade, lifetime) to invest, we thank you for your business and understand why you will be transferring your funds to __________________ (choose one: Edward Jones, Bear Stearns, Merrill Lynch, Morgan Stanley, etc.). I am sure they will do the same to you as we have done to you, good luck!”
So, I hope you still have all three legs on your stool just like me. Yeah right! Do the smart thing. Save up about 6 months of livable savings and set it aside forever, after that point live it up like you are going to die tomorrow- at least you will enjoy where your money went to instead of funding a terribly unhealthy retirement existence. When it comes time to retire and you have no retirement built up, buy the fastest motorcycle commercially available and give me a call. We can go cruising together on some cliff-riddled, mountainous roads together. Can you just feel the wind just whipping through your non-existent hair?
3 comments:
Thought you might find this blog interesting in light of your comments:
http://www.televisionsky.org/2009/04/crisis-shmisis/
this is your best post yet, creatively framed with your usual unpopular, but practical solution
Oh this is too good, your best rant yet. I couldn't have said it any better. I keep telling my friends to travel and enjoy life now, while we are young. I don't want to wait until I'm old and can no longer eat red meat to find out I can't retire due to a lack of funds.
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