Devil's Advocate 
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Don’t Save for Retirement

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This is a Devil's Advocate post.

It’s been a while but the Devil’s Advocate posts have returned and they’re going to return in a very big way – I’m going to argue why you shouldn’t save for retirement. If there are a few tenets in personal finances, saving for retirement is up there with having an emergency fund and spending within your means. Between compounding interest and the tax benefits of retirement saving, putting something away for the future is almost a no brainer.

Almost. :)

In this post, I’ll argue why you shouldn’t save for retirement. That’s right. You should not put money into your 401(k), your Roth IRA, or any of the other alphabet soup account names.

Mini-Ponzi Scheme

A Ponzi scheme is an investment scheme where the fraudster secures investments from unsuspecting investors. He or she continues to get these investments, promising fantastic returns, but pays those returns with incoming money. They usually fall apart when the scammer mixes up paperwork (usually because it gets too big), experiences a run on investments (people wanting their money), and the game is over.

Let’s look at the stock market as a whole and it’s very much like a Ponzi scheme. The market is zero sum – you make money because someone, or several someones, loses money. The stocks themselves have no intrinsic value, they represent ownership but in reality they are just pieces of paper. They’re no more valuable than money, intrinsically, but you can at least spend money on the street (good luck trying to buy milk with shares of Apple).

With your retirement assets, you usually can’t touch them until you retire, or face stiff penalties. This means that you have a built in protection when it comes to the Ponzi scheme. Whereas someone invested in a Ponzi scheme could withdraw their funds in bad times, we’re taught to “weather” those bad times and keep our money where it is because we won’t need it until retirement. We have forty (or thirty, or twenty) years of future Ponzi scheme suckers to boost our values up.

Enjoy Life Now

I’m all for putting the minimum in a 401(k) to get a company match – free money is free money, even if I can’t touch it for a few years. As for putting more? Skip it, take that money and enjoy it while you can. As you work more, get raises, and move up the ladder, you’ll find that your income will rise as well. You will also find that the amount of time you have will diminish, especially if you start a family or take on a lot of work. Try to enjoy the fruits of your labor while you are young and have enough time to do it. Travel Europe when you’re in your twenties, don’t put it on a bucket list to tackle when you’re 60. You won’t move as easily then. :)

What do you think? Devil’s Advocate make a good point here?

{ 32 comments, please add your thoughts now! }

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32 Responses to “Don’t Save for Retirement”

  1. DaveE says:

    Calling the stock market a zero sum game is wrong, or at the very least misleading. A zero sum game implies that there is a fixed amount of money in the system that can be vied for. But consider –

    - dividends
    - stock buy back

    These increase the amount of money in the system without just adding more paper to trade.

  2. David M says:

    I plan on retiring between 55 and 60 and think I will still have a little mobility!!!

    I’ll save now for retirment and hopefully travel full time for some years in retirement.

    However, I still take 6 weeks off every year and ussually go to South East Asia.

    It is not either or!!! I max out my 401K – thats $16,500 not just max out the match. I also put $5,000 into a Roth IRA, $5,000 into a Health Saving account and, am paying off my mortgage in 10 years and save other money.

    I’m enjoying not and plan on enjoyint the future!!!!!!

    • Jo says:

      Sometimes it is either save for retirement or enjoy traveling and doing things you enjoy now.

      It all depends on the money you make.

  3. DIY Investor says:

    If you want to know if the point is well made go ask the 70 year old Wal-Mart greeter.
    By the way-if uou don’t like markets you can still go to cash.
    The “live for today” philosophy is why the country is in trouble.

  4. I retired mostly at 55. I kept consulting part time while living in an RV and seeing the country. You are somewhat right though. The body does creak a lot more at 60 than it did at 30.

    The key is to live well within your means, not only fiscally, but physically and emotionally as well. People need to enjoy their lives at all stages. Then you should have assets to finish out your life.

    I do not even view money as an asset. I feel a persons true assets are: time, health, relationships, experiences and comfort. Money/wealth is a means to help develop and use those assets.

    The 70 year old Wal-Mart Greeter may just be having a bang up great time meeting people and studying the sociology of it all and then going surfing or bicycling after work before making up a very inexpensive but tasty pot of Cajun etouffee. It can be a great life.

    So, live within your means, save for future needs, but live also to create experiences you will cherish later in life as well.

  5. Wilma says:

    I won’t have a problem with travel and movement cause I’m not big on travel.

    I don’t think social security will be there when I retire. So hopefully I’ll have my 401k if the market doesn’t completely collapse.

    I agree with DIY Investor about the live for today philosophy that has put this country in a hole.

  6. I am a devil’s advocate on this perspective to a degree. Here’s my spin on it:

    “Don’t save for retirement; put aside some money for later.”

    The idea of retirement makes many people believe that they must sacrifice now for a better life later. It’s the cycle of work hard in a career you don’t like for 40 years; and to survive you live for 5:00, live for the weekend, live for the vacation, live for retirement.

    Life is happening now.

    Yes, it is wise to save money for a later time. Perhaps we can call this saving for “financial security.” But just don’t waste 2/3 of your life to “do what you want” for the final 1/3.

    I believe the wise pursuit is to align “who you are” with “what you do.” For this reason, finding a career you enjoy is more important than saving for retirement.

    If one enjoys what they do, isn’t this the same as “retirement?”

    I work every day but by my definition, I’ve been retired since the age of 37 (five years).

    I’ll save money for later but I’m not saving for retirement. I’m living now.

    • mannymacho says:

      I agree with you Kent. The whole idea of retirement may be something that is left over from a previous generation. Many workers (at least information based) are willing and able to work far past the retirement age and love what they do.

  7. Marc says:

    Oh, you could have gone so much farther with the idea of “Live for today!”

    Lets face it, 70 year old Wal Mart greeter is not that bad! If we “live for today” think of the memories that Wal Mart greeter has to keep that smile going till death!

    1) Spend foolishly at lunch! Gain co-worker love by buying them lunch!
    2) Spend foolishly at Happy hour! Gain friends while buying them shots!
    3) Buy that big car and drive everywhere! After all, your friends will be jealous!
    4) Decorate that big house and throw parties! your friends and family will always show up to eat your food and swim in your pool (and be jealous!)
    5) Travel like there is no tomorrow! Your only healthy once! Don’t treat your body like a temple, treat it like an Amusement Park!
    6) Buy your kids everything! After all, money cannot buy love, but it does buy something that oddly feels like it ;-)
    7) Donate everything else away, after all, its great to see that sign at the zoo, for everyone to see, that says “Mr. Smith donated this display!
    8) Why make others rich off stocks when you can make them rich off your spending today!
    ;-)

  8. earthling says:

    enjoy a lifelong sustainable lifestyle.

    inevitably there will come a time when we choose not to earn a wage or become unable to earn a wage. it is only prudent to set aside now a portion to sustain yourself at that time.

    but also our tomorrows are not cetain so find a level of enjoyment within your means now that you can sustain for the rest of your tomorrows.

  9. Bryant says:

    Two very simple reasons why the “Devil’s Advocate” is wrong.

    1) It’s the Devil. =)
    2) Delayed Gratification.

    This is something our country is not accustomed to. Why wait to get a Lexus when I retire and pay in cash because I’ve saved and can afford to do that when I can buy a lexus NOW with 5% and a 60 month loan and $800/month car payments??! Chances are in your favor that you will leave to at least 70. Plan for it. Or if you truly prefer to Live for Today, prepare to work Tomorrow. I don’t know about you guys, but I’m 26, and I plan on retiring fully at 50. That’s why I’m putting close to 20% of my gross income in retirement funds and another 15% in savings. My Lexus can wait for me…

  10. Good points, Bryant. I did the same as you at 26: saved hard and lived the “delayed gratification” philosophy.

    By the time I reached my 30′s I observed that retirement perpetuates the thought of future, which is a natural production of the frontal lobe of the brain. Humans, by nature, think and plan for the future. I’m not proposing you resist your own nature but to be aware of it and question it from time to time.

    If you are constantly living for the future, you risk killing the present moment; you are not living; in a sense you are dying.

    Perhaps the solution is striking the ideal balance between living now and planning for tomorrow.

    Also keep in mind that humans are terrible at predicting their own future.

    For example, 10 years ago would you have predicted you would be where you are now, thinking of life the way you do now?

    “As long as you are unaware of Being, you will seek meaning only within the dimension of doing and of future, that is to say, the dimension of time. And what ever meaning or fulfillment you find will dissolve or turn out to have been a deception.” ~ Eckhart Tolle

    • Strebkr says:

      “Humans, by nature, think and plan for the future.”

      I would love for this to actually be true. I find that most people are in capable of thinking even 10 minutes ahead sometimes.

  11. DIY Investor says:

    For me “saving for retirement” or whatever you want to call it is about having choices at a certain point in life. If the 70 year old Wal-Mart greeter is there by choice more power to him or her. My wild guess is that this isn’t the case. In fact, I would guess most Wal-Mart workers are not all that satisfied – at least in my neck of the woods they don’t seem to be.
    I know a lot of people just say that they will keep working. Actually the data shows that people “retire” on average before they plan to whether because of a layoff or medical reasons.
    So pile up the memories and accept my good luck wishes.

  12. laura says:

    My dad has never saved for retirement. He’s 62. He will work till 70 and live well on social security at 70. He will get his social security most likely whereas i’m not holding my breath for me to get social security. Lol! but for him, it’s worked. he’s not materialistic and likes his travel trailer. I’m glad he’s enjoyed his life.

  13. adam carolla fan says:

    a coworker of mine (38 years old, modest salary) doesn’t have a pot to piss in these days because he’s always been irresponsible with his finances – he definitely doesn’t practice delayed gratification.

    however…if he were to die tomorrow he would at least know that he went all out and had a fun life (ball games, concerts, expensive dinners, nice cars, traveling, etc.)

    butchances are he’ll live to an old age and realize that

  14. back2future says:

    My kids were born when I was 40-41 and working an “Up in the Air” job. International travel weekly for long stretches. I retired at 47 and did all the family stuff. We burned up a lot of savings, but I also helped my wife start a business that’s good now, and I spent thousands of hours with kids. Then I went back Up in the Air when they hit college. It was a bear getting back, and I will (must) now work as long as I am possibly able. But I feel like this approach keeps me young, whereas retirement in old age makes some seem old.

  15. Shirley says:

    Wandering Mike said, “So, live within your means, save for future needs, but live also to create experiences you will cherish later in life as well.”

    To me this sums it up perfectly and I can attest to the fact that it works beautifully. That is the story of our lives and now we are retired and living in total comfort in our choice of lifestyle. While we did not spend beyond our means, neither did we save beyond our means. Both were budgeted with thoughts of our life at hand then and now.

    We raised five children and none of us ever went without anything that we needed. Not a day goes by that the memory of one experience or another doesn’t warm my heart and we are both satisfied and happy with our lives.

    Were we affluent? Not by a long shot! During the fifty years that each of us worked, neither of us ever made over $15 an hour. Was it worth it? It certainly was and we wake up smiling every day.

  16. Jo says:

    When you draw money from your 401k you pay on every penny you withdraw, since you never paid taxes on the money you put into it.

    Then you don’t get the capital gains rate, you pay regular taxes even on the profits.

    If I had it to do over again, I would have spent the money to help my 3 daughters and their families pay for their home.

    Another thing some are determined to meanstest for Social Security. Help your kids now.

  17. Jo says:

    When you are drawing Social Security, then withdrawing money from your 401k makes you be in a higher tax bracket.

    If you figure the pros and cons, you may be better off to invest and save outside of the 401k, except put the minimum in a 401(k) to get a company match.

  18. ricinsac says:

    … after college join the Peace Corps to broaden your worldview and challenge your bias. Then return for that job or graduate school. In my twenties I served two years / traveled round the world / and taught english in Iran in the 1960s. A friend joined AmeriCorps after retiring – saved her two years of retirement and SS plus no overhead for two years – served as an accountant in the corps for a health clinic in Arizonia – then lived in Madrid for six months and now is back in California with her adult children nearby. Seek the challenges. Life is good. Enjoy!!

  19. David F. says:

    Spending money is not the only measure of living well. What people do you have in your life? Did you smile or laugh today? About what? What do you feel in your heart?

  20. qne8tx says:

    Get educated, make a lot of money workng while you are young, live and travel well now and prep for retirement. No reason you cannot do both if you are smart about it and earn a get salary . I have no problem with niether. It is all about choice. Who the hell needs kids anyway.

  21. qne8tx says:

    I know a 70+ year old gentelman who is a millionair and greets people at wall mart. Has nothing to do with economics. Most americans are stuid when it comes to money. People from other countries come here in their prime age with nothing and are worth more in five years that most americans. Even amercan that have big homes and fancy car have nothing. They owe it all and own little.

  22. Fawn says:

    He was correct in the 401k ponzie scheme, but in a big way as recent news verified. Now, consider that all of the above were stressed back in the late 1970′s when I graduated from High School. No good jobs were available to step into. And continuing education was on my shoulders as at that time my parents would not disclose any information so I could qualify for a grant etc… OUCH, I attempted to go to college a few times but, survival got in the way! 12 years later I took an assessment test at Purdue University; the results Masters at English. Ok, well; not so, I still was struggling financially and could not afford to pay in cash for what life had taught me. Alas, again for the past half a year I have had zero income, no savings, nothing and I have never been a spindrift. No assets of any monetary value: no automobile or any other transportation. Not a string of poor choices, I guess just dealt bad cards so far. But, at least I still Have Hope in Jesus and I am thankful for every minute here on earth and I look forward to the future with no worries.


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