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Don’t Save for Retirement

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?