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One must still have chaos in oneself to be able to give birth to a dancing star. -Nietzsche

  November 27, 2013

Your 401(k) is probably useless

The 401(k) is a tax deferred investment vehicle allowing you to invest income that is untaxed at the time of investment so it can grow faster, and then taxed upon eventual withdrawal. This sounds like a sensible way to plan for the future, until you think about the purpose of money and consider the likely government conditions at the time of your retirement.

Entitlement Spending

By the time you retire, decades of persistent deficits and the continued acceleration in government debt can be expected to result in a very high tax rate or even confiscation of retirement plans in order to support more borrowing and spending to win votes from party demographics.

If you accept this outlook, then the prospect of being taxed now at 40% is a bargain compared to perhaps 75% or higher upon retirement, wiping out most of your earnings. Even getting any of your money back from a retirement plan is not certain, as fund confiscation could be ideologically justified as making people more equal and helping those who, much like the government, are not fiscally responsible or capable of earning money.

Further, keeping your funds at hand means you will likely be able to transfer them to another country if confiscatory policies are looming, as long as you act before escape is made impossible.

Amassing a few million dollars that only become available when you turn 65 means you can pay the medical expenses of your final years, but this glorious promise of wealth isn't worth waiting for, as your best years will be behind you. Are you going to finally get around to seeing the world when your knees and back can't go far, confining you to a docile tourist's surface existence? Are you going to enjoy the moments spent with other sexy senior citizens who are also curious and finally free to explore? You'll be worn out from a long life of labor, but loaded with money that can't buy you a good experience.

You can save most of the same money now and allocate it in investments that earn income, while always having your nest egg at hand. You can retire at any age you're ready. You don't have to tie up your money and wait until a certain age to have it given back to you.

Money is most valuable when young, giving you options to live, love, and venture. The current system not only wants you to wait, it will probably penalize you for doing so, as do most opportunities.

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