Why Gen Y and Gen X Should Not Save for Retirement

Much as I dislike the OWS movement, hipsters and lefter-leaning youth who voted for Barack Obama, I do feel pity for them.  They were brainwashed after all (despite their claims they're so "intelligent" and "independent minded") with 13 years of indoctrination in the public schools, 18 years of left-leaning television and media, absentee parenting, government programs every step of the way, and so how do you think they were going to vote?  Additionally they're being dumped into the lousiest labor market in (truly) 50 years.  Of course, because of their brainwashing and mis-education about economics, they're clueless as to why they can't find jobs, and what's even more sad is it's actually by their own hand voting in socialist policies.  So I do have an element of pity for them.  Thusly, unlike my typical "tirade, yell, ridicule and mock" type approach I have to politics, with younger folk I've opted to engage them instead of ridicule them

This is evidenced by my book Worthless. Yes, I wrote it for money, but I also wrote it to explain to recent college graduates why they can't find employment and to prevent college-bound youth from making the same mistake.  I also have my seminar on youtube titled "Why Gen Y is Completely, Hopelessly and Totally Screwed."  Again, I was on book tour, but the reason I spent the time putting that together is to provide an explanation to youth as to what was going on and what kind of economic environment they are in.  To help them understand "why" things were happening instead of letting them suffer, cluelessly having no idea what was going on and what to do.

The good news is that I've found youth to be more receptive than say, an estasblished burnt out 65 year old hippie who's been set in their political ways since '68 and think "going green" is the latest indulgence to save their economic souls.  The reasons are multiple.  First, (frankly) I'm much better of a speaker than the average college professor and public school teacher.  I speak directly, bluntly, clearly and simply.  I don't talk over their heads and in my profession (unlike most liberal arts) my job is not to lie, pervert or distort the truth.  When I put together a book or a speech, it is based in reality, not a political agenda.  Second, in an ironic sense, the economy these youth voted in is making my job easier.  They did EVERYTHING they were told.  "Go to college."  "Follow your heart and the money will follow."  "It doesn't matter what you major in, it's to get your foot in the door." AND they voted how they were told.  "Hope and change."  "Diversity."  "Spread the wealth."  "Fair share."  "Bush's fault."  "Wage gap."  Blah blah blah.  And what they have to show for it is unemployment, crushing student debts and a quickly disappearing future.  In short, their entire reality is crumbling before their eyes and rapidly so.  One week you're a senior about to graduate with your BA in BS, the next week you're moving back home because you can't find a job and student loans are coming due.  They naturally are looking for an explanation why things aren't turning out the way their teachers and professors told them it would, and I give it to them.

And so, since I've found Gen Y, "Millineals" and even some Gen X'ers to be more receptive, allow me to provide another bit of advice in the hopes you will continue listening and thusly improve your life;

Don't save for retirement.

Of course, this is funny, because most of you guys (meaning Gen Y/X, Millineals, etc.) don't HAVE any money to invest anyway!  The economy has been so wonderfully managed previously that you have a bankrupt government, pending inflation stored up in the banking system, debt levels you simply cannot pay (be it personal debts or your share of the government debts), public employee pensions you can't pay, and health care/social security promises to other people you can't pay, all resulting in a lousy economy with no investment and an unemployment rate around 16% for you youth (around 50% underemployment in my estimation as well).  You don't have the disposable income to save for your retirement.

But let's play "hope and change" and IMAGINE you did have the money to invest in an IRA or a 401k. Just imagine.

First realize what you're going to be investing that "hopey changey" money in - retirement programs.  Retirement programs that were established by the government to give you various tax incentives to save for retirement, things like 401k's, IRA's, 403b's, etc.  The actual 'assets' you buy in these programs are stocks, bonds and mutual funds (mutual funds themselves being nothing more than conglomerations of stocks and bonds).

Now the first retirement program was started in 1978.  You were around then?  I was 3 at the time.  But certainly none of us were working and had the ability to start saving for retirement then.  So what happened over past 34 years?

Well, millions of people who WERE working over those past 34 years invested TRILLIONS of dollars into these various stocks, bonds and mutual funds.  IF (and that's a big IF because I know the quality and caliber of college economics courses) you remember Econ 101 correctly, when a market is flooded with TRILLIONS of dollars that means demand has gone WAY UP.  And when demand goes WAY UP, so too does the price.

We see this when new shoes hit a store or perhaps you remember the PS2 being bid up to insane prices.

Well that's the same thing happening in the stock market today.  Even if you had the "hopey changey" money to invest, you would be investing in an overpriced market (here is a lengthier and statistically backed post you can read if you want the numbers).  Worse still is you will have the baby boomer pulling their money out of the market which (again, IF you were listening in Econ 101) will have a negative effect on prices.  In short, generational factors are making the market a bad deal for younger investors.

Second, let's talk about that lack of money.  If you were like me when I was younger, you have some kind of guilt or shame that you aren't investing in a 401k or saving something for retirement.  Stop worrying and stop feeling guilty.  If you don't have the money, you just plain don't have the money.  I starved myself to save up a whopping $2,000 in my IRA back when I was (about) 23.  That's not enough to retire on.  Besides, there are more important things you should be spending your money on that would help you more financially.  Paying off student debts or any debts is a good thing.  Getting a REAL trade or a skill at a tech college isn't bad either if you've majored in Fluffy Bunnies and Chocolates.  And heck, you might as well take what little money you have and enjoy life.  Life is not meant to be slaving away working all the time, investing your disposable income into bubbly stock markets.

Third, let's talk about confiscation.  Your professors never called it that.  They called it "social justice," "nationalization," or "the rich paying their fair share."  In reality it's nothing more than theft.  It is one person or a group of people stealing the money and time of others. But as it pertains specifically to your theoretical retirement program, there is a chance that after you slave away, save your pennies and dimes, invest religiously in your 401k or IRA, the government will simply at one point in time decide to take it.  And not only is there a chance, I fear given the ENORMOUS debts of the federal government, it's almost a guarantee they'll confiscate or at least rescind the preferential tax treatment of those retirement plans.

Oh, I know, I know.  I'm just this "radical crazy, right wing blogger" stirring up the rhetoric and hate-speech pot.  But realize it has happened already before. In Argentina and in Bolivia.  And if you don't think it can happen here, well, again, I'm just a right wing kook. 

Fourth, let us talk about death.  You are going to die.  I know your professors may have told you differently, but then again, I'm sure their arguments against mortality were just as convincing as their arguments for socialism, but I'm so sorry to have to say this, you are going to die.  However, unless you get in an accident, it isn't going to be POOF, you're dead.  There will probably be a deterioration in your health.  And that deteriorating period will not be a pleasant time.  It will also be a VERY expensive time for you.  The vast majority of your medical expenses in your life will be incurred in the last 6 months of your life.  The price tag will of course vary, but it can easily be $200,000 or more.

So let me ask you this.  You slave away today in your health and youth.  And by "slave away" I mean sacrifice your time to build up the money to pay for your last 6 months of life that is going to really suck.  And because those last 6 months of your life are going to be so expensive, you have to sacrifice much more time TODAY to work up the money to pay for those last 6 months.  To save up $200,000, heck, that's going to take at LEAST 5 years.

So, if I understand this correctly, you're going to sacrifice 5 years of your HEALTHY YOUTH to live another 6 painful, rotten, bed-ridden months.

I got a better plan.  I call it the "Smith and Wesson Retirement Plan."  It costs only 33 cents. (Ah ah ah.  Think it through before knee-jerking a reaction).

Now, as is usually the case when I talk about the financial, economic and mortality aspects of life, people get all upset.  I see this when I teach my classes and I tell people, bluntly, not to major in the liberal arts.  They take it personally, when in reality I am trying to explain to them the REALITY of the labor market and GENUINELY help them.  When I have the 58 year old divorcee who never thought about saving for retirement come up to me and say, "Well, I finally paid off my childrens' student loans, and I'd like to start saving for retirement.  I'd like to retire at 62.  I have $4,000 and some cats as assets."  I tell him/her they're going to have to work till they're 75 and will not be able to retire at 62.  It's the truth, but again, they get very upset.  And it is here I want you to (for your own good) to be able to set aside your emotions and your feelings and approach this in a logical, reality-based, mathematical manner.

This is reality.

The markets are overvalued because of previous generations' trillions of dollars flooding the retirement plans.

The government has debt equal to 100% GDP and it's only going to grow because of all the government goodies we've promised us and everybody else on the planet into the future.  This not only means impaired economic growth, but a very increased chance the government will simply confiscate your retirement plans.

It is infinitely cheaper to knock yourself out when you find out your terminally ill, not to mention you'll leave a lot more to your family, or at least not be a fiscal burden on the tax payer.

Dark, macabre, yes, but truthful.

There is however, some good news - freedom.

Understand to save for retirement is a huge fiscal burden, and like end-of-life medical care, it requires you sacrifice a lot today for relatively little tomorrow.  Additionally, in today's debt-ridden, socialist-leaning economic and political environment, saving for retirement is proving more and more risky.  Not that the stock prices won't go up, but that your hard-earned money will simply be confiscated.

So what is the logical thing to do?

Enjoy life now.  Spend your money on you now.

As I mentioned before, some of you, like me, felt guilty if you didn't start saving for retirement at 22.  You even spent money you couldn't afford on an IRA or 401k because it was "what you were supposed to do" (just like going to college or "following your heart" and other advice you've received).  You didn't go out, you stayed in, you didn't enjoy life.

But that is not what life is about.  If you don't go and have fun every once in a while, then why be alive in the first place?  Working to simply to finance your last miserable 6 months on this planet or to pay for other people's stuff is not "life."  That's slavery.  And you're already going to be paying enough in taxes to pay for other people's mistakes or laziness to the point you're effectively a slave 40% of your working hours anyway.  So why risk slaving away more?  You're here on this planet this one short period in time.  Do yourself a favor.  Forget the retirement plan.  And MORE IMPORTANTLY, let go of the guilt. Go live life.

Because I guarantee you now, if you slaved away only to have it all confiscated as you lie on your government financed death bed, you'll have more regret and guilt then than if you had actually lived life.