I can’t stop contributing to my 401(k).
Not “can’t stop” as in Miley Cyrus, I-can’t-stop-doing-E-it’s-so-much-fun.
Nope, it’s literally against the rules of the plan. Even merely reducing my contribution is not allowed.
How is this a thing?
Me: Hello, Comcast? I’d like to cancel my cable subscription.
Comcast: Actually, the subscription rules state that you can’t cancel.
Me: Can’t cancel? But I don’t even watch TV anymore!
Comcast: I’m afraid you’ll need to continue your subscription anyway. Very sorry about this.
You know Comcast would do that in a second if they could get away with it. They must be consumed with envy for these 401(k) guys.
Sure, there are some shady 401(k) practices out there, but if you look deeper, you’ll see that the whole concept of the 401(k) is a scam.
Why? Because it reinforces the retirement model of working.
This model says: you will work for 40 or 50 years straight. You can have weekends off and whatever scraps of vacation your employer throws you. Then, one day, you will abruptly cease your efforts, move to Florida, and spend whatever days you have left drinking Arnold Palmers at the track and cultivating an herb garden.
What does it say about your work that you can (and, in fact, are expected to) just let it all go at the drop of a hat? Well, to me it says, you don’t care much for your work. You probably even hate it.
And this is the crux of the whole system. It assumes that your work is just a job. A way to make a living. You’re only doing it because you have to, because you need a roof over your head. And the sooner you can stop these “work” shenanigans, the better.
So, what a deal we have for you! You don’t have to work your whole life; we’ll let you set some money aside so that eventually, after countless hours of toil, you can shuck your burden and whimper out the rest of your life in peace. Just a small chunk of your paycheck, no big deal — -hey, we’ll even match it.
Not to worry, you’ll see it again in 2055.
Doesn’t that sound wrong?
It does sound wrong, because it is wrong.
Not wrong morally, although I’m not saying it’s right, either. Wrong as in, the story we are told is completely backwards.
The real story is: this system was put in place by people in corporations who needed lots and lots of factory workers to do the same repetitive jobs every day, turning cranks and assembling widgets.
Imagine you are on the assembly line. It’s pretty thankless work, but it’s not like you’ve got the money to get an education and move into management, let alone start up a factory of your own. You’re stuck.
The company knows you’re not exactly thrilled to clamping door hinges onto Pierce-Arrows all day, so they give you a small raise every year, and maybe a bonus, just to make sure you stick around.
But eventually, you grow old. Your hands aren’t as nimble as they used to be, and your reaction time has diminished.
Boy, the company thinks, wouldn’t it be great to have some way to replace these old-ass workers with new ones? Who’ll be faster and work for cheap? But we can’t just fire people for being old…
… and that’s how retirement was invented!
The 401(k) is what makes retirement seem like a good idea. “Oh, I can have all this money and not have to work? Sounds great!”
Except you have to wait 40 years.
Except you may not get all that money back, even then. (More on this shortly.)
Except you have to spend those next 40 years working a job you don’t enjoy, eight hours a day, five days a week, 50 weeks a year. 40 x 50 x 8 x 5 = a big-ass number that you’d rather not think about.
We’ve got to wake up. This is not what life needs to be like.
The 401(k) was not created to help worker bees like you and me save for retirement.
Instead, it’s a deliberate play to take money out of your hands and give it to Wall Street. Think about all that money across the world, that before it can make it into your paycheck, gets shuttled into whatever fund you’ve signed up for.
According to James Altucher, it’s no coincidence that after the arrival of 401(k)s in 1978, there was a 20-year stock market boom.
You are giving your money away to people who barely even need it, to play with for 40 years. Meanwhile, you might see your money again after that time. Or you might not.
Because there’s no guarantee that you get to take back what you put in when retirement finally arrives.
Just ask all the poor people who lost their savings in the 2008 crash. Ask people who were months or even weeks away from retirement, and suddenly all that money they’d been giving away for decades vanished out of nowhere. This was money that they not only expected to get back, but relied upon to be able to live a nice life without having to work.
Sorry, it’s back to the grind for you, pops.
I have to admit, it’s rather ingenious. The most amazing part of the scam is not that it exists, but that we buy into it without question. Have you seen the looks on people’s faces when you tell them you’re not vested in your 401(k)? It’s as if there’s a giant booger stuck on your face.
A lot of companies now do an “opt-in” strategy with their 401(k). You’re automatically enrolled unless you submit a form saying you don’t want it. Easy money.
So what’s the answer, instead? What should you do?
I’ll warn you, it’s not easy. What you should do is take control over your own money and your own destiny.
Keep that money and invest it in yourself. Take online courses. Read books. Learn to code and start building apps. Learn to write and start blogging and publishing books. Build assets and new sources of income.
Does all that require hard work? You bet your ass. A lot harder than working a 9-to-5. But isn’t it a bit more rewarding to work hard to make a living doing something you love than to live in a daily hell for 40 years, waiting for a magical retirement that you might not even make it to?
Don’t put your life on hold. You don’t have to quit your job and become a “digital nomad,” but at least reconsider your 401(k). Because I can think of no better way to put your life on hold than to give away your money to Wall Street for the chance to maybe get it back in four decades.
You might be forgiven for simply following the rules, but ultimately, you’re the one responsible for your destiny. Make it one you want.