Post by bounce on Sept 30, 2007 5:20:01 GMT -8
I don't mean to berate Falcon any more than necessary because this particular statement is held by many people.
So, this post isn't meant to beat up on HIM so much as the ideas he is spewing forth.
In another post, he said (paraphrasing) that he didn't want to have to worry about money. He wanted to come home from work secure in the knowledge that his 401K would be there for a comfortable retirement.
In response, I asked him how he knew that his 401K would be there for him and how in the hell he knew the 401K would make his retirement "comfortable." The answer, of course, is that nobody knows.
There is a financial tsunami coming and very few people are willing to raise their voice about it. It will destroy any chance for a retirement for those who are counting on their retirement plans (including DB plans, IRAs and 401Ks).
Moreover, there is NO WAY around it. It is unavoidable. It's coming.
Here are the reasons:
Right now, tens of millions (if not over 100 million) of employees are having automatic withdrawls taken from their pay checks (just the way Falcon is) to buy mutual fund stocks in their 401Ks and IRAs.
The boomer generation is a large part of that group.
What do you think will happen when the boomers retire and stop BUYING? Those automatic purchases WILL STOP, but that's only half the equation.
What will happen when tens of millions of baby boomers start to reach in to their retirement funds and PULL MONEY OUT to live on?
MOREOVER, what do you think will happen as the boomers reach 70 1/2 and ARE FORCED BY LAW to make withdrawals?
Gen X will be there BUYING THE STOCK that the boomers are selling, but look at the numbers! There aren't enough Gen Xers out there to do it. There will be ONE HELL OF A LOT MORE SELLERS THAN BUYERS.
Then, we have the issue of social security. When tens of millions of boomers try to retire and start COLLECTING some of what they think they put in to the system over their lives.... what do you think will happen?
It ain't gonna be there! That means they will make IRA withdrawals at an even FASTER RATE.
The sell-off will be enormous and that big 401K account you thought you had will evaporate right out from under you.
Your stock market account balances are a fantasy. They are an idea. They are NOT REALITY.
Don't think that companies' defined benefit packages will save the day. Look at Delta, the airlines in general, the railroads, steel, etc (the textile industry and autos will be next) and see the future of YOUR retirement plan.
The numbers aren't there to support it. Companies are racing as fast as they can to dump Defined Benefit (DB) plans in favor of Defined CONTRIBUTION plans.
A Defined Contribution (DC) plan is where the company matches a contribution to your 401K and that's it. They are not even supposing you will ever see any of it. They are saying, "Here is our contribution. Beyond this, we're done with your retirement."
Every company will be switching to that. It's a matter of mathematics. There are too many boomers and they're living too long. The economy won't support unproductive people in those kinds of numbers.
My whole point is this: If you are counting on a 401K or an IRA to supplement your retirement, you're in for one hell of a shock.
It's NOT going to be there. YOU WILL NEVER BE ABLE TO RETIRE unless you take on some new ideas. AND RIGHT FUCKING NOW is an excellent time to start!
As an aside - the difference between a DB and a DC plan is this:
In a defined benefit plan (DB) the company says, "If you work here this many years, we will guarantee you "$X" per month for the rest of your life.
In a defined contribution plan (DC) the company says, "If you work here this month, we'll add "$" to your 401K. Beyond that, we're offering you NOTHING toward your retirement. What you get is what you get. We make no promises beyond our contribution. Once that's been made, we're done with your retirement.
I am telling you here and now that depending on the tried and true advice of financial planners is quite possibly THE WORST ADVICE you could possibly take.
If you get ANY sense of security and "comfort" from having an IRA and/or a 401K, you are setting yourself up for financial bedlam.
There is an answer.
It's called "financial intelligence."
People like Falcon say they're too busy to think smart thoughts about money.
I suggest you NOT follow his train of thought.
Follow a different mental path.
Your family will be glad you did.
So, this post isn't meant to beat up on HIM so much as the ideas he is spewing forth.
In another post, he said (paraphrasing) that he didn't want to have to worry about money. He wanted to come home from work secure in the knowledge that his 401K would be there for a comfortable retirement.
In response, I asked him how he knew that his 401K would be there for him and how in the hell he knew the 401K would make his retirement "comfortable." The answer, of course, is that nobody knows.
There is a financial tsunami coming and very few people are willing to raise their voice about it. It will destroy any chance for a retirement for those who are counting on their retirement plans (including DB plans, IRAs and 401Ks).
Moreover, there is NO WAY around it. It is unavoidable. It's coming.
Here are the reasons:
Right now, tens of millions (if not over 100 million) of employees are having automatic withdrawls taken from their pay checks (just the way Falcon is) to buy mutual fund stocks in their 401Ks and IRAs.
The boomer generation is a large part of that group.
What do you think will happen when the boomers retire and stop BUYING? Those automatic purchases WILL STOP, but that's only half the equation.
What will happen when tens of millions of baby boomers start to reach in to their retirement funds and PULL MONEY OUT to live on?
MOREOVER, what do you think will happen as the boomers reach 70 1/2 and ARE FORCED BY LAW to make withdrawals?
Gen X will be there BUYING THE STOCK that the boomers are selling, but look at the numbers! There aren't enough Gen Xers out there to do it. There will be ONE HELL OF A LOT MORE SELLERS THAN BUYERS.
Then, we have the issue of social security. When tens of millions of boomers try to retire and start COLLECTING some of what they think they put in to the system over their lives.... what do you think will happen?
It ain't gonna be there! That means they will make IRA withdrawals at an even FASTER RATE.
The sell-off will be enormous and that big 401K account you thought you had will evaporate right out from under you.
Your stock market account balances are a fantasy. They are an idea. They are NOT REALITY.
Don't think that companies' defined benefit packages will save the day. Look at Delta, the airlines in general, the railroads, steel, etc (the textile industry and autos will be next) and see the future of YOUR retirement plan.
The numbers aren't there to support it. Companies are racing as fast as they can to dump Defined Benefit (DB) plans in favor of Defined CONTRIBUTION plans.
A Defined Contribution (DC) plan is where the company matches a contribution to your 401K and that's it. They are not even supposing you will ever see any of it. They are saying, "Here is our contribution. Beyond this, we're done with your retirement."
Every company will be switching to that. It's a matter of mathematics. There are too many boomers and they're living too long. The economy won't support unproductive people in those kinds of numbers.
My whole point is this: If you are counting on a 401K or an IRA to supplement your retirement, you're in for one hell of a shock.
It's NOT going to be there. YOU WILL NEVER BE ABLE TO RETIRE unless you take on some new ideas. AND RIGHT FUCKING NOW is an excellent time to start!
As an aside - the difference between a DB and a DC plan is this:
In a defined benefit plan (DB) the company says, "If you work here this many years, we will guarantee you "$X" per month for the rest of your life.
In a defined contribution plan (DC) the company says, "If you work here this month, we'll add "$" to your 401K. Beyond that, we're offering you NOTHING toward your retirement. What you get is what you get. We make no promises beyond our contribution. Once that's been made, we're done with your retirement.
I am telling you here and now that depending on the tried and true advice of financial planners is quite possibly THE WORST ADVICE you could possibly take.
If you get ANY sense of security and "comfort" from having an IRA and/or a 401K, you are setting yourself up for financial bedlam.
There is an answer.
It's called "financial intelligence."
People like Falcon say they're too busy to think smart thoughts about money.
I suggest you NOT follow his train of thought.
Follow a different mental path.
Your family will be glad you did.