Pensions and 401(k)s? The Bailout Fund For The United States Government
As described by the “Father of the 401(k)” Ted Benna: the 401(k) “helped open the door for Wall Street to make even more money than they were already making.”
What are these financial instruments that focus on retirement savings in the United States, anyway?
Generally, retirement savings derivatives are focused on “lock-up agreements” that deny the participants access to their capital. And most importantly, they defer tax settlements with the government to a point in the uncertain future. A future where the federal tax rate will be somewhere in geosynchronous orbit. Better known in America as a 401(k).
The fact is, 401(k) pools are gold mines to some of the largest financial institutions in the world. They have spent billions in marketing these “shit” products. Over many years, they have carefully managed these derivatives perceptions to the public. If this wasn’t enough, many of these institutions have invested millions in understanding the psychology of their client. This is so that they can market and manage these financial instruments more easily. These institutions have also given billions to lawmakers to help preserve these horrible investments. The lawmakers, in turn, legitimize these derivatives for contributions. Once again, demonstrating their contempt for the society they are entrusted to protect.
But, why are these financial instruments such horrible investments? I will give 8 reasons why I think you should stay clear of these ridiculous products. Of course, most will not heed this advice and most will be happy at home playing Zombies on Xbox
The False Perception Of Wealth
The idea of saving for your future retirement is a noble endeavor. The only question is how? In the United States, the current models are a variety of retirement derivatives schemes that gravitate around pension funds and individual retirement accounts. As you contribute to these schemes you receive beautiful statements accounting for your contributions over the life of the pension, IRA, or 401(k).
In reality, these statements do not demonstrate the retention of your capital and do not belong to the individual contributor, administratively. Especially, in the cultural mindset of your financial institution and the government. That is why a financial institution will sound annoyed at requests for redemptions.
What would you generally pay over the life of these instruments?
A recent study by the Center for American Progress (CAP) found that the typical American worker who earns a median salary starting at age 25 will pay about $138,336 in 401(k) fees over their lifetime. Or, 1% a year. Some range as high as 5% per annum! In the case of 1%. That is 30% over 30 years.
Of course, the tax will bring your total losses to over 70% of the total value of the instrument. If you are very lucky your net will be 30% out of your total contributions over your life.
You’re better off just buying one gold coin a month and locking it away in a safe. Not only will you not be taxed. But, it is the perfect inflation hedge, and no one is going to charge you a fee. In fact, your better off packing up and selling your home. Emigrating and watch the ensuing drama from somewhere else.
What Happens To Your Retirement Savings In Financial Institutions?
Working in the “dark pools” here in Switzerland, you will be happy to know that your capital is put to good use. It is given to some of the highest-performing hedge funds around the world. Where they can realize profits as high as 60–110%. This is to the unfettered joy of the fund managers that use the extra capital as “Monte Carlo” traveling money. In January, I have seen these fund managers — god only knows why — sit as close to the prince of Monaco as they can when the circus comes to town. I will let you in on a secret, this man hates money and does not give a shit about these people. Why they do not hold this event in June has always been a mystery to me.
Anyway, if you don’t like this arrangement, you can redeem your retirement savings and pay 10% for early redemption. Plus, the local and federal tax.
If the slap in the face payment sounds unfair, this is actually a blessing in disguise if you are just getting started. The longer you keep your money in these ridiculous instruments the more money will come out of your savings.
This comes to one of my most important rules: The longer you stay in the United States the more you are going to pay. If inflation does not eat you alive; the paid-off criminals in the government will.
Future Tax Rate’s And Changing The Rules
If the past is any indication of the future, It would be safe to assume, that counting on your tax liabilities being lower in the future is a “ fool’s paradise “. The American national debt is currently 24 trillion. Of course, that does not include the debt of all 50 states. Therefore, using simple logic, where do you think taxes will be in the next 20 years?
This comes to my next point, changing the rules is the US Senate’s speciality. Why not change them to help their special interests? The fact is, the US Senate does that every day– except on holidays.
Writing a law to help the largest financial institutions in the United States to the disadvantage of American citizens is a normal practice. The US Senate is not there to help you. They are there to steal from you and to get contributions. Changing, the laws to screw Americans out of their savings is a completely normal activity. Then, running to the IRS to help them with their stealing has been a normal procedure since 1940.
The longer you keep your money in these horrible derivatives the more likely you will become a victim of these criminals. The Senate prays on the socially weak and the US courts are their enforcement arm.
Even worse, they do not care what you think. They have the thugs of American law enforcement there to protect them. At this point, American law enforcement is nothing more than a band of former Walmart employees that used to be stocking shelves. Of course, with a full pension and healthcare, they will have no moral qualms working at concentration camps if asked. Just the kind of people to protect the thieves at the US Senate.
401(k) The Wealthy’s Inside Joke
If you were moved up to first-class on a long flight to Timbuktu. Where you had the opportunity to sit next to a Wallstreet Guru. The first thing he is going to tell you is that he did not make his fortune investing in 401(k)s. The formula is very simple, invest in income-producing investments throughout your lifespan. In reality. wealth is acquired by increasing your income, investing in income-producing assets, and most importantly — protecting as much of your income as possible.
The Changing Economic Cycle
Follow me closely because this is no joke. If you retire in a downward economic cycle, not only will your retirement investments be taxed, hit with fees, and inflation. In aggregate, your investments may be worth 50 to 60% less than they are today. In fact, there is no way to predict what is going to happen in the future if you keep (unhedged) open interest in the markets. To put this into perspective, most professionals do not keep open interest in the markets even overnight. Why would anyone risk their life savings by keeping open interest in the markets when the professionals do precisely the opposite?
Retirement Savings: The United States Government Emergency Fund
This is one of the most unlikely scenarios, However, it bears consideration. There are many things that could trigger a government seizure of your savings. Anything from a legal settlement to unpaid taxes. In this case, we will talk about the United States going to war. Is this unlikely? Maybe.
One thing we can all count on, there will be no end to global human conflict. For example, if the United States goes to war with China it is most likely that your savings will be seized and you will be given a bond in return. A bond that some family members may not be around to redeem. It will start off with long lectures over at foreign policy think tanks about how America needs to “Save The Puppies” from the Wuhan labs. That will rally “The Yoga Shitlib’s” and, of course, the neo-conservatives will be reawakened with dreams of being on the history channels as war heroes. Few will return from that conflict.
How Do You Save For Retirement?
In closing, what is the best solution? Bluntly, there are thousands of solutions and anything is better than a 401(k).
However, one of the main problems you will encounter is how to cope with the human struggle against the temptation to spend? One of the best ways is to save your savings in medals. You’re less likely to spend it due to the procedure of converting it into a monetary instrument. Gold will not give you stellar returns and it is not a sexy investment. But it will hedge against inflation and preserve what you have worked so hard for. Of course, some government goons may storm into your home looking for it one day. If you hear about that happening you can always have the option to go bury it by your favorite tree!
The longer you keep your money in a 401(k) the more you’re going to pay. Always remember, these retirement investments are generally unhedged and sometimes unmanaged risk. That being the case, in the markets, it is no different than going to Las Vegas and putting your money on [red] or [black].
---Roman
Understanding the nuances of the offshore financial centers can be challenging to say the least. In this newsletter, I talk about aspects of our industry that you may never read about otherwise. Some of my most informative articles are only at Substack. This being the case, my goal is to help you preserve your wealth by sharing my experiences.
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