Suze Orman at Google
I was agreeing with Suze Orman when she had everyone stand up if they had credit card debt, mortgage loans and personal loans. I thought surely she would go into how they should be ashamed of themselves, since they were the brighter swath of the nation, since they work at Google. I thought she would go into how they should not go into debt and get out from under debt as quickly as they possibly could. Then she went into a tirade about investing in a company sponsored 401k. I was a sad panda at that point. I think anyone that would advise someone, in this day and age, after the crash and the wholesale wipe out of 401k’s, to invest in a 401k should automatically be suspect.
A note on The 401k Scam
The government knew that they could get MORE taxes out of our generation than they could any other generation by offering TAX DEFERRED 401k incentives. Here’s the obvious math:
- at 23 years old, your tax bracket is the lowest it could ever be in your life
- should you invest diligently in your 401k, you will have a cool $1 million at retirement
- once you retire, assuming a paid for house, you have NO tax deductions
- your income would be $80,000 a year
- your 23 year old tax bracket investment will now be taxed at the highest bracket possible
- factor in your lovely social security payment, to jack up your tax bracket even more
- with no tax breaks you’re looking at $55,000 take home
- after 20 yrs of retirement you would have paid a cool half a million JUST IN TAXES
Welcome idiot, to the club, table for one. And, table for one is exactly what it is. You are left to invest nearly $1 million of your money with NO investment knowledge. People with barely high-school educations are pressured into investing in 401ks that are dog stocks and given the Santa Claus fairy-tale of, you’ll be rich by your retirement and won’t have to pay any taxes.
The 401(k), as the plan is known, is literally a do-it-yourself retirement plan completely dependent on the vagaries of the market. With over $7.7 trillion wiped out in two-and-a-half years by the 44 percent fall of Standard & Poor 500, many face a shrinking pension or none at all. Unlike a high-powered executive, the average worker has no broker who is constantly following investments, giving tips or advising him or her on the wisest allocations. The 401(k) plan places the responsibility and burden entirely on the worker.
There is no way on God’s green earth that a high school grad can know the difference between a mutual fund, options, bonds and commodities, on a massive scale the likes the country has never seen before. Remember, a scant 20 years ago noone had even heard of a 401k. But, with the dot com boom, everyone invited illiterate investors to join in the great fun and open up a 401k, to get in on the dot com action. When that burst and wiped everyone out, Wall Street, the fed and the government colluded to continue to wipe out everyone. The charade of the get rich when you retire myth was forced down our throats even more. And, companies and employees bought it hook, line and sinker. Gone were the pension plans entirely. People were now of the mind that the only retirement plans were from 401k’s and social security.
Meanwhile the government failed to mention that social security was never meant as a retirement plan AT ALL. It was always intended as a supplemental plan IN ADDITION TO your retirement. Literally people stopped saving for retirement and thought social security would be their retirement. Year after year, more taxes were raised and the promise of social security being your retirement was served to you. As the boomers retire and realize just what a poor system it is, it will be too late for them to do anything about it. They failed to invest in retirement and will have to rely on something that was intended to make sure they would not starve, NOT live on.
Briefly on social security, initially it was intended just as a money grab. The age of collection was 65, when the average life expectancy was 61.3 years for whites and 53 years for Blacks. Also the pay out even if a worker did live to reach retirement age, would never pay out what was put in. Some workers would have to live to the ripe old age of 200 years old, to get back what they put in. That means they would have to live 140 or so years past their retirement age to recoup what they paid into the fund. And, SS is not considered your money, it is considered the government’s money because once you die, you cannot bequeath the remainder to your heirs.
So is Suze Orman being honest with the employees of Google? Probably not. I mean, she’s standing in the Google building giving a speech to Google employees. I guarantee you she is bought and paid for, for the hour. And, the lesbians felt great pride to come up and show their support for her on the microphone, during Q & A. But, she does give one good piece of advice at the very end of her speech. She says: ” it is better to do NOTHING than to do something you do not understand.” This is a better way of saying “a fool and his money are soon parted.” So many people think because a salesman is in their face sliming his way into your pocket and telling you how the Smiths down the street are doing it, that you have to do it too. Ignorant workers are investing in 401k plans without even the benefit of understanding the first thing about amortization or compound interest. Many a time have I been given a paid break to go listen to the companies brokerage firm give their spiel about the company 401k. I would look around the room and see 20% of the people asleep, and the rest with eyes glazed over. These people are going to invest $1 million of their cold hard earned cash in a 401k?