Retirement Planning

I notice a lot of people, younger than me, like to plan for their retirement. I think it's great to start planning early, because we all know the government's not likely to take responsibility for us when we're old.

I've had a retirement plan since I was 25. The company I worked for put my money into a pension plan, which I rolled over into a 401(k) plan after leaving that company at 28. When I was 28, all I heard was stories about how you need to start young because that way, when you retire, you'll have loads of money you never paid tax on, waiting for you. They'd show charts comparing someone who started at 16 with someone who waited till he was 50. Oh my! I waited till I was 25!

I can't say whether or not the amount I've deposited into my 401(k) or IRA accounts over the years has been enough or too little. But I can say that the older I get, the more I feel like retirement plans are most useful for those of us who will fail in life. Something just doesn't seem natural to spend your life saving money, and maxing out on your 401(k) so that if and when you get really old, you can suddenly become a millionaire. What are you supposed to do with a million dollars when you turn 69 1/2? How much do you supposed to withdraw per year? The only way that would make sense to me is if I had been a millionaire all along.

The older I get, the more it sounds like banks are taking small amounts of money (lots for you and me) from a massive number of working class people. Then they loan it back to us in the form of credit cards, mortgages, and other types of loans - charging us interest. And penalizing those of us who decide to interfere with their plan by withdrawing some of it before retirment age. I know, I must sound like a conspiracy theorist, again.

Nevertheless, it does bother me to know there are so many twenty-somethings who make barely enough to get by, loading down their 401(k) plans - because they've been brainwashed into thinking one day they'll get rich off of it. How's it invested? Most of us don't really think too much about that sort of thing. They even classify investments with terms like 'Growth' and 'Income'. Sounds good. Mine have been invested in more 'Growth' stocks, for example. So, out of every paycheck, a chunk of my money makes Microsoft's value go up just a really small amount - so someone rich can sell and make a profit - not when I'm an old millionaire, but right now!

It seems like most of the advise about financial planning comes from banks. Of course banks think it's a good idea for you to give them money you can't use till you're seventy years old. And it's especially good if you start doing it early - because they get to keep it for longer - and there seems to be a greater chance you'll never live to see it: It's less likely that a 25 year old will live to be 70 than it is for a 69 year old... Also, they keep moving the target up, so that the 25 year old won't get to claim any of that money he lent the government for decades, until he's in his 80s. Why should any of us live long enough to enjoy some of what we've saved up?

I'm not saying 401(k) plans are a bad thing. Most people probably don't think about retirement at all, and they should. Those plans are especially beneficial when your company matches your contributions, which none of mine ever have, and when the market is performing well, which it hasn't been. They also knock off a chunk of what you will otherwise spend on taxes - which means they work better for those in higher tax brackets. But you know what? Sometimes you can do more with $9,800 you can use for anything you want, today than $14,000 Uncle Sam can use for anything he wants over the next forty years.

When you plan your retirement, keep a little money on hand to invest in some of the things you believe in - and that you, not the government, can decide when it's best to liquidate. When you listen to one of the 'experts' on planning for your retirement - keep in mind most of them are working for banks.