Del wants everyone to read this article published at Time.com: Should the 401k be Killed?
From the article:
“…It was at first seen as a supplement to the existing system of workplace pensions, but during the 1990s the 401(k) largely replaced pensions in the private sector…
…Unlike pensions, 401(k)s are voluntary, and many workers either don’t participate or don’t set aside enough money to give them a shot at a comfortable retirement…
…Even participants in the best-run, lowest-cost retirement funds face the risk that the market will tank — as it has done this year — when they’re close to retirement….
…At retirement comes another issue: pensions insure against the risk that you’ll outlive your money, because they pay until you die; 401(k)s don’t….
…And finally, the tax breaks built into the 401(k) — about $80 billion a year — fall mostly in the laps of high earners.”
Seminar
Well, my friends, it happened. For the first time ever in 19 years I missed a seminar. It’s never happened before. I’ve gotten drunk; I’ve done it after being up all night long not sleeping one hour. I’ve never had it happen before, but it happened this weekend. And so I want to apologize for everybody that took their time to come down here and visit.
I actually made it to the seminar. I collapsed in the elevator on the way up. We don’t know exactly what happened, but we have a pretty good idea. About 4 to 6-8 weeks ago I started trying to lose weight. I told you I went on a diet. I was feeling really bad, weak, sickly, unhealthy. And I lost 20 pounds over the last 4-6 weeks. I am not sure how much it was. And I’ve been feeling great, absolutely phenomenal.
I had gone to the doctor during that time and found out that I had diabetes and that I had high blood pressure and high cholesterol and high body fat. I had high everything that you shouldn’t have high anything of. Somebody asked, “How’s it going?” I say, “Everything’s up. My blood pressure, my cholesterol, you know, my blood sugar.” You name it; if it’s bad it was up.
Phenomenal
And so I got onto an exercise program and lost the 20 pounds—pretty common for me to do that, done it many times before—no problem, felt better. Got to where I could do the treadmill. I was doing the treadmill at the top level 15 for an hour and a half straight, so I started doing the Stairmaster which is much harder—and I’m getting pretty good with the Stairmaster. Everything was going great.
Friday night came up. And it was my girlfriend’s birthday on Saturday, so we had to decide do we go out Friday night or do we go out Saturday night. I thought, you know, hey, I’m going to be teaching all day Saturday and got to get up again Sunday probably better off to go out Friday.
So I worked out really hard Friday night. When I got done—‘cause I couldn’t workout for two days—got done working out, I came home and in a rush to go out and get back. I didn’t eat but just a little teeny bit of food. And we went out; we danced all night long, felt great, had an incredible time—just really what life is all about, just phenomenal. That’s a whole story in itself. I won’t go there.
Bizarre
But I got home, went to bed, got up. And because the girls had been out so late, they couldn’t get out of bed so there was nobody to fix me breakfast. I was in a hurry, so I just bypassed breakfast and drove up here. Got up here, everything was going fine. And then I went up the elevator and I started to get vertigo. My head started spinning, and down I went—boom.
Now, we think it was a blood sugar lapse because I hadn’t eaten for a day and a half and I had been working out for two hours, dancing for four hours, and just really believe it was a blood sugar lapse at that point. I’m taking medication—they had just doubled my blood sugar and blood pressure medications, so they pushed my blood sugar down too far, pushed my blood pressure down too far I think.
All those things at one time hit me, and boom down I went. Bizarre. Went home, slept for eight hours straight and then laid on the couch for two days—couldn’t move, just exhausted. So I don’t know what it is. I will have to get back to the doctor. Have to take some tests and try to level it all out. I just, again, want to apologize to everybody.
Gambling
I’ve been asked literally hundreds of times about the point that I made that I had heard that the democrats were going to take your 401(k)s, they were going to disallow the 401(k) deduction, and they were going to absorb your 401(k)s into the IRS and have you start paying three percent more social security taxes, which will be what they’ll call a savings account for you—basically just more social security taxes.
The concept was based on two theories. The first theory was that we as a society had money that the government never got to tax. It was $800 billion or $80 billion—something like that. It goes to $80 billion a year tax break for people who put their money in the 401(k)s and the government never got any of that money. And then when we lost half of it all at the same time, the way the government saw that was basically you lost our money. You gambled our money in the stock market. We don’t want you gambling that money.
The second part of the argument is that the 401(k) is just a lousy way to save for retirement. And this article—I finally found this article. It came to me by way of another article. The article I was reading was about how bad 401(k)s are as far as a way to save for your retirement. And it’s just a litany of problems with the 401(k), and I agree with all of them.
Rip-Off
I’ve been telling you for years now, at least ten years, get out of the 401(k)s, get out of the IRAs, they are a bad deal. They’re a rip-off in many ways. And they’re not, in most cases, a good alternate for a pension plan or a good alternate for social security or even a good alternate for having a savings plan that works, because they don’t in most cases retire people.
So finally I found this article. And like I said, I was reading another article about how bad 401(k)s are and I linked over to this article. And the article’s name it’s in the Time Magazine section of CNN. We have it on our website, so you can go there and get it. And the title is “Should the 401(k) Be Killed?”
And this economist goes on and makes all these points about why the 401(k) should be killed. And I have two—I’m conflicted here—I have two areas I would like to discuss. One of them is the fact that the 401(k) is really a bad vehicle as far as retirement. The second one is the government is seriously considering wiping it out. They’re also seriously considering absorbing it into the IRS as a government-controlled pension plan.
And the rate of return they plan to pay you—get this—a whopping three percent return. And in their minds that is far in excess above the one percent average return that Americans make in their 401(k). Now, I’ve been telling people this for ten years. Finally it’s coming to light.
