The original title to this post was just ‘Fidelity can blow me’, but when I shared that with my wife she thought I meant relationship fidelity. That lead to quite a long discussion and what can only be called ‘over-sharing’ of feelings before we resolved to add the second sentence for clarity.
Mind you, Fidelity doesn’t have to be alone in blowing me. Most of the large financial institutions can join in. Now the imagery is all wrong again.
The point being that the institution of retirement planning – call it retirement fear mongering – is structured to make money managers rich and keep you trapped. Summarized, the entire industry is designed to frighten you with the threat of cold and impoverished golden years. The chances that you’ll end up alone in a gutter are incredibly high. You will not have relaxing days in the sun playing golf. You will not be on a cruise. You will be poor, riddled with gout, and flatulent.
Unless…..unless you simply buy into the retirement planning scam.
Think about it. Putting aside entitlement programs like Social Security, the primary savings mechanism available to the working class is a 401K plan. With a traditional 401K, in exchange for near term tax benefits (thanks government, for taking less of my money), you are required to place your money into a managed plan where money managers will take a percentage every year until you retire. Every year. You have no option to self-invest the funds. Fidelity gets your money so Fidelity managers can drive Ferraris today. You pay for their cocaine-fueled weekends in the Hamptons through the scent of your fear.
And guess what? These are not permanent tax benefits. You’ll pay the taxes when you withdraw, perhaps at an even higher rate depending on your tax bracket and how crazy our Congress gets. If you don’t wait until you’re 60+ to pull out your money, you’ll pay all the taxes plus a 10% penalty. That’s the pistol held against your head, forcing you to keep your money in a pot that the financial elite get to dip into at will.
Of course you can call bullshit on this. You can take a different path to retirement. And I’m not talking about saving and investing on your own, socking money away in a coffee can or playing the lottery. Instead, a good place to start is deciding why you want to retire in the first place. What do you imagine doing with all that time off, and would you have more fun, be more engaged, feel more fulfilled if you did those activities now, when you’re younger, more energetic and sexier?
My retirement plan is a simple 3 steps. No complex modeling of retirement age or deciding where to rollover your IRA. Just do the following:
Step 1: Always be retiring
My 90 year old grandfather once told me his only regret in life was not taking more opportunities when he was young. By opportunities he meant travel, fun, exploration and experiences. Also I think he meant more sex. He was a weird guy. At 90 he was sitting in a chair, immobilized from hip replacements undergone in his 80s, smoking a cigar. Retirement looked awful to me, and I think it felt awful to him.
Starting now, just decide you will retire for 3-6 months every 3-5 years. Pick a date now. Put it on your calendar and circle it. Retirement! You have no job risk because companies don’t reward you for tenure anymore. There are no benefits you’re walking away from. The same 10% you’re saving into your 401K will fund your exact same lifestyle during those mini-retirements, and you might even be able to live much cheaper during that time (think Thai beaches, I know my Grandfather did).
When was the last time you even took a full 7 days off of work? Imagine how recharged you’d be with 3 months, how fresh your ideas and perspective, how much vigor you could bring back to the workforce when you find a new and better job. You’ll be a mythical beast that everyone wants to hire. Don’t want to take that life-changing journey through India? Think about what you could do with that time with your kids, your wife, your fitness. Amazing.
I know that every bone in your body is screaming ‘No! That’s not how it works. I have to stick in my job for safety and security.’ That thinking goes hand-in-hand with the retirement fear-mongering system. You don’t. The economy is enormous. Even the poorest in the US live a life of unimaginable wealth compared to the richest of 300 years ago. Indoor plumbing, flat screen TVs, streaming movies. Food. Just don’t pick up a meth addiction and you’ll be fine.
Step 2: Never retire
Once you’re committed to always retiring, then commit to never retiring. Plan to work until you drop dead or you are so incapacitated you are at risk of burning the office down (see #3 below). Plan to work as a consultant in your industry if you can get it, or as a Wal-Mart greeter if you can’t. Plan to take surveys online for money. Do tasks from Amazon Mechanical Turk. There are thousands of ways to make money. There is a guy who wanders around Bourbon Street in New Orleans dressed up like a pirate with a sign that says ‘Pirate Jokes – $1’. He’ll tell you a few of them. They’re funny, you laugh, and because you’re drunk you give him more than $1. I’ve seen him multiple times over the years, so I know it’s paying a living wage. Think about how big the economy is when that’s a career possibility. Buy a book of pirate jokes, get eye patch, make money. With the Internet you likely don’t even have to pay for the book.
If you plan to constantly be retiring but never retire, then all of your fear goes away. There is no future where you’re cold and in the gutter. You are always earning. Maybe you have to sell the big house and move into a rental in South Carolina, but you won’t starve. You won’t. Get a nice porch on your rental and read books when you’re not working. Very low cost.
Step 3: Don’t beat your children
Of course there is that eventual situation where you are fully dependent on the care of others. You can’t see or walk or pee right. Someone needs to care for you. This sucks and is no fun. Saving money to enable this situation, and denying yourself life while you’re alive, sucks as well.
The hedge against this situation isn’t to squirrel away money, to hand it over to the Fidelity fear-mongerers. Just don’t beat your children. My father-in-law recently passed away, and some of his final concerns were if his wife would be cared for. He has 5 children, including 3 married daughters, and one adult grand-daughter. That brings the number of adult children in his life to 9. 9 adults damn well better be able to care for an invalid parent. We’ve lost our minds as people and humans if we are unable to feed, clothe and keep one additional human warm.
I know, you’re terrified about medical costs of long-term care. Guess what? With what medical costs are today, you have no chance of saving enough if you end up needing perpetual, high intensity medical services. It’s not possible. Either the government (collective care) will step in or you’ll die. The latter likely isn’t such a bad outcome.
Systems come and go. You don’t see a lot of people working as serfs on the lord’s farms any more. The retirement fear game is the same thing. It’s a privileged few keeping down the many. The good news is the king won’t allow your lord to cut off your head if you decide to walk away from this game. It’s your life. I’ll see you in Thailand.
And He Says 
There are reasons for paying for a financial advisor.
1. You suck at managing investments, i.e. you’re typical
2. You don’t have time or inclination to do that job, i.e., you have a life
3. You want access to data not easily grabbed on your own, i.e., you want advice
4. You want affiliation with a big name, to brag about having an advisor, to be comforted, i.e., you’re pathetic
5. You want advisor for significant other when you bite the big one, i.e., your other is senile.
So the advisor charges 1%. If his or her return is 1% above what YOU could achieve, the advice is free.
Index tracking.
Before we feel too sorry for unfulfilled Grandpa, let’s list what’s on his resume:: first in family to get college degree, a life of full employment with 4 employers over 50+ years, Cadillac health coverage ($1 per script) in retirement from a state agency, political office, fed, housed, and put 5 kids through college, vacation on Jersey shore for 50 years, travel to Europe, through the Panama Canal, on the St. Lawrence, into Canada, dined out every night once kids were gone, paid all his bills on time, accumulated stocks, and kibitzed with Albert Einstein at Princeton. Boo hoo.
You sound jealous…perhaps you feel like you missed opportunities.
I think Andrew and Bob need to hug it out…otherwise, it’s a fantastic point. There’s one key thing you’ve implied, but not said. “Go forth and multiply.” Kids and grandkids = pyramid scheme. Don’t beat them, but have a few. Diversify your offspring.
I thought Fidelity went to ASU to study interior design.