Well, some of the Democrats in Congress are talking about scrapping the 401(K) program and replacing it with an expansion of Social Security.
After seeing my own 401(K) lose over 10% in value in the last month alone, I have a certain amount of sympathy for this. But upon further reflection, I find myself as horrified at the thought as many others.
As they said, this makes perfect sense if 1) you remember that all the money in Social Security is actually just IOUs from the government, which takes Social Security money and spends it on whatever it feels like, and B) your top priority is expanding government spending at a record rate.
But that’s just politics as usual — let’s look at the actual idea and see what it’s all about.
So I’ve lost 10% of my 401(K) in a month. That sucks, and it sucks bad.
But does it suck so bad that I want to pull out of that and replace it with a government program that will guarantee me a 3% annual rate of return? And that presumes that one can actually trust the program.
I hate to quote Paul Harvey, but he has a saying he often repeats: the stock market is a roller coaster, and on a roller coaster the only ones who get hurt are those who stand up and try to jump off.
Over time, the stock market is a pretty safe investment. It goes up, it goes down, it makes people cheerful and drives them mad if they pay too much attention to it.
I’m a good 20 years away from retiring. I’m willing to wait this out, bide my time, trust the guys at Vanguard to handle things properly as things go on. I am willing to bet that things will bounce back by the time I need my retirement money.
And if I’m wrong?
Then I’m wrong.
And I’m screwed.
But I’m willing to take that risk.
And I happen to believe that it’s my right to take that risk.
One of the things that royally pisses me off about the typical Democrats, especially those that are running Congress (into the ground) right now, is that one key element of their philosophy is to protect people from the consequences of their decisions — most often by the expedient measure of depriving them of that choice in the first place.
Here, I — like millions of other Americans — have chosen to show a smidgen of responsibility for ourselves and plan for our own retirement, not choosing to rely entirely on the government and Social Security (with its lockbox of “Dear American, IOU billions and billions, love and kisses, Uncle Sam” notes) to care for us when we retire.
And here we have some Democrats who, because they see some bad news in the markets and NEED TO LOOK LIKE THEY ARE DOING SOMETHING, have decided to destroy the entire 401(K) system. Because to them, it’s not about fixing things,
it’s about looking like they’re doing what they can.
And I won’t even go into the damage that would be done to the already-rocky stock market when all that private money that goes into the stock market via companies like Vanguard and Fidelity and whoever suddenly dries up as the government swoops in and sucks it up into the increased Social Security taxes.
But as I said, my main problem here is philosophical. The primary incentive here is to protect American workers — like me — from the consequences of a poor decision.
You know how most people learn how to make right decisions? By making wrong decisions and learning from them.
One of the things that has stuck most in my brain when it comes to things like this is a quote from Michael Jordan:
“I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”
(Yes, I’ve used it before. Sue me.)
If you don’t take the chance of failing, you never really appreciate winning. There’s no real sense of accomplishment if you start out knowing you’ll succeed — and you’ll never learn a damned thing.
The main consequence of abolishing the 401(K) system would be to punish those who have chosen to take care of themselves, and reward those who have not. It will convert those who have tried to provide for themselves into yet
more folks who will turn to the government to take care of them in their old age.
And that means more people who will be most inclined to vote for those who have promised to take care of them, and who have grown dependent on the government.
Oh, joy. Just what we need. A whole new generation of people who hear the phrase “I’m from the government, and I’m here to help you” and think that’s a GOOD thing.