News From The Future: Your 401(k) Is Worthless


Don’t you love having 5% matching contribution taken out of your paycheck every week to put into your 401(k), which causes you to not as easily afford beer and brunch? I sure as hell don’t. But hey, it’s for my future, right? I’ll retire on a cloud of smart investments from my youth. Yay, retirement money!

“Not so fast, my friend,” says Robert Merton, a Nobel Prize-winning economist, who says that 401(k)s are heading for a crisis, just like everything else that has anything to do with money, because it’s 2014. Thanks a lot, Obama/Cheney/Baby Boomers/Donald Sterling/FIFA/Jason Kidd/Jay Leno/Etc.

Merton, who founded Long-Term Capital Management, a hedge fund that almost brought down the global economy in 1998 (remember that?), says that 401(k)s take the wrong approach to investing for retirement, emphasizing account balances, investment returns and amassing the largest portfolio possible, rather than emphasizing the level of income employees should expect in retirement.

He’s talking about income projections and an actual, tangible income stream rather than amassing a lump sum of money. This actually makes sense, but, frankly, I don’t understand what the hell my 401(k) actually is anyway, and neither do you.

“The seeds of the coming pension crisis lie in the fact that investment decisions are being made with a misguided view of risk,” Merton writes.

Well, retirement was a nice thought while it lasted. Better enjoy working until I’m 85. I’m just gonna keep writing these articles until I die at my floating computer bench. If I live long enough to see floating computer benches.

[via TIME]

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