The Retirement Trap: Private Wealth Management & 401k Alternatives

It has always been a bit confusing for me when I listen to our government leaders talk about how they have passed a new bill or created some screwy legislation that is in our best interest.  They use terms like “how much we are going to love it over time” or “how it is for our protection” yet, they themselves want nothing to do with it.  Social Security (SS) was created during FDR’s tenure as President as the end-all save-all for retirement—yet, the federal government themselves get something different.  Medicare the great healthcare program for the elderly—yet, the federal government would never subject themselves to it.  The new retirement plan for us, the 401k and IRA system, surely must have been far beyond what the Congress, Senate and White House ever felt like they deserved because they gave themselves a different plan.  If the government really had our best interests in mind, why do they refuse to participate in what they have given us?

On page 66 and 67 in Nelson’s book, Becoming Your Own Banker, he talks about the retirement trap.  As I ponder that title, I don’t think he could have named this small section better if he would have tried.  Who knows—maybe he did! Just the very word trap, with a little bit of thinking, leads us in so many directions of how a government-planned retirement is exactly that: a trap. We can look at it all the way from one extreme of the pendulum to the other: on one hand, our leaders are just not being as smart as we hope, and on the other, the extreme of conspiracy theories.  Today I just want to take some time to focus on only knowledge and understanding, and leave the conspiracies for you to hash out on Facebook.

During the almost 7 years I spent as a Rich Dad Coach, my time was spent helping clients understand financial concepts and the game of money. It didn’t take long after starting to work for the organization to see Robert’s tremendous ire toward mutual funds and qualified plans. At first when my Rich Dad clients would ask why Kiyosaki had such angst for their 401k the place where they held most of their wealth I simply explained that he knew there were much better financial vehicles for them to use one being permanent life insurance. I would then send them to start researching it through a few resources I knew of.  Quickly realizing that this question was only going to become more and more frequent, I decided to I’d better begin to understand this ire—so I started researching.  Sadly, it only took a quick Google search and reading a few articles before I could feel my blood pressure on the rise.  The word trap started ringing in my ears as wells as many of the other words I heard Kiyosaki use on many occasions when talking about qualified plans and mutual funds. I was shocked at what I found. It was no wonder to me why the Federal Government voted themselves out of having to use the very plan they, along with Wall Street, had devised to give to us.

I would like to share with you today a link to a frontline interview with John C. Bogle, the creator of the Vanguard Funds.