Friday, January 18, 2008

In the Mag

A reader emailed me to see what I thought of this week's issue of TimeOutNY, in particular the article titled "401ks Are For Suckers." I have to say that I totally agreed with everything the author said, and I decided to immediately put a stop to all my contributions and cash out my account. Then I am going to spend the money "gorging myself on expensive cheese in Paris and snorting hard drugs off the backs of go-go boys in Berlin," because the author of this article made it sound so enticing. Oh yeah, she also mentioned the fact that she'd be "on the dole at 65, eating cat food out of a rusty hubcap," which I think I'll have to try as well.

Ok, hopefully you've figured out by now that I'm kidding! I thought the article was very silly. Her reasons for not doing a 401k are that, basically, she can't afford it now, she'd rather live for the moment, the matching contributions from her employer aren't guaranteed to happen, it's all a conspiracy on the part of highly compensated employees, and that the 401k was invented by those chuckleheads who are our government so it must therefore be bad. I'm sure no one who is reading this site needs me to help them rip these arguments to shreds! It was so extremely silly that I thought she might be doing an ironic devil's advocate kind of thing, but I'm not even sure she really was!

The rest of the issue featured other items on the theme of money, including these tidbits:
-- the risks and rewards of potential NYC money-making ideas, like investing in art, or financing theater productions
-- how to make money as a prostitute (women can earn $200-300 per hour, gay men $100 and up)
-- how to chat up drunk Wall Street guys for financial advice (if you're young, female and cute)
-- how to save money using various scams to sneak into the movies, return gifts in exchange for cash or gift cards, and flip concert tickets on craigslist.

If none of that is your cup of tea, check out the latest issue of Consumer Reports, which features a cover story on financial mistakes that could cost you $1 million, as well as some other articles on retirement. Their take on the 401k: it's not for suckers. I agree.

19 comments:

NewbietoNYC said...

I was as baffled as you by the TONY 401(k) story. I'm an NYC twentysomething woman, and I've made it my mission in life to ensure that my girlfriends in the city DON'T think this way. The last thing we young ladies need is an argument in favor of poor financial planning.

Andrew Stevens said...

I read the story myself. Ms. Halpern suffers from what I call "random cynicism," the belief that anything that sounds like a good deal must have a catch which is meant to screw you instead. This is not an awful instinct to have; Ms. Halpern is probably very hard to con, but sometimes it leads you to make some truly awful decisions.

It doesn't help that she doesn't have a lot of talent for logic and reason (though she does have a facility with words which masquerades as if it were such a talent). I'm sure she intended, in her research, to come to an honest conclusion, but her reasoning is so riddled with confirmation bias that it was impossible for her to do so. (What's that old phrase? Using facts like a drunk uses a lamppost: for support, not illumination.)

Escape Brooklyn said...

Thanks for the summary! I'm still waiting for my copy of the issue to arrive but I'm starting to suspect my mailperson swiped it.

It sounds as if the advice is geared towards NYC's "young, fabulous & broke" demographic.

And while I do agree pension plans were initially designed for (and continue to benefit) the highest compensated employees most (hence the need for ERISA), that's still no excuse for the rest of us not to take advantage of their benefits!

Anonymous said...

This might interest you:
http://gracefulretirement.blogspot.com/2008/01/shes-kidding-right.html

Mrs. Micah said...

Wow. That's like watching a trainwreck or listening to a story about a friend driving drunk or...wow.

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Mike said...

I am a first time reader and just wanted to say I have bookmarked you and will enjoy reading more.

In particular I really enjoyed your 'rules'. Great job!

Kansas Simplicity said...

A important aspect of having an education is recognizing bad advice when one is shared or espoused to the mass public. While this post may not last forever, I would like to follow up in 25 years with the author of the article and find out 'how you doing'.

Tired of being broke said...

I did not read the article. However, from your summary the writer sounds like a financial train wreck waiting to happen. I wonder if with the dislike and non contribution to a 401k, if the writer also has credit card debt, student loan debt and a car loan.

Amy said...

Any idea why men make less than women as prostitutes? I'd think they'd be more rare, and :. more pricey.

As for the author: I agree that she's using the facts to support her choice not to enroll, but as she said, "I have a litany of excuses for opting out of my company’s 401k—school loans, credit-card debt, high rent, low pay". I bet in 3 or 4 years she'll re-evaluate the 401k and find it worthwhile.

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Andrew Stevens said...

Amy, not as much demand. And supply isn't as low as you might think. Male homosexuals who hire male prostitutes almost universally prefer prostitutes who "act straight." In other words, the prostitutes are being paid to receive oral sex. This isn't exactly the most demanding job in the world so the supply is decent and the demand isn't nearly as great as for female prostitutes.

Justin said...

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"Future Millionaire" said...

So what kind of life does she plan when she's retired? Some times the best things in life are the ones you have to work to achieve and being able to afford retirement is going to be one of my best things in life.


Some one needs to give that Girl a CLUE!

Anonymous said...

Who the hell is Dan Solin, and why is he encouraging her?

Also, has she thought about a Roth IRA? That'll at least take away her argument of the hardship withdrawal penalty for the full amount of her contributions (or, in her words, her money).

RacerX said...

How about these money makers...

1. Find hypo needles on the sidewalk and trade them in for new ones and sell them to drug addicts

2. Rob the blind. They can't identify you!

3. Sell Wesley Snipes a tax deferance package

4. Rob a house and then...move in! Just leave the family in the basement!

5. Start a magazine that does stupid articles just to get the weird SEO...oh sorry that one is taken... :)

sipbkk said...

What I want to know is how the author got a job writing about Finance anyway? She'll definitely be eating dogfoood with that strategy!

Andrew Stevens said...

She doesn't have a job writing about finance. She works for a magazine which rarely touches on finance which decided to write a single issue about finance which is almost entirely tongue-in-cheek.