Let me quote:

7) Your Retirement Plan is For S**t. I don’t care how much you set aside for your 401k. It’s over. The whole myth of savings is gone. Inflation will carve out the bulk of your 401k. And in order to cash in on that retirement plan you have to live for a really long time doing stuff you don’t like to do. And then suddenly you’re 80 and you’re living a reduced lifestyle in a cave and can barely keep warm at night.

The only retirement plan is to Choose Yourself. To start a business or a platform or a lifestyle where you can put big chunks of money away.

source: LinkedIn post by "Entrepreneur, Started & sold several cos, Author 11 books (latest "Choose Yourself!") , Angel Inv.".

In no way am I an economist. I would like to understand in detail how could inflation cause this?

What evidence supports the perspective above? Do you think it is applicable only to the U.S. economy or in other countries as well?

  • 3
    "Where you can put big chunks of money away" - away where? Retirement plan is exactly that - a vehicle to put big chunks of money away.
    – littleadv
    Jul 1, 2014 at 6:53
  • Away to grow your business and invest in other ventures. To convert to other currencies. To buy something evergreen like precious metals that will always be valued no matter what.
    – Boris_yo
    Jul 1, 2014 at 7:23
  • 3
    Have you looked at the price of gold in the recent years? I don't know if you're serious or just trolling...
    – littleadv
    Jul 1, 2014 at 7:46

3 Answers 3


My guess is that the point is that yields on bonds and cash equivalents is so low that inflation will cause the inflation-adjusted returns to be negative. There is something to be said for how much inflation can eat out of investment returns.

At the same time, I would note the occupation of the person making that post along with what biases this person likely has. "Entrepreneur, Started & sold several cos, Author 11 books (latest "Choose Yourself!") , Angel Inv., JamesAltucher.com" would to me read as someone that isn't who I'd turn for investment advice when it comes to employer-sponsored plans.

Be careful of what you blindly follow as sometimes that is how wolves lead the sheep to slaughter.


The same author wrote in that article

“they have a trillion? Really?” But that’s what happens when ten million dollars compounds at 2% over 200 years.

Really? 2% compounded over 200 years produces a return of 52.5X, multiply that by 10M and you have $525 million. The author is off by a factor of nearly 2000 fold. Let's skip this minor math error.

The article is not about 401(k)s. His next line is "The whole myth of savings is gone." And the article itself, "10 Reasons You Have To Quit Your Job In 2014" is really a manifesto about why working for the man is not the way to succeed long term. And in that regard, he certainly makes good points. I've read this author over the years, and respect his views. 9 of the 10 points he lists are clear and valuable. This one point is a bit ambiguous and falls into the overgeneraluzation "Our 401(k) have failed us." But keep in mind, even the self employed need to save, and in fact, have similar options to those working for others. I have a Solo 401(k) for my self employment income.

To be clear, there are good 401(k) accounts and bad. The 401(k) with fees above 1%/yr, and no matching, awful. The 401(k) I have from my job before I retired has an S&P index with .02%/yr cost. (That's $200/$million invested per year.) The 401(k) is not dead.

  • 1
    Also worth noting: how do the management fees in the 401k compare to the cost of a similar sized investment in a small business? And what is the average/expected rate of return of a small business/enterprise versus the market?
    – Ethan
    Nov 2, 2016 at 23:02

Let's pretend that the author of that article is not selling anything and is trying to help you succeed in life. I have nothing against sales, but that author is throwing out a lot of nonsense to sell his stuff and is creating a state of urgency so that people adopt this mindset. It's clever and it obviously works.

From a pure time perspective, most people won't make enough money to run their own business and be as profitable as if they worked for a company. This is a reality that few want to acknowledge. If you invested in yourself and your career with the same discipline and urgency as an entrepreneur, most people would be better off at a company when you consider the benefits and the fact that employees have a full 7.5% of social security paid by their employer (entrepreneurs see the full 15% while employees don't). Why do I start here, because this author isn't telling you that the more people take his advice, the more their earnings will regress to the mean or below. In fact, most of my entrepreneur friends have to go back to work when their reality fails after they burn through their savings.

401ks are not a perfect system, but there are more 401k millionaires now than ever before this, and people who give the author's advice are always looking to avoid doing what they need to do - save for retirement. Most people I know sadly realize this in their 50s, when it's too late, and start trying to "catch up." I don't blame the author for this, as he knows his article will appeal to younger people who don't have the wisdom to see that his advice hasn't been great for most. The reality is that for most people 401ks will provide tax advantaged savings that you can use when you're older; taxes will eat at your earnings, so these accounts really help.

Finally, look at the article again especially the part you quote. He says inflation will carve out what you save, yet inflation is less than 2%. Where is he getting this from? In the past decade, we've seen numerous deflationary spirals and the market overall has come back from the fall in 2009. Again, this isn't "good enough" for this author, so buy his stuff to learn how to succeed! There have been numerous decades (50s,70s) that were much worse for investors than this past one.

  • You write about this author as if he were Robert Kyosaki selling seminars, coaching, etc. James' site has none of this, just a link to books he's authored. (Edit - he does offer a newsletter, from a small link on the site, not in-your-face promotion. ) Nov 2, 2016 at 14:40

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