Robert Kiyosaki is at it again. In his latest article, he calls the 401(k) the biggest scam ever. I’ve written about 401(k)s, so I know a thing or two about them and I have to say that RK is talking out of his ass again.
Kiyosaki thinks the world is about to end, and it’s got nothing to do with war or global warming. It’s all due to the evil 401(k):
…the flaws of this retirement plan will grow into personal tragedies as the first of approximately 75 million baby boomers retire, leading to the biggest stock market crash in history.
Then he conveniently picks a time frame in which the stock market did terrible (1998–2008) to show that a sample 401(k) would’ve gone from $47k to $45k. But 10 years is way too short of a time period, especially when you’re talking about retirement. I mean, long-term investing might fall into the 10-year spectrum, but not retirement investing. And he conveniently fails to point out that employer matching kept that number higher than it should be.
He says that retirees will be taking their money out of these plans, causing the values of those funds to plummet. But he doesn’t take into account that the rules for 401(k)s have changed: employees are automatically being enrolled in these plans, which means the amount of money going into them will increase. Will they offset themselves? I don’t know, but he never mentions that.
I don’t know what happened to Kiyosaki or why he says what he says, but he says outlandish things for the sake of being outlandish. He has tons of people talking about him right now (some good, some bad), including myself. So he’s doing something right if his goal is to promote himself, which is something he’s really good at.
It’s like he’s trying to remind people that the guy that wrote a best seller a LONG time ago is still alive and kicking—which is kind of sad.
I do have to say one good thing about him: I have to give him credit for starting me on the path of financial responsibility. If it wasn’t for him and his book, Rich Dad, Poor Dad, I wouldn’t have found The Simple Dollar and would never have started this site.
But after his book became a worldwide phenomenon, he’s taken to these wild assertions that are meant to do one thing: shine the spotlight on himself.
What are Your Alternatives, Robert?
Back to his latest article on the 401(k) issue.
He tears 401(k)s a new one, but he doesn’t propose an alternative. Let’s say he’s right and the 401(k) is the biggest scam in the world. Great, we’re all on the same page.
Now what? How are you supposed to build enough wealth to retire? What other way is there to realistically save money and have it compound over time?
He never gives one, and that’s why he pisses me off so much. It’s really easy to point out things that don’t work (I’m a master at it!), but proposing an alternative that will actually work is much harder.
And that is why Kiyosaki is nothing more than a rabble rouse: he stirs the pot and sits back to watch the havoc he’s caused. And the only reason why anyone gives a damn is because he once wrote a book that became a worldwide phenomenon. Apparently, that’s an automatic pass to say and do whatever you want without being held accountable.
I better get writing.