If you're the typical employee, who follows the typical advice that most of us are given when it comes to their careers, then it is easy to see why you're in a lot of trouble. Even if you're not at the moment, sooner or later, you will come face-to-face with the realities that I have laid down in this book. As long as you work for someone else, you're at a severe disadvantage. You will be the last to be hired, while being the first to get fired if things get bad. While you're paid five figures to do your job, the guy at the top of the company will earn six figures at the bare minimum, and will probably earn seven figures.
If the company you work for gets caught up in an Enron or World Com like scandal, there is a good chance that the 401K nest egg you're relying on could become vaporized, and I hope you're not relying on social security, because social security will be of no benefit to you. When you carefully study the social security system, you quickly realize that it could be considered the biggest ponzi scheme in recorded history. The concept of social security was created shortly after the start of the Great Depression.
The government decided that it would “compel” people to save for their retirement by taking a portion of money out of each paycheck they earned to be put into the social security trust fund. Once the person reached the age of 65, they could apply for this social security, and the government would begin paying them a pension which is similar to the defined benefit plan which I discussed earlier. This plan sounds great in theory, but there are a number of fundamental problems with it. First off, who gives the government the right to decide that each one of us should save money for our retirement? Shouldn't that be a personal choice?
Second, and most important, the government has been dipping into the social security fund for decades. Regardless of what political party you belong to, this is not debatable, and both Republicans and Democrats are responsible. Many experts have said that the social security trust fund is completely empty, that there is no money in it and the government owes the tax payer approximately $50 trillion. The only problem is that the government doesn't have the money, and this means that social security is our biggest unfunded liability. Despite this, each day, millions of employees around the country get money taken out of each pay check, to be put in a trust fund which will have no money available to them when they retire. Therefore, you cannot depend on social security when you retire and must prepare now.