No, the "compound interest" meme is one of the most dangerous ideas that's going. Fundamentally, exponential growth destroys itself.
My model for economic progress is that there are two variables: the ability for a civilization to solve problems and the ability for a civilization to create problems. The benefits of growth are more immediately visible than the drawbacks, and because they differentially accrue to certain people, those people gain political power that is used to suppress the political response that would solve the problems created by growth. As a result, problems eventually grow faster than solutions.
When the ability of a civilization to create problems exceeds the ability to solve problems, we get an economic crisis such as the Great Depression, the stagflation of the 1970's or the situation that we're working through now. One way or another, the system needs a decade or so of low performance in order to slow down and sort out the problems that growth has created.
These crises seem to come every 40 years or so, so you're certain to have one, maybe even two, in the course of a career and subsequent retirement. And it just takes the aftermath of one to destroy your savings and possibly your career.
And, as the previous commenter says, if Wall Street has really turned into a system that captures all economic gains for a few people at the top, all you're doing is making them rich when you put money in a 401k or IRA. Personally, if I was President, the first thing I'd do is dismantle the 401k and IRA systems and let people withdraw all the money they have in them.
I'm convinced that tax-deferred savings have created a 'lost generation' of small businesses. It used to be people stacked up money in a bank and had it available when they wanted to start a business. If all of your savings are in a tax-deferred savings plan, you deprive yourself of that option.
My model for economic progress is that there are two variables: the ability for a civilization to solve problems and the ability for a civilization to create problems. The benefits of growth are more immediately visible than the drawbacks, and because they differentially accrue to certain people, those people gain political power that is used to suppress the political response that would solve the problems created by growth. As a result, problems eventually grow faster than solutions.
When the ability of a civilization to create problems exceeds the ability to solve problems, we get an economic crisis such as the Great Depression, the stagflation of the 1970's or the situation that we're working through now. One way or another, the system needs a decade or so of low performance in order to slow down and sort out the problems that growth has created.
These crises seem to come every 40 years or so, so you're certain to have one, maybe even two, in the course of a career and subsequent retirement. And it just takes the aftermath of one to destroy your savings and possibly your career.
And, as the previous commenter says, if Wall Street has really turned into a system that captures all economic gains for a few people at the top, all you're doing is making them rich when you put money in a 401k or IRA. Personally, if I was President, the first thing I'd do is dismantle the 401k and IRA systems and let people withdraw all the money they have in them.
I'm convinced that tax-deferred savings have created a 'lost generation' of small businesses. It used to be people stacked up money in a bank and had it available when they wanted to start a business. If all of your savings are in a tax-deferred savings plan, you deprive yourself of that option.