How I broadened my Retirement Investment Opportunities. #innovation

You Can Take Control of Your IRA/401(K)

Just watch it—there be dragons here. Not actual dragons, just rules. Rules you must follow to keep Uncle Sam happy. And that is one uncle we want to keep happy.

I am not a financial advisor. This is not advice. This is my experience. 

Did you know that you can buy an oil tanker or shipping container and lease them out for steady income with your 401K or IRA funds? Did you know you can buy property here or abroad with the same funds? You can. And it’s totally legal.

With the help of Checkbook IRA, I recently created a self directed 401(k) Retirement Trust. I funded it with part of my IRA. I’m looking at a number of investments that make me silly happy when I think of them.  I think I’ll skip the oil tanker, but property in Spain or Portugal sounds great!

My story is below as well as a fascinating little history of how the 401(k) came to be. If you want to skip all that and learn how you can get control of your retirement funds, check out Checkbook IRA here.  This is an affiliate link. There are other companies that do the same thing, but I can only vouch for these guys. I highly suggest digging around in their University section. Great examples and ideas.

They’ve been amazingly helpful and informative. I had a lot of questions and you have to make sure you file all the things for our uncle. It’s a great team and I hope you’ll check them out.

My trip down this road has been an interesting one. 

It’s amazing how much college doesn’t teach us about everyday life. Important, everyday life things like how to manage money and invest wisely. I was raised by a single mother. A smart, tenacious, proud woman, she was the first in her family to get a college education. She knew nursing, and later administration, but she didn’t know much about investing or anything beyond. 

In hindsight, I followed the same path. Got the degree—engineering, nursing is way too gross for me—and went to work. Part of ‘the plan’ was putting money into the company matched 401k. Sounded great once I’d paid off my college loans. God help the youth of today with their debt upon graduating school. 

Assumptions are interesting critters. When you start digging into things like our financial sector, the government and programs like the 401k you realize how much of our lives are based on assumptions. Because we’re told something is good for us or simply ‘just the way it’s done,’ we go with it. Or at least, many do. I certainly did. I wasn’t the least bit interested in economics (even though I once managed the highest exam score in the history of a university econ class) it wasn’t my thing. When it came to banking and investing, I was a sheep and followed the herd willingly. 

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My eyes were opened in early 2017 as I was researching for a new SciFi series. I found cryptocurrency. I’ve got a bunch of resources on it here. https://sabinepriestley.com/crypto-resources/

 Crypto led to blockchain, with led to fintech and all things banking. The definition and history of money is incredibly fascinating from the right perspective. Who knew?

According to Andy Tanner of The Cashflow Academy the history of the 401k is almost an accident. I caught Andy’s interview in Money Revealed video series I purchased. Brilliant stuff. They’ve gone bonkers with monetizing everything but that’s a gripe for another day.

As Andy tells it, there was no mastermind getting together to determine how to help the average Joe or Josephin prepare for retirement. 

401k is a line item added to a bill by a creative accountant trying to save his customer some money. 

The predecessor to the 401k was the pension plan. Pensions were enticement to work for a wage that would sustain you, but never make you rich. The company, it was understood, would see to your post-retirement life. 

This meant that employees were on the books till death do them part. That could be a hefty load, but it was tremendously effective—many were willing to trade riches for security. Entrepreneurs are the minority, Josephine and Joe were cozy. 

In the early ’70s things were kind of dodgy for employees. Many companies were failing their pensioners and the government stepped in with the ERISA-The Employee Retirement Income Security Act in 1974. It basically told the companies that they needed to take care of not just the employee but their spouse as well. Oh, and they also had to prove that they were using their company funds accordingly. Needless to say, this didn’t sit great with the companies. 

The rich have always had an advantage over Joe and Josephine. In the ’60s there was a provision for rich bankers to take profit-sharing bonuses, park them in an account, and defer the tax. As more companies caught on to this code they wanted their own piece of the pie. Like the bankers, rich execs didn’t need the money immediately. A tax deferral was a far better idea. 

Powerful people in business, know powerful people in government. It’s the way things work around here. So a young attorney (like twenty something young) named Richard Strenger opened the provision up to other companies by writing less than a thousand words, calling it Section 401(k), and sliding it into the US tax code.

This was intended to help the rich stash some cash and defer taxes. It was never intended to provide a means of retirement. 

Fast forward to 1980. According to Andy, a pension consultant named Ted Benna was working with a bank to implement the 401k clause to their advantage. I’m not totally clear from Andy’s telling how the average employees got involved. Perhaps it had to be available to all employees. The problem was, the average employee wouldn’t be interested. Tax deferring a $50 bonus doesn’t compare to a $40k one. Anyway,  Benna pitched a program to a client. They loved the idea, but wouldn’t implement it. Too risky. 

Benna apparently saw the brilliance of the idea and decided to start his own company. On January first, 1981 the first 401(k) retirement plan went into effect and was wildly successful. The secret sauce ?—in order to get Josephine and Joe on board they offered to match their contribution. How amazingly generous is that? Hey, I save $500 in a year and end up with $1000! Awesome. 

The companies thought so too. By calling it a retirement plan, they washed their hands of pensions. All those lovely employees sailed right off the books on retirement. Brilliant.

That’s how something virtually every US employee pays into came about. Talk about unintended consequences.

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The story gets a little insidious after that. Wall Street was watching. As Andy put it, every mutual fund salesman is thinking “My gosh. People are gonna be put on autopilot. Before they even get their  paycheck, they’re gonna buy my products.” More sweetness for the financial sector. Most employees don’t know squat about the kind of investments their 401(k) offers. I didn’t. Total cluelessness. I asked around and did what others were doing. 

For all that’s holy, youth of today, and my fellow old-farts, don’t be sheep waiting around to follow the flock. Take if from a recovering lamb. Assume nothing. Ask questions. Just because that’s the way it’s done doesn’t mean that’s the way it should be done. Crush the box.

For all that’s holy, youth of today, and my fellow survivors of age, don’t be sheep waiting around to follow the flock. Take if from a recovering lamb. Assume nothing. Ask questions. Just because that’s the way it’s done doesn’t mean that’s the way it should be done. Crush the box.

Everything is in flux right now, especially our financial systems. Cryptocurrency is changing the landscape of fintech. Institutional grade investors are on the march. Cash is old school. 

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Break out the grey matter and get some exercise. Educate yourself. Diversify your investments. Invest globally! No one is stopping you but you. 

I am a space exploration enthusiast, electrical engineer, cultural anthropologist, crypto and cannabinoid advocate, and science fiction romance author. A newly minted nomad, join me as I travel the world in search of cool things, magic adventures and really interesting people. www.sabinepriestley.com

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