Ask HN: Am I an idiot for thinking I shouldn't get a pension?

It's free money - however you look at it. Any government backing secures decades of contributions. Payments are often matched by an employer as a benefit. Contributions are pre-tax, thus saving real money. It's locked away, which means you can't spend it!

Not getting a pension, of some kind, seems way riskier than living only with money in the immediate.

As always, the trick is:

1. Compound interest 2. Long-term 3. Diversify investments 4. Maintain control and awareness 5. Compound interest

It's a compound sandwich.

Thanks for your response. I guess it boils down to the fact that I just don't get most of this stuff, so any financial decisions I have to make become a thing of trust / hoping things will be alright. Let someone else handle it, it'll be fine. I'm OK with that most of the time. I can sit in a taxi and relax, I'm not checking if the driver is doing the right thing. But that's for a short drive, not a 30+ year investment that will be a huge factor in how my life will be when I'm old. It's a bit harder to take the "sit back and enjoy the ride" approach there.

Investing in houses would at least be something physical. I can touch a house, I can see if it's still in a good state. I can verify it myself. I'm never going to know enough about finance to verify that for a pension scheme.

Maybe I'm taking too much of a binary approach here. I may end up doing both, but the stock market thing still feels like economic gambling voodoo to me.

In the United States at least, an IRA is a responsible way to set aside some of your income in a way that defers taxation until your retirement years, when presumably, you'll be in a lower tax bracket.

The returns aren't great, but they are better than the 0% you'd get putting them in savings, after you paid tax on them at your current income bracket.

Do NOT try to pick individual stocks, etc.

Counter-points (post size was limited so I'll put them here):

1. Everyone tells me it's the responsible thing to do. Counter-counter point: everyone above my age seems to have done it. They would be crazy not to recommend the next generation to do it, because the next generation has to pay for their pension. Since my age is lower than my country its average life expectancy, that means I can't trust the opinion of the majority of people about this. I don't like to think in such a distrusting manner. Phrased differently: the majority of people can not be objective about this, because they're already invested and they need to keep the thing they invested in alive.

2. Since I don't have a brain that thinks finance is interesting, anything I do myself might be risky. Counter-counter point: seeing people cry about losing their pension has made my brain label that as risky too.

> save up money not spent on rent, use that to buy another house, etc. I guess people are always going to need a place to live in.

Until: Your mortgage repayment goes higher than income; multiple repair costs come together; event like Covid stops tenants from paying rent; a house is damaged beyond repair and the insurance won't pay out; some local event drives people away and collapses local resale prices; many other issues...

There's nothing sure about being a landlord and unless you have multiple houses in various places far away from each other, it's really not that much safer than shares.

How exactly is a house safer? Several places still haven’t recovered from their 2007 prices, demographics of a region can change, expensive repairs can happen, a tenant can quite literally destroy your place or stop paying rent for N months, …

I’m not saying it’s a bad investment, I’m just saying that in terms of risk (measured as “will I get back my money when I need it?”) it seems comparable to me to broad cap-based index funds.

Yes, you are crazy wrong. Longterm investment yields 7% against all economic crises over two centuries. Do the sums on your life expectancy, compounding and future risks of state subsidy disappearing.

The only net present value alternative of merit is housing. Owning your own home has huge direct correlation to a healthy old age.

Thanks.

> Longterm investment yields 7% against all economic crises over two centuries.

I wonder what that percentage would look like in comparison to people who spent all their money on a cheap mortgage free house, and bought 1 or 2 houses to let afterwards. Could be more than 7%? I know far too little about this stuff to express it in a number/percentage.

Over the last 25 years, property values have appreciated by around 7% in Australia. This might shock people who are used to seeing the spectacular price rises in metropolitan cities, but they're looking at a shorter window.

https://www.rba.gov.au/publications/bulletin/2015/sep/3.html

Owning property to let can be good or bad, depending on your goals. https://en.wikipedia.org/wiki/Peter_Rachman

My suggestions (I have just decided to officially retire, so money things are on my mind):

1. Read Rich Dad, Poor Dad. I have not personally read it, but it is supposed to be pretty good at explaining the basics. I also vaguely remember some criticism, but can't remember the specifics.

https://en.wikipedia.org/wiki/Rich_Dad_Poor_Dad

2. Index funds are good for people like you (you sound like my sister). If you're worried global capitalism will collapse (along with everything else) in the next 30 years <which it actually might> then... well, no one is going to be worrying about money at that point.

3. Investing in stocks takes some effort - you need the emotional intelligence to control your impulses (I am still working on that) as well as some understanding of the economy, economic forces, etc. How pump and dump schemes work is another good topic to understand. People can go down the rabbit hole as far as they want - I am not a "research the financials of a company in detail" person for instance. And options... very gambling-like. I have done ok over the years, but more just because I understand tech and have a decent sense of how companies might thrive -- i.e. invest in what you understand.

4. Relying on state pensions, given the social and economic trends, is a recipe for disaster. Politicians are kicking the can down the road all the time and if the social trends I spoke of become real problems, then pensions will be the least of it. I am certainly not counting on seeing any Social Security or National Insurance (I live in the UK) when I hit 65.

5. From the sound of it, you probably should focus on never getting into debt and building your business / passive income. Then you need only worry about what you are entirely responsible for and not on other people which seems to be a motif in what you're saying. But that means not being an employee which is a lot more secure...

6. If I'd held onto my 10 Bitcoins for longer.... well, if I'd bought some when I heard about when it was $0.01... if I'd sold that NSOL stock in August 2001... You can't be terrified of what might happen (or what didn't) and become paralyzed as a result. Go read the Chinese parable about the farmer who loses everything after gaining everything. Or the Book of Job.

7. And like you say, don't blindly trust other people with your money; the world is getting more corrupt, I fear. So that means YOU HAVE to be responsible for it and figure out how to take calculated risks and what your limits are. Otherwise you will become reliant on that paltry state pension - or you'll have to keep working all the way into your 70s like some people.

Thank you, I really appreaciate your comment, and I'll read up on Rich Dad, Poor Dad, index funds, etc.

> Then you need only worry about what you are entirely responsible for and not on other people which seems to be a motif in what you're saying.

You read me pretty well. I think I would be OK with relying on others though, but not necessarily with having faith in some made up economic scheme that I don't understand.