Retirement Investing Is Causing the Next Big Market Crash
It's time we question the retirement industry and everything we know about our roles as humans as we age.
For you to read this piece and not reject nearly all of it, I need you to start by rejecting everything society has ever told you was right. Just for the next 3,500 words.
Accept that many of the trite, pithy statements that were told to you as truth are actually societal constructs that have existed for your whole life, but only a brief little blip of human existence. There are people alive today who were born before many of the ideas, which we as Americans hold as true, were even invented.
I’m asking you to think from first principles, from here until you’re done reading. Don’t allow your initial societal biases to influence you into immediate rejection of what I’m saying. And I’m going to start with one of your deepest held assumptions:
Money, in no way, shape, or form, creates more money. Money will never, ever, “work for you.” You cannot “put your money to work for you,” in the way your financial advisor would like you to believe. Money is not an engine of productivity. Put a dollar on the table, let it sit there, and it will never become a hand-made piece of furniture or a rocket ship.
People are the engine of productivity. And when you invest money into something and ask for a return on your investment, understand that you are asking people to generate that return.
Now, with that out of the way, I want to tell you that all of your plans to invest in your retirement, so that your money can “go to work for you” for the rest of your life while you play pickleball and go on cruises, is destroying society. Modern retirement investing is a blight upon humanity.
I’m probably going to be the first one to tell you this. I haven’t heard this from anyone. I’ve only heard people dancing around the topic. Millennials and Gen Zers are harping about boomers because they seem to own everything and then charge you too much to rent out the things they own from them. The younger generations complain that the price of everything is too high. And you’re even hearing these same complaints from Gen Xers who are just outside of the real compound interest curves of their “investments”.
Now, I do have an emotional bias against retirement. I’ve always despised it since I was a little boy. I watched retirement destroy my grandfather, who became a pensioner at fifty-five. He sat on one part of the couch watching game shows for so long that the part of the couch he sat on sloped downward from the weight of his frail body. He died at seventy-four from a myriad of diseases that come when you do nothing for twenty years of your life while drinking beer, smoking cigarettes, and watching Bob Barker on repeat. And that hatred for it has only increased as I’ve surrounded myself with retirees in the world’s largest old-folks home that some people call Naples, Florida.
Retirement Investments Own Everything
It started to hit me that the asset price inflation that we see in literally every sector, from housing to public markets to crypto to commercial real estate, was tied to some form of retirement investment. And then, I started to realize that all of the economic problems that my friends and I are struggling with like low wages, high prices, and unaffordable assets, are indirectly tied to those older than us “investing” in their retirement and then “living off of” their retirement investments once they reach the magical age of sixty-five.
Take this example. I’m a future renter, having just signed an apartment lease for the first time in over four years after having to live with my parents because it is simply too expensive to be a small business owner anymore (don’t do it, work for Blackstone instead). While doing my research for housing and looking to get the best rates possible, I stumbled across a YouTube video by the channel How Money Works about the overabundance of “luxury apartment housing”.
In this video, he describes the reason the prices of these apartments remain so high despite low occupancy rates, is because the asset value of these properties matters more to the underlying investors than the year-on-year revenue. So, the property managers of these rental complexes are incentivized to keep rental rates as high as possible, often far beyond what the market will pay. Since the underlying owners of these apartment complexes are pension funds, 401(k)s, hedge funds, and mutual funds (typically investment havens for those seeking retirement), they don’t care about what the valuation is that year. They care about the valuation of the asset when the fund matures.
If you give your money to a hedge fund, or any other investment vehicle like a 401(k), they hold your money to place long-term bets in a “diversified” set of asset classes. They only distribute returns after a certain period, say 7-10 years, upon which they are hoping that the valuation of their portfolio assets will increase substantially. So, that apartment complex, when purchased by the (probably morally bankrupt but financially successful) fund, doesn’t need to be occupied in year one. It needs to be at 90% occupancy by year seven at the max possible rental rates. This ensures that when the fund goes to sell it and distribute the gains to their portfolio investors, the property appraiser appraises the property based on future revenue potential. Present and past revenue be damned.
When I found this out, my brain started to shift. I started to realize that, oh my god, only a few large financial institutions own basically everything. We have all had this feeling that this was the case. Because when you go into any restaurant, they all feel the same. None of them are owned by anyone working there. And when you go to stay at an Airbnb (which you should stop doing immediately and get a hotel instead), they all have the same amenities and aesthetic to them. And when you go to any shopping plaza, they all have the same seven stores, that again, are never owned by the people who work there. (My gym is one of the rare cases, and I’m being forced out by my landlord on the price of rent so that they can acquire another franchise owned by State Street, probably, to take my place.)
And then, and then, literally this morning on my drive to write this piece, I realized something even worse. That the reason the prices of everything keep going up, while the wages of everyone are going down, is all part of the same problem.
Any Form of Retirement System is Unsustainable
So, what is the problem?
The problem is that the modern form of retirement, that is a concept that feels like it has existed forever, is built upon systems created only a short period of time ago, with numbers made up on the spot. And these numbers have caused greed to squeeze every last drop from the American economy.
And there are two crucial numbers that I want you to think from first principles to dissect and criticize: the age of retirement being sixty-five years old and investment portfolios averaging 10% returns. These two numbers are going to cause a financial crisis, the likes of which we have never seen before.
Let’s start with the sixty-five-year-old retirement age. This number came from Germany in 1889 when German Chancellor Otto von Bismarck created the first state-sponsored government old-age pension system. It was exactly what you imagine, workers paid into a pension system until age sixty-five and then were able to collect pension payments for the rest of their life thereafter.
But there’s a catch. The age of retirement when Germany first created this new system was actually seventy, not sixty-five. And the mortality age back in 1889 was in the mid-forties. People hardly ever made it to seventy to collect those benefits. And Germany came up with the age of seventy because that was a number they figured people physically couldn’t work after. They didn’t have gyms like Galaxy Fit Lab to improve longevity 😉. And the system could (probably) sustain such a small population of people with little input from the workers.
Germany later changed this number to sixty-five because so few people were making it to seventy (which, I thought was the point????). And then America, in 1935, created the Social Security Act under FDR’s New Deal initiative. And they took that number of sixty-five from the Germans. Again, a completely randomly assigned number. The mortality age in America in 1935 was sixty-one.
Before the pandemic, the mortality age was seventy-nine years of age in America. Seventy-nine. That means, almost everyone makes it far beyond the point of the randomly created and seemingly magical number of sixty-five. Almost everyone is collecting large amounts of social security payments for well over a decade before they die. It’s no surprise that it is calculated that the modern American social security system will go broke around 2033.
When an entire country must support all the old people financially for fifteen or more years, you have a systemic problem on your hands.
But, I fear, that problem is far worse than a failing social security system. The problem is all forms of retirement plans, that don’t include people “saving” for retirement, are failing. State pension plans are slowly crawling towards insolvency. And union pension plans are struggling to such an extent that the Pension Benefit Guaranty Corporation, which is the insurance company that insures these private pension plans, will be insolvent in 2026 with 99% certainty.
But it gets a lot worse than that.
Remember, I said that there were two made-up numbers we needed to focus on. And these two numbers you had to stop and question your previously held assumptions that society gave you about these numbers.
The second one, that the market must return 10% annually, terrifies me. It’s an insult to human intellect. And it should make you want to camp out in front of the headquarters of Wall Street bankers and occupy their territory. (Which, admittedly, would and did do absolutely nothing useful.)
This, also seemingly magical, number of 10% originally appeared in the 1980s and 1990s when 401(k)s and IRAs were popularized and the newly minted financial advisors needed a benchmark to tell their clients that they were going to beat. At the time, if you didn’t adjust for inflation, that was the historical average annual growth rate of the S&P since its inception in 1926. So, basically, this was just a 60-year average that financial morons needed to beat. That’s it. We have carried this number all the way to today. And if your parents’ financial advisor doesn’t meet or exceed this target, guess whose head is on the chopping block?
Since the number of financial advisors has increased 35% since the 1990s, the number of people incentivized to ensure the markets grow at 10% a year is now greater than ever. And do you know what is absolutely hilarious? In the first six months of 2025, the S&P 500 returned a measly 6.2%. Clearly, people were furious (and probably wrote some nasty emails to their FAs), because as of this writing (August 24, 2025), the S&P is now up 10.88%.
I don’t swear anymore. So, I’ll just say it for everyone reading: What. The. Eff. Is. That. 4.68% growth in less than three months!?
Now, if you asked the normal American, not the boomer on yet another Alaskan cruise (I mean the young family trying to get started (or afford anything, really), the young man who can’t move out of his parents’ basement (or, as his parents like to call him, their built-in home watch service), or the young single woman at a soulless WFH marketing job she hates whose womb is covered in cobwebs), if their life is 10.88% better this year than last year, my guess is they would tell you, categorically, to eff-off (these are the rare moments I miss swearing).
Partly, this is because the economy, measured by gross domestic product (GDP), is only up 1.2% this year (well, as of the first half of 2025). Meanwhile, the consumer price index (CPI), which measures price inflation, was 2.7%. So, the average person, who simply has no ownership of any assets whatsoever (me and my friends 😊), has seen their life get 1.5% worse so far this year.
Oh, shoot, I forgot to mention that home prices also are experiencing a 4.8% year-over-year increase!? Can I get a “woot-woot” for all my boomers out there who just purchased their third Airbnb?!
And, I’d love to say that this was an anomaly. That this is the first year we have seen the public markets and retirement assets be so grossly disconnected from the lagging progress everyday people are seeing. But this level of disconnect is actually common. Every year. For far longer than I’ve been alive.
Each year, as the concept of retirement rots the minds of the populace, asset owners demand asset valuation increases on the order of 10%. But it’s not as greedy as I’m making it seem. I’ll make this number a little easier to swallow. If you adjust for inflation (your money being worth less than it was before), the average annualized growth of the S&P is only 6-7%, which is still 3-5% above the actual growth in productivity of the real economy.
But how do you get this growth to be so far above what the economy is actually worth?
It’s easy. You squeeze the system for everything it’s worth.
You raise the rent. You slash the wages. You raise the prices of the food. You buy up all the homes and list them on Airbnb for a 250% markup over yearly rental rates. You buy all the mom-and-pop businesses, “lay off” most of their employees, cancel the rest of the employees’ health insurance plans (the cost of which is also part of the same problem), and you raise the prices of the goods and services sold on the loyal customers who don’t have a good nearby competitor to go to. In short: you destroy the lives of the people around you, mainly the younger generations, for the good of the old and rich.
The Foundation of the Problem
Why are we here? Why can’t young people own homes, start families, or start a business (I’m trying super hard, I swear)? Why can’t we do the things our parents were able to do at the same age with the same level of effort (or even earlier and with less effort, if we were progressing as a society, that is)?
That’s because we are supporting the old in the pursuit of their retirement.
I told you at the beginning. Money doesn’t make money. Money isn’t productive. People are productive. And if a large portion of the population removes itself from the productive population for twenty to thirty years as they go to expensive dinners, sail on cruises, or take month-long vacations to Europe, the rest of the population must support them.
If the world already couldn’t sustain social security and pension plans, it surely can’t sustain the 10% of people, admittedly smart, who “invested their life savings” to retire to a grander standard of living than they had when they worked (or, better stated, were productive and useful).
The deep foundation of the problems I’m commenting on here is greed. Human greed fuels every market boom-bust cycle we see. And yes, we will see another bust soon (I promise I’m an eternal optimist, but I also can see the world for what it is sometimes). And this one will be bigger. Because unlike ’08, the Dot Com Bubble, or the Great Depression, this one impacts all asset classes, even the made-up ones (like crypto, which was probably made by the government, but that’s a story for another day).
The practical application of greed, in this context, is retirement. It’s a promise of a life that society should have never given anyone.
It took the parents away from the kids, because the parents’ kids simply can’t afford to live in one place for six months and another place for six months when the weather alternates being nice in those places like they can.
It took the parents away from their grandkids for the same reason.
It made the parents feel burdened by their children, because any financial help they gave their children was going to be a drain on their retirement lifestyle that they had been promised since they began working, not all that long ago.
And the young began to resent their parents because they couldn’t make for themselves the kind of life their parents had at the same age. And while they are struggling with rent and can’t fathom having children of their own, their parents are on (yet another) European vacation.
And I’m really getting sick of this “I worked my whole life for this!” attitude. When did forty years, the typical career length before retirement, hardly even half of your expected lifetime, become “your entire life”? You really get to sit on your butt for twenty to thirty years because you worked for half of it? What kind of promise is that? Will that even make these people happy? The answer is no. Most retirees are insufferable and without purpose.
Before modern retirement, old people continued to be useful to society. They left hard labor and worked in the community governments as decision makers. They became educators of the young with their wisdom. They lived with their adult children and became caretakers of their grandchildren. They were useful. They were productive. They didn’t sit on the couch watching game show reruns. And they didn’t demand 10% returns every year.
They were happy to provide in any way they could. And on their final days, they were surrounded by the family and the community they supported their whole life (actually their whole life), who now could thrive because of how much that person sacrificed on their behalf. And my guess is that they died a lot happier than the old, rich person, alone in the nursing home that their children hardly ever visit, who “saved their whole life” for retirement.
Yes, There Will Be A Crash
Yes, we will experience a major economic crash soon. I don’t know when. In my lifetime, obviously.
Why? Simply put, there is too much greed for the system to be sustainable anymore. You can’t have all the young people incapable of affording rent, never mind being able to afford children of their own, for much longer before massive change happens.
When it happens, we can’t make the mistakes of our past.
In 1935, as America was clawing its way out of the Great Depression, we created the Social Security system.
In 2008, we made a drastic mistake by bailing out the banks. The people at the bottom suffered acutely and chronically, while those at the top were saved and financially prospered.
After reading this piece, you might have made the mistake in thinking that I’m a socialist. That I’m some young, liberal wacko. If you thought that, you have truly no idea what free markets are or what socialism looks like. Because bank bailouts, social security, and the government investing 10% in Intel, is socialism.
Free markets create balance. A balance between greed, prosperity, and productivity. When there is not enough productivity in the system to match the level of greed, there is a market correction. And these corrections need to occur without government intervention for the free market to remain a free market. And for it to be efficient in the future corrections it will need to make.
When this market crisis happens, and those who own everything see their paper wealth get slashed by 70% or more, we must remain strong and not bail them out. We must let them fail. We must flush the greed out of the system.
They’ll be okay. They’ll come together with their families. They’ll ask for help. And we, the younger generation, will help them. And in return they will go back to being productive and useful to help those around them. Yes, they’ll have to cancel their trip to Africa. Yes, they’ll have to sell their Airbnbs to a young family who couldn’t previously afford them. Yes, they may even have to get a job at a local community college to share with the younger generations their wisdom of the way the world works. And no, the family around the bed of their dying love-one will not have a massive financial windfall that will tear the siblings apart. But that’s a small price to pay for the future prosperity of humanity.
Works Cited
Bureau of Economic Analysis. Gross Domestic Product, 2nd Quarter 2025 (Advance Estimate). U.S. Department of Commerce, 30 July 2025, www.bea.gov/news/2025/gross-domestic-product-2nd-quarter-2025-advance-estimate.
“Forget GDP. The U.S. Economy Isn’t Doing Great. But the Worst Might Be Over.” MarketWatch, 10 July 2025, www.marketwatch.com/story/forget-gdp-the-u-s-economy-isnt-doing-great-but-the-worst-might-be-over-6d202c35.
“Gross Domestic Product: 2nd Quarter 2025 Advance Estimate.” U.S. Bureau of Economic Analysis, 2025, www.bea.gov/news/2025/gross-domestic-product-2nd-quarter-2025-advance-estimate.
“Home Prices Post Smallest Increase in Nearly Two Years, Case-Shiller Index Says, Offering Buyers a Reprieve.” MarketWatch, 30 July 2025, www.marketwatch.com/story/home-prices-post-smallest-increase-in-nearly-two-years-offering-buyers-a-reprieve-3c3a4e83.
“Home Prices Cooled in May. Where They Are Falling the Most.” Barron’s, 31 July 2025, www.barrons.com/articles/home-prices-us-case-shiller-685bf810.
“Rallying Stock Market May Help Public Pensions Reduce Shortfall This Year, Study Finds.” Investopedia, 2025, www.investopedia.com/rallying-market-may-help-pensions-reduce-shortfall-8678654.
“Retirees: The News from Jackson Hole Is Ominous for You.” MarketWatch, 22 Aug. 2025, www.marketwatch.com/story/retirees-the-news-from-jackson-hole-is-ominous-for-you-9ca906f0.
RBC Wealth Management. H1 2025 Equity Recap: Business as Unusual. 1 July 2025, www.rbcwealthmanagement.com/en-us/insights/h1-2025-equity-recap-business-as-unusual.
“Social Security: Insolvency Date Gets Closer.” The Week, 15 Aug. 2025, www.theweek.com/personal-finance/social-security-insolvency-date-gets-closer.
“Stocks Set New Record to Wrap Up First Half; Here’s What Drove Markets.” Washington Post, 30 June 2025, www.washingtonpost.com/business/2025/06/30/stock-market-record-2q.
“Trump Calls on Fed to Cut Rates after US Growth Surges to 3%.” The Times, 25 July 2025, www.thetimes.co.uk/article/trump-calls-on-fed-to-cut-rates-after-us-growth-surges-to-3-percent-rt6vsjxlm.
“U.S. Economy Shrank in Early 2025 as Tariffs Sapped Growth, Imports Surged.” Washington Post, 30 Apr. 2025, www.washingtonpost.com/business/2025/04/30/gdp-q1-economy-tariffs.
USAFacts. “What Is the Current Inflation Rate?” USAFacts, July 2025, usafacts.org/answers/what-is-the-current-inflation-rate/country/united-states.
YCharts. “US Real GDP Growth.” YCharts, July 2025, ycharts.com/indicators/us_real_gdp_growth.