 You drank it all last night! I'll let you get some. Well, maybe you should have thought of that before you drank it all in one night! B-Bolshevik Bunny. B-Bolshevik Bunny. No, you look like a sh**hole. B-Bolshevik Bunny. B-Bolshevik Bunny. B-Bolshevik Bunny. Your other 700 grandchildren to do it, you horny old slut! Bolshevik Bunny. Oh! Greetings, comrade Rourke. At whom are you shouting? My grandma. Babushka Bunny is in town? How is she? Not well. Why's that? Last month she had a stroke. So now she's living with me. Why? She can't work anymore so I have to take care of her. Comrade Rourke. Yes? Can I denounce my Babushka as an enemy of the state and have her? Re-educated. Of course you can. But if I may ask, why do you have to take care of her at all? Doesn't she have money in her retirement account? Retire what? Her retirement account. You know, the money she set aside for when she wasn't able to work. All of Babushka's money went towards Vodka. I see. But what is this retirement you speak of? Retirement is when a person has enough money they can stop working altogether. How does that work? Let's start at the beginning. In the beginning. No, I'm talking about the history of retirement. Like you, Bolshevik Bunny, the majority of the human race was poor Yoko Rubes who worked the land. Thank you. Because most people were peasants, there was only one way they could expect to stop working. If a peasant didn't want to work until they died, they needed to have enough children who could work the land. Which is probably why your Babushka had so many offspring. Well, that and the vodka. Ow! Around the 19th century, people started looking for work in large factories, which were terrible, polluted death traps that killed thousands of workers every year. Come on. They weren't that bad. Not again. Despite being death traps, people preferred to work in factories rather than returning to the farm. So they worked for years and years and years and years until they reached old age. And still they worked, which created a problem for the capitalist pigs. These old poops are f***ing with my quotas. I need to get rid of them so I can exploit younger workers. Do you mean hire? No, I mean exploit you f***ing moron. Why would you admit that out loud? Because who's going to f***ing stop me? Point taken. Anyway, in order to get rid of inefficient elderly workers, capitalist pigs started offering pensions. A basic pension plan worked like this. If you work for me for 35 years, after you retire, I'll keep paying a percentage of your income for the rest of your life. After all, I care deeply about my workers. Capitalist pigs really paid their workers for the rest of their lives? Well, you see, when capitalist pigs started offering pensions, workplace safety was... nonexistent. Money, dammit! So it was unlikely workers would survive the 30 years needed to collect the pension. And even if they did survive the capitalist pigs' death trap factories, most people didn't live much longer past retirement. So capitalist pigs paid a relatively small amount for their retired workers. Suckers! But as the 20th century progressed, retirees started living longer. What? And as retirees started living longer, capitalist pigs paid more and more into their promised pension funds. So in the 1980s, they switched to a different retirement plan. And thus was born the 401K. Why did they switch? Here's the difference between a 401K and a pension. A pension is a defined benefit. Defined benefit? Meaning, you, the worker, don't have to contribute any money to receive a pension. Your former employer is responsible for your retirement. They contribute money to the pension fund and oversee how it's invested. You just sit back, collect your checks, and theoretically not worry about running out of money. How is that different from a 401K? A 401K is a defined contribution plan. Meaning, you, the worker, are now responsible for your retirement. Which means you have to contribute money to your retirement nest egg. Some employers offer to match a certain percentage of your contributions, but even so, corporations can offer 401Ks at a fraction of the cost of a pension. Then 401Ks are just a way for corporations to save money? Yes. I mean, capitalist pigs created them. I don't know what you're expecting. But before we shed too many tears for the lost pension, let's remember they were far from perfect. To reiterate, employees had to work several decades to be even eligible for a pension. And when they finally did retire, they were still at the mercy of their former employers, who again controlled their retirement accounts. Retirees had no say in how their pension funds were invested or how much money they would receive. And if their former employer went bankrupt, retirees would be left twisting in the wind. So yes, forcing employees to take charge of their retirement was a cynical attempt by capitalist pigs to save money. But it also gave workers the chance to redefine retirement. Bolshevik Bunny, how do you define retirement? I guess when I turn 65 and can stop working, but the average lifespan of a rabbit is nine years, so I guess that's not going to work, is it? No. And the idea that you have to wait until you're 65 to retire is a holdover for when pensions were the only plans available. In this age of 401Ks and IRAs, the way we think about retirement is changing. Here at the CMPF, we define retirement as having F**K YOU MONEY. F**K ME MONEY? No, F**K YOU MONEY, in quotation marks. Basically, it's money that allows you to say F**K YOU. To whom? Your job. You can say F**K YOU to having to work overtime, or F**K YOU to sitting in traffic for two hours. You can say F**K YOU to your annoying co-worker, and F**K YOU to your unsympathetic manager, and a big F**K YOU to your abusive customer. You can even say F**K YOU to capitalist pig. F**K YOU, capitalist pig. Well, F**K YOU, too. Oh, no, we didn't actually mean F**K YOU, capitalist pig. But now that I think about it, F**K YOU, capitalist pig. F**K YOU. No, F**K YOU. Yeah, F**K YOU. No, F**K... We're getting off track. And let's just call it F**K YOU money from now on, because I'm sick of hearing all these f**king bleeps. Now, let's be clear. As communists, we believe the way the truly safe F**K YOU to the capitalist system is for the workers of the world to unite. And I'm sure, even now, billions of proletariats across the globe are putting aside their racial, religious, and ethnic differences, and forming an international coalition bent on overthrowing the bourgeoisie. But, while you are organizing with your fellow workers, we recommend you save your money at the same time, just in case the proletariat doesn't seize the means of production in our lifetime. How much money is F**K YOU money? How much do you think? Um... A million dollars? Two million dollars? Ten million? Fifty-fifty bajillion dollars? The answer is, there is no exact amount of money that guarantees financial independence. Why? Because the needs of each individual are different. For one person, ten million dollars may be more money than they will ever be able to spend in five lifetimes. For another, much more foolish person, ten million dollars might not even last a month. So if you truly want to know how much you need in order to retire, you need to do the one thing we've been advocating from the first episode of this program. You don't mean... Track your spending. Oh, it's even boring hearing it out loud. Well, if you truly want to resist the capitalist system that exploits your labor and siphons off your income with pointless commodities, you need to know how you're spending your money. Specifically, you need to know how much money you spend per year. Plus, there are free apps out there that help you track your spending. There's no excuse for not having a budget. Well, I still won't do it. Bolshevik Bunny, you'll do what we tell you to do. I guess I can try. At least no. Now, after you find out how much money you spend per year, you need to multiply that amount by twenty-five. Why? Because... Twenty-five times your annual spending... is the amount needed for retirement. That seems like an arbitrary amount. At first glance, it does, but... twenty-five times your annual spending... has been proven to be the amount needed to retire. How? Years ago, mathematicians established the four percent rule. They found that a person can live for thirty years or more off their retirement... nest egg. if they only withdraw four percent of their portfolio. Now, what is one hundred percent divided by four? Um... Uh... Uh... Twenty... Twenty... Twenty-five. Twenty-five. Very good, Bolshevik Bunny. So, if you follow the four percent rule, you will need to save twenty-five times your annual spending... in order to retire. But Conrad, Rourke, I see an error in your advice. When I retire, won't my spending be different from what it is now? First of all, communism never ever makes errors. But in this case you have a point. Chances are your spending in retirement will be different from what it is now. Maybe you'll be spending more money, maybe less. If you want a more accurate picture of how much money you'll need, look up a retirement calculator on the internet. For simplicity's sake, we're recommending you save... Twenty-five times your annual spending... as a baseline. However much money you decide to save, it is imperative that you start putting a percentage of your paycheck into a retirement account now. How much of a percentage? There are two schools of thought on this subject. The first is what we call... Standard retirement. Standard retirement is the simplest path to living comfortably in your golden years, where you can retire at sixty-five, and hopefully collect the benefits of Social Security and Medicare. In order to achieve standard retirement, a person must put... Ten to fifteen percent... of their income every year into a retirement account. In most cases, this is a traditional... 401K. which, despite being a cynical attempt by capitalist pigs to save money, has its advantages. Like what? First of all, 401K contributions are pre-tax. Tax? No, no, no, no. We're not going into that much detail about taxes. All we're saying is that 401K contributions are taken out of your paycheck before the government takes its cut, thereby lowering your tax rate. Wah! Also, 401K contributions are the best example of our favorite money-saving strategy. The skim. Now, we've described how the skim works over and over again since the first episode of this program. But, like all communists, we love redundancy. So here we go again. Number one, decide what percentage of your income you want to save. Number two, when paid, immediately put that amount into savings. Number three, spend the rest. With most 401K plans, you can literally set the percentage of your income you want to save. And the money will be automatically put aside. Some 401K plans even have an auto-increase feature, so you can save more money without having to think about it. As a final incentive, some employers offer to match a percentage of your retirement contributions. So I can get more money from my job simply by contributing to my retirement? Absolutely. And you don't need to be a financial genius to know it is very foolish to leave extra money on the table, especially when it's coming from the employer who exploits you day in and day out. Standard retirement is probably the best choice for people who have a hard time understanding personal finance. With standard retirement, you don't need to know about or worry about things like tax-advantaged accounts, stocks, bonds, annuities, or the difference between traditional and Roth IRAs. All you have to do is put 10 to 15%. If you're paycheck into a 401K, well, you work 30 or more years of your life. Toiling away as each day and week and month and year pulls you closer to dusty death until you finally do retire and have nothing left. You're just a shell of a person who sacrificed the best years of their life to an unfeeling, uncaring economic system that kills millions of people every year and is methodically destroying the only habitable world we will ever know. Of course, if working for the rest of your life for a corporation that actively abuses you and the planet doesn't sound appealing, there is an alternative path to financial independence. Early retirement. How does early retirement work? Like standard retirement, the goal of early retirement is to save 25 times your annual spending. But, instead of only putting aside 10 to 15% of your income, with early retirement, you put aside 50% or more. That seems like a lot. It is a lot. And we take the position that early retirement isn't for everyone. Specifically, if someone lives at or below the poverty line, it'll be difficult enough to retire at all, let alone retire early. Again, as communists, we advocate that the essential workers of the world who feel like they're not being paid enough when, for example, they're forced to work during a global pandemic, organize, unionize, and vote for candidates who support the labor movement. Or hope Congress gives us all universal income. On the other hand, if you're a bourgeoisie socialist, or, as we like to call you, a bourjalist, early retirement may be a viable strategy for resisting internalized capitalist oppression. How? First, by skimming off 50% or more of your income, you reduce the amount of money you spend on pointless luxuries. Since capitalism is a system that only survives by peddling useless garbage, the less money you spend on dumb luxuries, the more it hurts the system. Ow! Second, by retiring early, you reclaim the resource far more valuable than any currency or investment. Your time. If you no longer have to work 40 or more hours a week just to earn a living, you can devote your time to doing things you really want to do. Like playing video games all day? Yes. And you could also paint, write poetry, knit, read the entire Marxist canon. Or I can binge-watch The Office for the 177th time. Sure, but you could also do things that help create a more just society, like volunteering at a food bank, helping the sick and the homeless, supporting a voting rights group, starting a revolution. Or I could just post socialist memes on the Internet. Why do I even bother? What? Nothing. Anyway, whichever path you decide to take to get to retirement, it is essential that you start saving for retirement now. And when we say now, we mean right now. Not next week, not next month, not when you're 40, now, now, now. Seriously, we're talking to you, Eliza Barsby in Appleton, Wisconsin. Pause this video, put down your bong, and set up an automatic deposit into your 401k. Or if you're already putting money into your 401k, increase your contributions, because statistically speaking, you're probably not saving enough. Why should we start saving for retirement now? Because whether you choose early or standard retirement, both paths rely on one common denominator. Compound interest. The Brahma and Shiva of personal finance. Now, Bolshevik Bunny, you of all people should know how devastating compound interest can be when applied to debt. Yeah, but when it comes to investing for retirement, compound interest can be a creator of wealth, because it utilizes one important mathematical concept. Exponential growth. Meaning that while your retirement nest egg may grow slowly in the beginning, if you consistently contribute to your retirement, eventually you'll reach a point where your investments are yielding an enormous rate of return. What? Rate of return. Basically, it's when your money makes money. And if you have the right retirement strategy, the longer you keep your money invested, the higher your rate will be, because of exponential growth. However, in order to fully reap the rewards of this exponential growth, you must do two things. Start saving for retirement now. And the second thing? Have the right investment strategy. To be continued. I don't f***ing know, you piece of...