Comment by mikestew

OP wrote it poorly, but isn't wrong. Most retires get income from a few places: Social Security, 401K, or rental property.

Social security is a direct transfer of money from people currently working to people no longer working. The amount you get is vaguely based on how much you earned when you worked, but it's not like the money you paid in went into a savings account for you. It went to the people who were already retired. Remember, the first recipients of SS never paid in anything. It's been a long chain of working paying non-working ever since.

401k's are usually based on stocks. The value of stocks is based on the labor of the people who work at the company. The dividends and interest come from that labor too. Once again, at one point you were that labor, but your labor was going to retired people, and now it's "your turn".

And rental income comes from people giving you the money they get from their labor. You used your labor to buy the house, but the current money comes from their labor.

Now the rest of what they are saying is flawed because two of those three would go away if AI replaced all labor. But they are correct in saying that your cashflow in retirement comes from other people's labor, just as your labor went to other people when you were working.

It's exactly factual.

Let's say you take 10% of each paycheck, withdraw it as cash, and put it in a safe in my basement from my first paycheck to my last one 40 years later. The safe is a safe. It earns no interest. No one else contributes to the monetary value of the contents of the safe in any way.

The 40 years are up. You need to pay for groceries. You go down to my basement and behold the fruits of four decades of toil. You take some of it to the grocery store... and it takes up a far, far larger percentage of your cash pile than you thought it would.

Inflation got you. In fact, if we're talking about 40 years ending this last April, it shaved 66.6% off of the purchasing power of the money in that safe.

Uh oh.

So how do you deal with inflation? Instead of putting your money in a safe, you put it in a retirement account. That retirement account creates wealth for you by investing your money into equities, bonds, and other assets.

Equities and bonds typically grow in value by backing the asset with the surplus value generated by the labor of the people who are doing work for the entity that issued the equity or the bond.

Could you also invest in assets that don't get their returns off of other people's labor? Of course, but most retirement accounts in the US today do not do this.

So, yes, you're living off of money that you did not labor for, at least after you exhaust the inflation-adjusted value of the principal you put up for your retirement savings.