Comment by lenerdenator

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.