Are 401K plans "scams?

I hear you, but you don't have to pay for her college. It's great that you want to but I would say that you have to balance what you need for a retirement you richly deserve, and her education that she (IMO) should feel financially invested in.

I paid for my kid's college as long as they kept up their grades. When they didn't, Daddy's gravy train ended. Of course, my kids went to State schools when tuition wasn't so back-breaking.

One of the greatest lessons you can teach your kids is (IMO) financial literacy and responsibility. Unfortunately, today's kids are leaving High School with no understanding of debt, budgets and simple fiscal math.

You could be very right. I borrowed off my 401K and I think I did suffer a tax penalty but maybe not. It was long ago. If not all the more in favor of 401Ks

Well we pull out our money for retirement first. Some of the money is from putting away a small amount into a 529 plan but we will exhaust it this year. I agree on the grades but I can’t fault her in that she has been on the deans lust each semester except the first where she just missed it.

She pays for her books and anything over and above tuition and room. She earned more than half her tuition and board through scholarships and each year she took the government loan we pay the difference. At least we have so far.

But even so money is tight

I haven't seen where this young man explained why he thought it was a scam.

"because rich people don't invest in them" isn't a reason.

So, what was his answer when you asked him why he thought that?
What evidence did he show?

Yes! We advise people to fund their startups with 401(k) money. It's a lot more dependable than crowdfunding and you don't have to sell off part of the business as you would with angel investing or venture capital.

There was no answer - or no true answer - just what he had heard. I attached a YouTube video of someone explaining why these are not scams - it is in argument of a couple of guys that are promoting that 401ks are scams. Seems there are a couple of guys - if you see this you see these guys are actually the scammers. Not sure off the top of my head but I think this is Grant Cardone, but there are others promoting this - there is some other former hedge fund investor promoting the same thing.

I think with social media being such a big thing for most younger individuals they are buying into what is being promoted via social media rather than really investigating and learning for themselves. When I explained about doing some research and learning about the better investments - I kind of got an answer like it is so much work.

Oh and a big thing is that he said - but you can't access that money. It is your money but you can't use it if you need it - what if you have an emergency without being penalized.

I explained that a 401k is not supposed to be an emergency fund - it is supposed to be for your retirement. If you absolutely need to - you can borrow from it and I gave the example when I did. I also made it clear that you need to pay it back in full before you leave the company or you will be penalized on the portion you still owe.

I also explained that you should also be putting away money into an emergency fund. You can do both - put away a few months of salary so if something happens you have the funds. I also explained how that happened to us just recently. We did manage to get by for a month without my husband's salary. But we did have in the back of our heads if it got worse we would borrow against the 401k - fortunately it has not.

I told him that you could put a small amount 2 or 3% you would probably not even notice it as it comes out prior to taxes so it less than that. And how much it is likely to be when you are ready to retire.

I honestly don't think they want to do the work. Hopefully not all are thinking this way or what the heck are they going to live on when they retire?

Yeah.
Just as I suspected. Something he heard somewhere, aka Grant Cardone, what's that other guy? Tim Robbins etc.

Ah youth.

I looked up Cardone videos, and his very face made me think "Are you kidding?" Then I watched a little, and it's pretty apparant his truths and facts lie in the ability to talk louder and faster than anyone else in the room.

Of course you can't easily access your money. It's a Retirement Fund. I can't even wrap my mind around someone saying they need immediate, penalty free access to 2-3% 24/7, or God forbid, up to the amount your company matches.
The easist way IMO to painlessly get to the max is in the first year, if you can't afford to contribute the let's say max 6% is to do what you can, like the 2%. If you're making $50K a year, that's less than $20 a week. If you are starting at 20K a year, 2% of your salary is $1.54 a day, Monday - Friday.
Really? You can't forego immediate access to that?

As you get raises, or bonuses, you increase your contribution percent by what you got until you are up to the max.
So you can't access the funds until retirement (leaving out buying a home, etc)?
Well you never saw it in the first place. Don't dwell on it. It's for your Retirement.

Now I do know 2 things that inhibit the growth of the account, and I'm sure there's more.

#1 is fees. Many people probably don't know all the fees they may be paying, and yeah that can eat away at your money. Solution? Learn what the fees are, and switch your financial vehicle to a different fund. Educate yourself.

#2 is your vestment period. You're not getting that free employer contribution right off the bat. You need to stay at the company X amount of time.
The trend from what I understand today is to switch jobs as often as you change your underwear. It's not rocket science to understand your employer isn't going to just let you take the money with you until your vested, either partially, or completely. Looking it up, it seems it takes an average of 6 years to be fully vested. Also, it varies when a company allows you to join the 401K.

Edit, I just read that about 1/2 of companies now offer immediate vesting for their match. Huh. I'm out of the loop. But, even if that's accurate, it mean 50% of companies don't offer that.

Anyway, this Grahm Stephan video below is both amusing and informational. I've watched a few of Graphm videos. I admire his common sense and passion. Caveat, me personally? I can take him in controlled doses. I do get weary of his .20 cent coffee schtick. On the whole though, I like him.
FYI, this video pokes some fun at first, then settles down into some good info.

There are people promoting the notions that we never landed on the moon, that GWB engineered 9/11 and that aliens created all of our ancient civilizations.

Frankly, if you're friend or associate wants to believe idiotic notions, let him. He will suffer in the long run and a lot more than any of the other conspiracy nuts.