A Hard Look at You, Your Company, and the Government: Part I

All generations have heard about the “good old days.” However, if they were right about one thing, it was about the value of hard work and how companies rewarded hard work at the end of a long-term career with this thing called a pension, where companies would pay you money for a certain number of years after you retire from the company, based on service. I talk about pensions in the past tense because unless you work for the federal/state government, the railroad, or the military, chances are that you won’t be getting one. My company stopped direct pensions for the most part in 1988 for the 401k option instead. Others are following.

Now, here are some realities that you’ll have to realize:

1. The Government Ain’t Comin’

The U.S. Government might provide you with some Social Security when you retire. I wouldn’t count on it though. Social Security hasn’t been managed well because successive governments have been borrowing against it. Now, dear reader, unless you were born before 1975, chances are you won’t even get all your benefits when you retire—meaning you won’t get all the money you put into the system, if any. So don’t expect to work until you retire without saving significantly and then “expect” the government to fund your retirement—it’s not gonna happen. Get it in your head. I mentioned before why you shouldn’t let the government handle your tax refund, imagine if you handed them your retirement options to handle.

2. Retire Early at Your Own Risk
"I’m going to start my own business…"

How many times have you heard your friends crack out that gem? I’ve never felt comfortable saying it, because I have no business plan and no start up cash. Maybe I will, but I’m not banking on it. My current plan is to save a certain amount every month until I have enough to retire on. Many of you have determined to retire at 35, which seems like an arbitrary number if you ask me. Why not 36? Or 34? I don’t see a reason to retire at 35 when the average healthy person lives to at least 80. Are you prepared to support yourself on an unsteady income for the next 45-50 years after you retire? With only 10 years of work?

OK, let’s say after 10 years you’ve retired with 1 million in the bank. What then? Do you stop working? Let me tell you, life would get pretty boring after about the third trip to Europe—it’s just like the third trip to Six Flags. Gets kinda boring pretty fast. It can also get expensive when you don’t have new income to back it up. Annuities can only bring in so much income. And when you include inflation and cost-of-living, you may find yourself reporting back to work at 45.

And that is just not fun. Imagine the possibilities:

Think about it: Bill Gates, Oprah, Warren Buffet—they’re billionaires. Why haven’t they quit their jobs? Truth be told, even millionaires who’ve earned their money (not lottery folks) worked years to build up their income and spent sleepless nights doing it. Even pro athletes tend to have a strong work ethic? Why quit so soon? We’ll talk about it in Part II, next week. Comments, criticisms, and different points of view are allowed of course, in the Comments Section. See you next week.