Should we retire retirement? With 43% of Americans having $10,000 or less in retirement savings, and 27% with less than $1000, it is obvious that many people do not think for the future. In fact, recent research on people’s brains shows a tendency toward the use it or lose it mentality extending to people’s money [...]]]>

Should we retire retirement? With 43% of Americans having $10,000 or less in retirement savings, and 27% with less than $1000, it is obvious that many people do not think for the future. In fact, recent research on people’s brains shows a tendency toward the use it or lose it mentality extending to people’s money as well.

So when we understand this, what does that mean for retirement? Without Social Security or pension plans, most people would not have enough saved on their own individual merit (that is, outside of some government or corporate plan) to retire. Most people, in fact, probably would not be able pay their income taxes if it weren’t for tax withholding!

Even in “standard” retirement planning, they say you need to have 80% of your pre-retirement income. You do NOT need 80% of your pre-retirement income you actually need 80% of your pre-retirement expenses! By saying income, the conventional wisdom is saying that people generally spend (expend) ALL of their take-home income. However, if you are a prudent saver, you should not be spending anywhere near what you take in.

For me, we only spend about a quarter of what we take in. And with that 75% saving, we are actively looking for investments to help it grow. Because we would like to be able to not work a traditional job by about age 35, this is about the only way to go. But there is no way to figure that in the retirement calculators most people use.

For instance, in the aforementioned retirement calculator, they need to know your current age, your current income, when you want to retire, what percent of your income you’d need to retire, how long you think you’d live, how much you’d get in pensions, and how much you’d get from Social Security. Well if we want to “retire” at 35, how would they calculate that? Do they calculate Social Security when we turn 65? Our 401(k)s that we can’t use until then? Pensions that we couldn’t use until then? Would we be able to count our passive income streams as pension amounts? Would I put 25% of my income since that is all we use now? Or would I put less since we wouldn’t need all the work peripherals? The calculator just does not  apply for people who think outside of the box. It is not for Fruitfulistas.

So if retirement is not really a possibility for most people without Social Security or corporate pension plans and it is not really considered retirement for people who are active savers and investors (like us and you reading this!), do we need to have a new paradigm as it relates to retirement?

Maybe we need to have another end goal. I’ve talked to many people about their retirement goals, and because to them it seems so far off, they say things like, “I’ll just keep working till I can’t” or “I like working, I like knowing where my next paycheck will come from”, things of this sort. And working in and of itself is not such a bad thing. If people like to work, then why force or otherwise pressure them to stop? And if people have the means to stop early and change paths, why don’t we allow for that? Even though retirement is a fairly recent concept, why is it that it has become a prescribed standard? Why is everything so standardized?

I was looking into annuities the other day, and I couldn’t even buy one because of my age! Just as you can’t use your own retirement money that is placed in a system (like 401(k)s and IRAs) until a certain age, I could not buy an annuity until a certain age. That basically leaves us with the options of direct investments with our after-tax take home money. And for everyone else, it leaves working…and all of their financial future at the hands of someone else which is never the safest route, even if it is the most comfortable. If you are working because you love it, that is one thing, if you are working because you have to, that is another.

For many people, retirement should be similar to work before, but at your own pace

I think we need to come up with another word other than retirement. And it’s not just because the standards don’t apply to everyone either. A large number of people  have their whole identities are wrapped up into what they do experience a huge loss when they officially retire, and many people feel that they have been “put out to pasture” and no longer are useful to society. To many, their work is the purpose in life. Without it, they quite literally die.

So, perhaps in the future, Social Security may or may not be around and the word retirement may have to be retired. Retirement was, after all, just an experiment. Those who we say retire early are not really retiring, but doing what they would prefer to be doing, and making money at it to boot. Those who enjoy working should continue doing so until they find something else they like better, but they shouldn’t stop working because of a prescribed pattern.

This isn’t to say that we should stop saving or encouraging so-called retirement planning because it is always good to save. It will always bring more security and as you get older, you lose a little of this. But retirement should not be thought of as standard or a single event, but rather a very individual, specific plan to not only live sustainably financially but also emotionally well into the future. And to many whose life’s purpose is in their work, that may mean continuing to do so, but perhaps at a different pace or time schedule.

Secure chickens in cages

The huge poultry industry claims that keeping [...]]]> The other night something attacked our chickens. In addition to all the things that you think about when you are dealing with an attack like this, came some thoughts comparing the lives of chickens with humans. While somewhat strange, I think there are quite a few comparisons.

Secure chickens in cages

The huge poultry industry claims that keeping hens cooped up in large warehouse systems with no sunlight, bugs, grass and dirt in tiny cages decreases the chance of premature death (before they say it’s ok to kill them) or disease. Well, that is probably true. They control everything in the chickens’ lives from the temperature, to the exact food delivered. They cut off the end of their beaks so they don’t peck each other and act just as they should, which is as production units for the industry. They decide when they should molt, they decide how much light they get (the sun and weather is never a factor). They even decide how long they live which is usually less than 2 years of age.

So while in the wild they might get caught by a predator, get some disease and have to search for their food and work out arguments with other chickens, they might actually have a chance at a life -that could actually be up to 10-20 years! I wouldn’t call what they have in the factory, a life. I would call it torture.

Keeping humans secure in cubicles

But isn’t this very similar to what we humans in industrialized nations have done to ourselves as well? We have traded our freedom and sense of purpose and drive for a secure life where we never have to worry about where our food, or shelter, or warmth, or other necessities of life come from. They just magically appear. When we go to school we are taught how to act and behave, so that we can do it for the rest of our lives in the work force sitting in cubicles and driving in boxes (sounds a lot like a cage). And if we don’t behave correctly, we get put into a smaller box-cage -a jail cell until we are willing to be the production units we were molded to be. Basically, we traded our freedom for security.

And it’s not that security is bad -I certainly like having a warm bed, good food, clean water, health care, etc but it just seems like by doing this to an extreme we have lost focus of what it truly means to be human. Just like a chicken in a factory may have an urge to go scratch around and look for bugs but not know why -because they’ve never been allowed to do that, we humans in the industrialized world often have a drive to go do something exciting or exotic or get back to the basics and build or create or roam the world. I think these are those same basic instincts that the system does not appreciate in its quest for the perfect production machine.

The middle way: some security but much more freedom

So is there a middle way? Is there a way to have some of that comfortable security while also feeling alive, like a human? I think again back to our chickens. They do not live in a factory, but they also are not feral. They live in our backyard and they roam around all day long. They get to do most of the behaviors that chickens need to do but yet they get supplemental food from us, they have a home that we built for them, and we take measures to prevent predators from striking. This is how I think we humans should live. I think some people in industrialized worlds are able to do this, to follow a dream and make it happen without feeling like just a cog in some larger system than themselves, but many (without all the resources it takes) do not. I think this is what is meant by the cliché “work/life balance”.

And whenever something threatens our security, a little bit more of our freedom goes away. It was interesting in our discussions about what to do about the predator in the henhouse we had actually talked about putting them in a small 6×6 foot run so that they would be extra protected. While there may be more security, they would have also lost 90% of the yard to play in. We also talked about guns and traps and other methods of security -huge costs.

Isn’t this what we humans do to ourselves as well? After 9-11 we beefed up security and built a whole new division of government (Dept of Homeland Security) and we therefore lost some of our ability for freedom of movement, we lost a lot of our freedom to personal privacy and even some of our freedom of speech. We started a war and became very preoccupied with border issues and immigration. We essentially caged ourselves in further than before.

With our night chicken predator, like possible security threats to humans, you have to do something, but you have to be careful not to go so far that while you may feel safe, you can’t go out and do anything. What kind of a life is that?  

As for us? We are going to lock up their coop at night and try and catch the predator. These tactics protect them without taking away much freedom at all (they will have to wait for us to let them out in the morning, but I think this is a good trade). We are not going to go so far that we turn their lives upside down and they are miserable. Can we say the same for people? Not if the rate of prescription antidepressants and anxiety medication is any indication.

Basically, this concept is a spin-off of fear and greed. Security and freedom are two oppostite spectrums. When we have fear, we want security. When we want more and more (greed) we want utter freedom to get it. But you can’t have it all, all the time. It is always that tug of war between the two that you have to work through in order to find balance.

And this is where [...]]]> I think what many people forget when it comes to economics, and life in general, is that it eventually has to come back to the natural world. Everything we can buy or own or eat or use at some point came from the earth (or in rare instances, the moon or space).

And this is where true wealth originates. Given the right conditions there is a virtually inexhaustable supply of things that can grow from a fertile ground. I was once talking with someone in the tropics about a rather seedy orange and she said, “that is God’s way of showing he loves us”. What she meant by that, I think, is that from that one orange out of many on a tree, there were multiple seeds that then could grow a multitude of trees and future oranges…a true wealth of food and abundance.

And I think that is what wealth really is…increasing the likelihood and tapping into that stream of abundance that naturally occurs.

And as far as the minerals and items from the earth that don’t grow and keep reproducing, there is a certain wealth in that. Unlike the food, plants and animals that have a limited life cycle and can spoil, the things that are mined have long, long virtually infinite, as far as humans are concerned, life cycles.

So with this basic knowledge, why is it that we would throw away things like aluminum, plastics, other metals? Don’t we have it mixed up? Shouldn’t these mined items be things that we plan on having for a long time?  All that work to mine it, produce it, package it and it ends up in the trash or dump days, or even minutes, after we rip it open to get to our food or toy or whatnot.

And as for the renewable resources, if we cut down all the orange trees, threw away all the seeds in the oranges (or genetically modified or bred them out) eventually these abundant resources become finite, like the oil and metals from the earth. And unfortunately, in some business models, this is the best way to make money: scarcity and rarity. By limiting and controlling supply, you can charge more, and what was once everywhere then becomes something hard to find.  

In order to reap the true wealth that is around us, we need to understand the limits of the natural world and be good stewards of it. We need to understand the life cycle of each item, how long they should last, and how to either produce more of it (in the case of renewable life-form resources) or better manage it (if it is a finite resource).

It just astounds me that these basic notions  are not often even considered in economics. If we cause an extinction or otherwise “use up” and deplete all the resouces in a given area, we just look for more elsewhere. If we are not careful with these things, even the most basic resources such as water or even air! might become a commodity where it was once abundant, clean and plentiful.

How can we NOT care about this, when our very existence is tied directly to it?