Retirement: The myth and the reality

I ran across this contrarian view about retirement recently. I’ll tell you where I found it later. Right now I’m interested in your take on the quote. Have we been sold a bill of goods?

1. Retirement is Worst-Case-Scenario Insurance.

Retirement planning is like life insurance. It should be viewed as nothing more than a hedge against the absolute worst-case scenario: in this case becoming physically incapable of working and needing a reservoir of capital to survive.

Retirement as a goal or final redemption is flawed for at least three solid reasons:

a) It is predicted on the assumption that you dislike what you are doing during the most physically capable years of your life. This is a nonstarter—nothing can justify that sacrifice.

b) Most people will never be able to retire and maintain even a hotdogs-for-dinner standard of living. Even one million is chump change in a world where traditional retirement could span 30 years and inflation lowers your purchasing power 2-4% per year. The math doesn’t work. The golden years become lower-middle-class life revisited. That’s a bittersweet ending.

c) If the math does work, it means that you are one ambitious, hardworking machine. If that’s the case, guess what? One week into retirement, you’re be so damn bored that you’ll want to stick bicycle spokes in your eyes. You’ll probably opt to look for a new job or start another company. Kinda defeats the purpose of waiting, doesn’t it?

I’m not saying don’t plan for the worst case—I have maxed out 401(k)s and IRAs I use primarily for tax purposes—but don’t mistake retirement for the goal.

Do we need to rethink retirement?

The passage on retirement above is lifted from a book about lifestyle design. I think the general philosophy is that instead of setting work and income as an objective, you set out to live a lifestyle that makes you happy. Work and income is involved but in an integrated  way. Income is not the objective. Income is the means to an objective. I don’t know if I am buying this but it is making me think. What I do know is that what our society is selling right now is not working. It is breaking down before our eyes. Jobs make people dependent which might have been acceptable when employers (companies) were stable. These days, what company do you trust to be around when you retire? Can you afford to be dependent?

Do we need to rethink life?

Today, I’m fishing. I’m digesting the quote above and trying to get into the rest of the book. Maybe you know the book and recognize the discussion. Maybe you don’t. Either way, I am interested in your reaction. What do you think about retirement planning? What would you do differently (or what changes have you made) based upon today’s economy. What advice would (do) you give young people who are just starting their lives? And if you don’t recognize the passage but want to know how to become part of the new rich, just follow the link.