People are constantly told they need to “save for retirement”. Is that really the meaning of life?
Maybe “planning” to retire as soon as possible is a better strategy than “saving” for a retirement that is decades away. Does it really make sense for people to spend the best and healthiest years of their lives grinding away at a job just to sit around the house and wait to die when they get old? The idea of saving for retirement comes from the right place, but the execution taught by conventional wisdom is designed to serve the system more than the individual.
The people who tell you to save for retirement the conventional way are the same people who used to tell college students they can major in pillow fluffing and have a high paying job waiting for them after college.
Those who really understand money know that consistent income and cash flow trumps savings by a mile. Realistically, if you managed to save two million dollars for retirement, all that money could be wiped out in one month from a medical emergency or health crisis. Having a big pile of cash when you’re old is great, but if that cash is not being replaced when you spend it, your decades of “work” could go up in smoke overnight. And this also assumes you have full access to the money and are not limited to a certain amount a month as many retirees are.
So why is “saving for retirement” such a big part of conventional wisdom? Retirement was actually invented after the Great Depression as a way to push older people out of the workforce and allow younger people to replace them. It was a way to give the youth more economic stability.
Today, lifespans are much longer and healthcare technology is much better. It’s also safe to assume healthcare technology will continue improving in the future. People are likely to live for several decades after they hit retirement age. Can you realistically save enough money to live a middle-class lifestyle for 20, 30 or 40 years while making a middle-class income today? Of course not. Many with student loan debt will still be paying it off well into their 40’s.
The majority of society views the concept of “retirement” completely wrong. It is viewed as something you do at a specific age. This is why many retirement accounts have penalties if you try to take the money out early. You are told to spend the best years of your life grinding so you can enjoy financial freedom when you are too old to take full advantage of it. However, you are never told to find a way to generate consistent income for the rest of your life so that you don’t have to grind now or in the future unless you want to.
This should come at no surprise because you can’t have “too many cooks in the kitchen”. Furthermore, businesses benefit more from loyal employees who want to “climb the corporate ladder”. Replacing valuable employees is expensive and it can cut into profits since new hires usually have a learning curve making them less profitable in the first few months they are on-boarded.
Conventional wisdom and pop culture will always glorify the behaviors that benefit society over the individual. Spending your entire life working for someone else benefits society and employers. This is why getting a job is so much easier than starting a business or setting up forms of lucrative passive income. Becoming an entrepreneur is highly difficult by design. High startup costs, large time commitment, personal sacrifice, licenses, laws, taxes and other red tape is all meant to discourage people and ensure most of them give up before they make one dollar.
This is not to say working for employers is a bad idea. Its not a bad idea at all, IF YOU HAVE A PLAN. One of the best things you can do after earning a college degree is work for someone. It is another form of education, networking and skill building that can pay off later in life. However, for someone who is truly ambitious, a job should be a stepping stone, not a parking space.
For wise people, the goal when they first graduate college (or even high school) should be to “retire” as soon as possible. Not to retire when they’re old and grey. Retirement should be viewed as a life goal, not something old people do.
People who retired early usually don’t do it because they have a big pile of money. They do it because they have setup enough sources of consistent cash flow that they don’t have to actively work at a job. The day a person enters the workforce, should be the day they start planning their exit. There is no higher goal to seek than your own freedom.