Stop Thinking About “Retirement”

On my BoltBus trip back to Bellingham from Seattle this last Friday (have I mentioned my great love for mass transit? Well, it’s true, I love mass transit with Great Love), I sat next to a man about my age-ish going to LinuxFest 2017 in Bellingham. 

As is my wont, I struck up a conversation with this complete stranger and surprise! found myself discussing the tech industry and personal finance with him.

(As a side note: He does a lot of hiring. He noted men’s tendency to say “Sure, I know how to do that!” when in fact they don’t and instead think that they can learn the skill.  Whereas women tend to say “No, I don’t know how to do that” unless they’re goddamn experts in the area. He encourages us women to express a bit more confidence in our abilities, even if we think it’s misplaced! Which, in all likelihood, it isn’t.)

Aaaanyhoo, he mentioned that he is just a few years away from Financial Independence, which is when you no longer need to work for financial reasons. Your sources of “passive” income (investments, rental income, proceeds from a book you wrote, etc.) can cover all your expenses. He never used the word “retirement,” and with good reason: our conception of “retirement” is simultaneously quite new and rapidly becoming obsolete.

Retirement is often considered ground zero for personal financial planning, but we would benefit both financially and …psychically? from broadening our conception of it, and from continuously working towards it even if “it” isn’t very clearly defined for us.

“I. Must. Save. For. Retirement.”

If you know nothing else about personal finance, you’ve probably drunk the “Save to my 401(k)/IRA for my retirement” koolaid. In many ways, I’m glad the PR about saving for retirement has been so effective, ‘cause lord knows we need to save more. But, like any rule of thumb, it can be harmfully simplistic.

Many of us think of retirement as a switch we flip at age 65. We work work work for 40+ years, retire when we turn 65, and spend 30 years indulging in leisure of various kinds, possibly with a side serving of fear that we might up under an overpass eating cat food. This conception of retirement is pretty damn new in human history. Social Security, for example, with its “full retirement age” of 65, wasn’t implemented until 1935 , only 82 years ago.

Additionally, this notion of retirement doesn’t seem to be aging very well:

  • We no longer work for our entire careers at a single company (try 10).
  • We no longer have pensions that give us ample guaranteed income in retirement.
  • We’re living far beyond 65.
  • Those of us in knowledge and/or creative fields look in horror on a vast expanse of time not spend making something or solving a problem.
  • Our stock and bond markets are expected to return significantly less than they did in the last 40+ years, so we will have less help from our investment portfolios to cover expenses.

While many of us simply are not on track to have enough money to last for 30+ years without earning an income, many of us would be bored out of skulls if we tried to do so.

New Conceptions of “Retirement”

I imagine many of you are currently thinking, “Interesting pseudo history lesson there, lady. But “retirement” is decades away and I will need approximately… $4 bajillion to retire, so it’s never going to happen.”

Good point! I don’t think many, if any, of us are going to see this “Retire at 65. Leisure time for 30 years” kind of retirement. But that in no way means you should resign yourself to a lifetime of drudgery, or give up on “saving for retirement.”

As this article points out, retirement could look any number of ways for you:

  • You could work work work until you retire, either young or old
  • You could work work work until you retire, and then work part time and spend part time in that leisurely life.
  • You could work some, leisure some, work some, leisure some, and so on.

While I think that last option is a bit optimistic for many people (can you imagine taking your 40s off from work in the tech industry, and coming back as a 50-year-old woman: “Alright! Here I am! Who’s going to employ me?”), I do think the idea that your career could be varied and allow for transitions is not only appealing but doable, especially if you’ve got the resources of a tech career at your disposal.

Working in the Tech Industry Can Help You Get There

The tech industry has its problems, to be sure, but one thing’s for sure: there’s a loooot of money sloshing around. And if you’re thoughtful and hard-working and lucky, not only can a lot of it be yours, but you can use it to strengthen your finances surprisingly quickly.

What have you got going for you in the tech industry?

  • Salaries that are higher than most people would dream of. Are you 30 years old and making more money than your parents do, 30+ years into their career? Mmm hmmm.
  • Annual bonuses
  • 401(k) match
  • Stock options that might turn into Big Money some day
  • Restricted Stock Units that definitely turn into More Money on a regular basis, as long as you stick around
  • Employee Stock Purchase plans that enable you to get some “free money” every 6 months or so.
  • Free meals, Flexible Spending Accounts, tax-free transit passes, etc.

You might have all or some of those. Regardless, it’s likely you’re looking at serious financial potential here. (Especially if you’ve advocated for yourself when applying for a job and at annual reviews.)

So, what should you do? If nothing else, live off your salary and bank all those less-frequent types of compensation. Better yet, bring a little more intention to your finances and start saving a chunk of each paycheck, too.

Do some back-of-the-napkin math right now: How much money could you be saving every year if you saved all your non-salary compensation? Are you in fact saving that? Or is it going…somewhere…I could have sworn it was around here somewhere…darn, now where did I put that?

Even If You Don’t Get “There,” You’ll Be in a Better Place

If you’re young, saving for “retirement” is probably a pretty useless motivator. It’s just too…remote. But you can sure as hell save for flexibility and choice and strength. And that trajectory will lead, one day, to whatever your retirement looks like.

The whole “Early Retirement” craze seems to be particularly popular among The Dudes, not so much among The Ladies, it seems. Maybe you’re not a diehard “financial independence” person. But you should certainly be a “financially more independent” person.

So, start working towards that. Maybe along the way you in fact do start honing in on that early retirement picture. Or maybe, as in my case, you figure out you want to change careers and eventually launch you own business. I’m not financially independent, but my efforts in that direction gave me a hell of a lot more choice than I would have otherwise had.

Looking for numbers? You should be saving at least 15% of your income for retirement, better yet 20%. And of course, the higher your savings rate, the sooner you get “there.”

Early-Retirement Resources

If “extreme early retirement” or “financial independence” does float your boat, here is a short list of popular resources you could explore and take inspiration from. I have some, um, “issues” with some of the privilege implicit in a lot of the assumptions and philosophies, but there are a lot of good ideas to take away.

If you work in the tech industry, you likely make way more money than you need. And banking all that excess—instead of finding new and delicious ways to spend it—is at the core of financial independence.

Do you want to make sure you’re investing in your future, even if you’re not sure what it’s going to look like, or when exactly you’ll get there? Reach out to me at meg@flowfp.com or schedule a free 30-minute consultation.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved. Read the full Disclaimer.

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Flow Financial Planning, LLC is a Registered Investment Advisor in the States of Washington and California.

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