It's the first day at your new job in a fresh new career. The future is bright, and you've already planned out how you're going to blow your new, higher paychecks. Doggone it you're ready to treat yourself! However, before those paychecks start rolling in, you'll need to fill out some documentation regarding your retirement account. Your parents had one, and your grandparents may have as well. “It's important!” they said. You want to live a good life when you're too old to work, right? Everyone else is pumping their hard-earned money into AMAZING employee matching 401(k) accounts, so you should too, right? "It's free money!"
Except it's not, though.
By definition, a 401(k) is a "retirement savings plan sponsored by an employer with significant tax benefits." That's pretty vague, no? Let's break it down a bit further. A 401(k) is a retirement INVESTING plan that *shrieks* HOPES to put your money in the right investments so you make enough money that by the time you're 59.5 (let's not try to use Walmart's advertising here) 60* years of age. Then you can hopefully fund the last few years of the miserable life you just wasted working for someone else.
That's harsh. I know.
But it gets worse.
A 401(k) is typically comprised of a mix of investments, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Hold up a second. It's not some enchanted account that magically generates guaranteed money for us to access when we're past our prime and struggling to even get out of bed in the morning, is it?
Not even close.
Just like stepping into the stock market, a 401(k) account comes with its fair share of risks. I've witnessed firsthand individuals losing substantial amounts of money with their supposedly fantastic 401(k) investments.
Retirement is starting to sound a lot less than it's cracked up to be, no?Good! As it should.If this is starting to sound fishy, let’s look at where we came up with the retirement age, anyway. Straight from the horse’s mouth, on the official United States Social Security website:“The original Social Security Act of 1935 set the minimum age for receiving full retirement benefits at 65. Congress cited improvements in the health of older people and increases in average life expectancy as primary reasons for increasing the normal retirement age.”Let's break this down. It's rather puzzling that a couple of historical figures set the retirement age based on the average lifespan, almost as if they were anticipating that most of us wouldn't make it much past 65. Could it be that this number was chosen to conveniently align with when we can access our retirement funds penalty-free, rather than considering our actual physical decline as we age?
Government: *checks life expectancy chart and sees people are living longer*
“Raise the retirement age, you fools!”
I can't help but feel like this whole retirement age concept is just a big charade, making me want to walk away from the table and refuse to play their game. It's like being the older sibling who finally outgrows playing the same games as the younger ones, realizing that winning isn't as thrilling when the game itself is utterly meaningless.
Are there safer retirement *investment* accounts out there that lower the risk while also offering some of the same pie-in-the-sky benefits? Sure. However, it still doesn't deter from the fact that the entire concept behind retirement and the age they came up with is, well, kind of bullshit.
“But, PENSION!”
It's the same theory. Give money to an account, hope the company doesn’t go under and cancel it all, pray you make it to an age that you're able to withdraw it, (without massive penalty) let alone enjoy it.
What if we stopped worrying about a number in a bank account that will HOPEFULLY be enough to fund our remaining years? What if we begin to focus on not only "getting by" in our 60s, but to enjoy wealth NOW?
Which brings me to the core of this discussion and the primary purpose of this blog. The conventional notion of retirement, dictated by the system, underscores the critical importance of achieving financial independence. By attaining this milestone, not only do we gain greater autonomy over our financial stability, but we also hold the power to determine when we bid adieu to the traditional workforce and establish the level of income needed for a comfortable lifestyle.
From the moment we step into our careers, we are conditioned to focus on our future selves, neglecting the life we desire to live in the present. Could this be a deliberate tactic to keep us trapped in the employee mindset, rather than empowering us to seize control and shape the quality of life we truly desire?