Episode 018 - The Retirement Myth

We’ve been programmed into thinking about saving for retirement like it is a ceremonial event throughout our working lives, and that if we don’t do this we are doomed to live on the street, in a cardboard box, or die early. I’m going to dispel some of these myths and explain some alternative thinking you might want to entertain in this episode.

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Show Notes

Show format for 2020.  We remodeled our home, I rebuilt my recording studio & office, going to bring a looser, more content, more personality, more passion.  Interviews are coming too...

iTunes reviews: 

Great content. Worth listening to.
Great content. Worth listening to.
Spankme1000 via Apple Podcasts ·United States of America ·12/26/2019


This is riveting stuff. I love how the presenter gets real with how the world works, and offers a lot of great advice and information on how to master it. Financial Sustainability is a wonderful concept and I'll be looking forward to more information on this important topic. Keep up the great work!
k0d3g3ar via Apple Podcasts ·United States of America ·12/10/2019

Great info!

Great content! Myles keeps it real in the topics he talks about. Thank you Myles, looking forward to more! Brad
Bradley34 via Apple Podcasts ·United States of America ·11/20/2019

Solid podcast
Myles presents his topics in a methodical way with personal insights which are enjoyable and educational. His topics and core beliefs naturally echo with me and his extended thoughts and observations of the world (plus years of experience), are helping me to cement my own thinking and articulation of ideas and the world around us. Thank you Myles! Found via Joshua at Radical Personal Finance.
Barney (Photographer) via Apple Podcasts ·Great Britain ·11/13/2019

Core content

I’m going to cover a bunch of financial stuff in this episode, and I need to give the standard caveat here - I don’t know your personal financial situation, I’m not a personal finance consultant or a licensed practitioner.  This is general information on how I live MY life an how I make financial decisions to live an unconstrained lifestyle.  It works for me.  There is no guarantee it will work for you because you are not me.  So if you want professional advice, talk to your CPA, accountant, etc. and let them give you their side of the story.  Its highly likely it will NOT be mine.  But I’ll start with sharing my side of the story, and why you might be interested in considering it.  Remember I’m a contrarian.  I’m not like everyone else.

Onto the subject of Retirement

Let’s first set the stage for some basic statistics in the 21st century:

The US average life expectancy in 2016 was measured at 76.1 years for a US male
Life expectancy, despite popular thinking, hasn’t gone up that much at all
In 1980, US male life expectancy was at 70 years - up only 6 years on average over the past 36 years
Yet healthcare expenditure has risen 20x over that period
The US is ranked #43 in life expectency, with Hong Kong at #1 (81.9 years)
The general protocol (life protocol) that is preached throughout the financial, insurance and govt industries are that you go to school, work until the age of 65, and then retire for your “golden years”
Yet if we look at these statistics, your golden years will be 10 years long
The BBC published a paper attributed to aircraft-maker Boeing that showed that employees that retired at 55 live on average to age 83, but employees that retire at 65 only lasted on average another 18 months
This paper has been widely disputed, but mainly by those in the financial industry, and typically by those who have an interest in you working longer
I spoke with someone who used to be a CFO at a major defense contractor in Phoenix recently and she told me almost identical results to the Boeing study
Govt wants to raise the retirement age to 70 yet life expectancy and these studies show little or no rationality to doing this

So why is this happening?

US future entitlement obligations are unsustainable
According to MarketWatch, social security may run out of money in 2035
In order to calm the population who have been fed this life protocol for centuries, they are coming up with a bunch of “new math” in order to find a way to support seniors
This all results either in increased taxes or decreased efficacy of the $USD
And there is no wiggle room in there for any financial adverse events such as we had in 2008

Here’s an interesting task you should try.  Go to Google.com and type in “When will social security run out?”  Then look at the statement that comes up first (2035) and then read all the posts after it telling you not to worry, they can make this work, they have the money, you won’t run out of money.  Then look at who is writing that drivel and it is all the financial industry, financial pundits, AARP, SSI, etc.   Those that have skin in the game perpetuating mythology because a panicked public can’t be fleeced as easy.

Workers don’t have the power of unions as much these days as existed in the latter half of the 20th century
There isn’t anyone fighting for pension programs, in fact in the private sector many large blue-chip companies are dropping pensions entirely - e.g. GE

What about IRAs and 401Ks?
There are many good things about these programs - particularly protection in case of bankruptcy for individuals (check your local statutes in your region to see what is and is not covered here)
But you lose your control of the money to a “fund manager”
ROTH IRAs probably make the most sense in that you pay the taxes earlier, but the reality is any investment where you put your money into the hands of a third party means you lose control
In many cases, the returns are far lower than what you could do investing it yourself, but that comes down to the individuals skill and risk tolerance
However with US bond rates paying less than the current inflation rate, unless the fund managers invest in higher risk investments, they are having a hard time keeping in pace with inflation
Why?  Because your savings rates are so low because govt pressure on Fed Reserves to print more cheap money to keep interest payments down on existing debt means savers pay the price
There isn’t much sense in saving money given these circumstances

And that is what brings me to the myth of retirement

Those workers that embraced this life protocol are the most likely to be victimized by it.
Those on a path to retire early (FIRE) may find that they either can’t, or will be the targets of extortion to get their treasure by govts that need to continue to perpetuate the life protocol formula

The popular thinking of taking advantage of employer matched 401K that is “free money” is a deal with the devil
It is more of a trap to have a job and never leave it, forgoing happiness for making others rich from your labor
And that 401K money may be tax deferred, but if you have to wait until the age of 65 or 70, statistics show that you won’t have long to enjoy the money anyway

The sad truth here is that when you die, you are no longer a liability line item on a balance sheet to the govt, a pension, etc.  That’s not good for you - that’s really great for banks, govts & insurance companies.  Your life is yours to protect - not to defer to a third party that doesn’t have your best interests at heart.

Let’s get serious with biology & humanity
Despite the ferver of religions to provide some path of positivity after death, the reality is we all fear death, and that is probably what drives the majority of us to religions
For most of us, death comes too soon
But the longer your exist, the more resources you need and consume
World population is currently at 7.3 billion, but this has doubled since the day I was born, and will likely surpass 10 billion by 2050.  Yet the planet’s resources are finite and the pollution of our human race appears to be taking a toll on climate and nature to the point where it is becoming less comfortable living on this wonderful planet.  I’ve written about this before, but I don’t believe that climate change is a problem directly, but world population growth (that then results in climate change) is the root cause of the issues we are facing.  Yet no one will talk about that topic, because it is anti-human.

We’ve never seen this level of increased population, mainly due to medical advances helping the emerging world, but not really helping the USA (1980 vs 2016 statistics)
The early demise of many that was common 100-200 years ago has generally been reduced due to vaccinations, preventative medications, etc. but this puts further and further pressure on seniors and their finances
So more of us get older, but not necessarily that much longer in life
And more of us need more healthcare in our final quarter which puts further cost burden on those that have to provide it
That means the younger have to pay more in premiums, whether directly or through their employers
If that isn’t something that they want to hear, it surely isn’t something any political candidate will make a part of their campaign strategy.  They will talk “Medicare for All” but although that has a great appeal from a humanitarian perspective, the reality is they can’t afford Medicare for Seniors right now, so how can they make that work if you have 5x as many enrollees?  The only way is to reduce the service levels down, and put further pressure on healthcare providers to slash their costs.  Considering just how uncompetitive the US is when it comes to healthcare, that would be my focus.  But meanwhile that doesn’t get votes - make healthcare more affordable isn’t something being championed as a rallying cry or a slogan on a baseball cap in this year of federal elections.

We embrace this fiction that saving for our retirement should be Job #1, even if it means deferring that money now, when statistics show 78% of us are living pay check to pay check, and need that money today.

We defer income until we are physically unable to enjoy it
Traveling is hard on the body - walking 10,000+ steps per day, etc.
Try going to Europe and realizing just how hard that is on the body
How can you visit the Roman Colleseum if you have a bad back?  Or climb Mt. Kilimanjaro?
How can you climb Machu Pichu?   How can you explore castles in Ireland with a bad hip?

And more and more of us in the west are obese due to fast foods, living in a cubicle on our asses all day, bad eating habits from work obligations, stress, etc. and this is reducing our biological lifespan by 10 or 20 years.
With this, how could you ever get to enjoy your 401K?

Well you could take it early and pay taxes on it then, and a 10% penalty for doing this (check with your CPA as to the actual costs)
But then people start panicking that they have nothing saved for retirement.

A bird in the hand, however

Retirement savings is just another way that employers constrain you
They do it with health insurance and they do it with retirement plans
Thankfully they are under strict regulation by the govt to behave, however you know why they are under those regulations....  Because the govt doesn’t want you to be their obligation

So how does the unconstrained approach this problem?

Simple.  You don’t retire because you start an early path to Smart Income.  Then you stop working once you have enough sustainable smart income coming in that is hedged to inflation

By doing this, you avoid the need to save for retirement.  Your assets generate monthly dividends like your pension would have paid you
And they are tied to inflation - e.g. if you own rental real estate, rents rise with inflation protecting you
If you owned a laundromat, you would put your washer prices up 

And the argument that it takes physical energy to attend to assets is not plausible if you apply the Smart Income filter rules.

Funny thing is that many retirees like to start a garden and attend to it, because we humans have this in our DNA.  Instead of planting a bed of flowers and watering them, weeding them, etc. how about planting a bed of rental properties in your early years and attending to those?

The reality is that if the goal is to provide cashflow in your senior years, it is better to own assets (particularly those that are going up in equity value) that pay those dividends to you, than to rely on a govt that may not be there for you, a corporation that could drop the pension program at any moment, or Wall Street index funds that could crash and lose their value at any time.  And savings and bonds?  As they say in New York, “forget about it”.  You can’t keep pace with inflation at current rates.

So to those that are saving large percentages of their income with their goal of “FI”, I say this....

You are just trying to perpetuate retirement early because you probably don’t like the obligation of having a job, being away from family, etc.  Retiring early is great - you will get to travel and do things that a 65 year old may be physically challenged in doing.  Those experiences will stay with you for the rest of your life.  But you need something to do afterwards.

If you start a business, you will need capital to do it.  If you start a new hobby, that will cost money.  Life costs money.  That’s how it works.  You need a way to generate that money without physical labor.  Financial Sustainability provides a path to that, but putting all of your faith in just saving money and putting it into various investments may not end well for you, once you lose control of that money to a fund manager, govt, bank, etc.   Imagine how you would feel if you had your money in Lehman Brothers in 2008.....

You have a life ahead of you to learn about money, business, capitalism, assets, etc.  You can waste those years now by working hard and just saving, or you can begin to realize that in capitalism we are all businesses, and we have to grow up and act like one.  

For our families future.  Yes, you are ultimately responsible for you.  When you are on your eventual deathbed, you will come face to face with “what did you do” with your life.  Don’t have a tome of excuses.

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