Conventional Retirement is a Plan to be Poor
According to the Social Security Department, the average benefit in 2018 will be $1,404 a month.
This is equivalent to having an $8 per hour job.
Originally sold as a temporary program, it has morphed into a permanent government retirement plan that tens of millions of our senior citizens rely on.
Nearly half of the unmarried persons who receive Social Security completely depend on it for their income.
Like most things in government, though, it’s completely broken, and the only reason it hasn’t completely imploded is that the Treasury Department has suppressed the real inflation rate. If the government actually paid a real cost of living increase, according to economist John Williams, the average Social Security check for 2018 would be $2,041 per month, 45% higher than what seniors receive today.
Today, 56 million people receive Social Security, but as the boomers continue to retire, this number will climb to 88 million by 2035.
In 1945, 42 workers supported every 1 retiree. By 2035, that number will be down to 2:1, and that’s with the government assuming the labor force participation will be the same as it is today (think robots).
There are equally horrendous numbers for the other conventional retirement plans.
*** 41% of Americans have no savings at all! Not even enough to cover a $500 emergency.
*** Pensions across the nation are on the verge of bankruptcy.
*** 401(k)s have proven to be a failed experiment for savers, destroyed by fees.
The truth is that the strategy for a conventional retirement is failing.
It’s an unworthy objective.
Prior to the 20th century, this idea that you would live some carefree life and do nothing for 10 to 20 years didn’t exist.
In fact, for the vast majority of the population on planet Earth, this is still the case.
So what’s a financial plan worth living out? I think it’s a very simple plan, and if you want, you can still retire.
1. Do something you enjoy for a living.
If you have to work through your 70s, so what – go enjoy the day working.
2. Create multiple streams of income in your life.
Generate enough passive income to pay for your basic monthly expenses. This, by definition, is true financial independence.
It’s scary when you actually read into the entire idea behind these tax-deferred retirement saving plans, like a 401(k) or IRA – they are plans for poverty.
They assume you’ll be at the lowest tax bracket at the age of 65 and that you’re an idiot that will have NO other sources of income. This is just horrible planning, in our opinion.
3. Live a sustainable lifestyle.
Scrap the idea of the debt fueled lifestyle when it comes to a car, education, and other things that, if you truly need, don’t require any financing.
Summary: The energy and effort aimed at a conventional retirement is a mistake, in my opinion.
Instead, focus on living a happy, sustainable lifestyle, with multiple streams of income. Be an aggressive saver and look for cash-flowing investments that will give you the peaceful financial security we are all looking for.
Legal Notice: This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.