Average Joes Deserve to Retire, Too

I originally wrote this post in November 2011, around the time of Occupy Wall Street. On some level, I miss Occupy Wall Street, because I hate the idea that you are not supposed to talk about finances in “polite company”. I hate the fact that we are all so busy keeping up appearances, that we let those appearances drown us in debt, or make it next to impossible to retire. It was refreshing (to me) to have a time when the country was actually focusing on our collective financial health. This is also part of why I love Alexandria Ocasio-Cortez – not because I agree with everything she says, but because she is putting our collective financial health back in the spotlight.

While this post was written with the spirit of Occupy Wall Street in mind, it was also inspired by a post written by Derek at Buck$ome Boomer.

I have updated the post a little, trying to keep it relevant, but the meat of it is still the same. The American Dream is not just about the picket fence and the 2.6 kids, it is about the ability to retire, to spend time with your 6.76 grandkids, to travel, and enjoy a period in life where you are no longer worried about earning your money, but how much you are going to leave behind. And I fear that part of  the American Dream has moved out of reach of a lot of people.

The conventional wisdom is that in order to truly gain wealth, you need to be an entrepreneur. You need, as Derek says, to start a business that does not need you. Even in my own life, we have looked at the possibility of buying rental property, because for so long, property has been one of the tried and true ways to earn income that does not necessarily need you (or at least does not need you 8-5 every day).

But the majority of us will never own rental property. Some will never own any property. Most of us are not cut out to be entrepreneurs, and honestly, if everyone stopped working for anyone else and just ran their own businesses, our economy would completely collapse. Our economy needs workers. If you are an entrepreneur who wants to create a business that does not need you, then you need employees. And I do not believe that the only people who should get to retire are the ones that own the business, or even the workers at the very top of the business (because even Jack Welch was working for someone else).

I do not believe that I am doomed to a mediocre life because I work for someone else, and no one should be. With the collapse of pensions, with the idea that everyone’s retirement should be invested in the stock market (which yes, over 30 years has good returns, but what happens when it is time for you to retire and the market is in a major down cycle?), we have endangered the retirements of the vast majority of our population. Working a job should not mean that you must work that job forever.

The purpose of Social Security was to prevent our seniors from living without heat, from going without needed medical attention. However, it was not meant to support people for 20-30 years, and yet, it is what many folks are depending on.

Some of the ways that employers are getting around this is making contributing to the employee retirement plan non-optional. I work for the state. They determine, based on my age, how much of my income I must contribute to my retirement account. I can choose to contribute more, but I cannot choose to contribute less, even if contributing less would prevent me from losing my house or my car. I am also not allowed to borrow against my state retirement. Because they want me to be able to retire – but at the expense of my ability to meet my current needs. (Okay, for me, I can meet my current needs just fine, but that is not necessarily the case for everyone.)

And this is actually the problem with a lot of jobs, with people who are living from paycheck to paycheck. It is not that they do not understand investing or even compound interest. They understand that $1 today can become $5 or $10 down the road. The problem is, they do not have that $1. Or, they have $1, but that is really all they have, and that does not meet any threshold for investing. Even if what they have is $1 every week, that is only $52 dollars in a year, and that is a really depressing savings rate, so depressing that it seems pointless. They might as well spend that $1 they have one something they enjoy now – like going to a movie once every 5 months.

But if your choice is between having the house in the better school district, to give your kids a better education, or having a few extra dollars to throw into the retirement fund, most parents will choose their child’s education. In a sense, their children become their retirement fund (and that is not really healthy for anyone).

Micro-investing is one of the ways to get around the $1 problem. But it does not get around the problem of quality of life today vs quality of life tomorrow.

There is also the FIRE movement, which is, on some level, about sacrificing quality of life now (in terms of living way below your current means), in the hopes of being able to have a longer tomorrow, but still, at exactly what quality of life?

I support my friends who want to be entrepreneurs (though most of them work harder, with longer hours than I do, with no employer match, or any retirement investment). I support my friends who are working toward FIRE. But neither of those are actually solutions for the majority of the American people.

Do I have the answers? Do I know what we need to do so that the Average Joe has the opportunity to retire? Honestly, no. But I do know the answer should not be that only those who got lucky with their inheritance or their own business should be the ones who have the opportunity for financial freedom. I do know the answer should not be that we have to sacrifice the now completely for the hope of a future.

As a society, we need to be having the conversations. We need to be able to talk about finances on a macro and micro level. Is it government’s job to fix all the income inequality out there? Probably not. But it is the government’s job to examine our societal safety nets and make sure they are actually catching the people they need to catch.

And outside of government, what we can do is to stop being afraid of talking about finances. We can teach our kids how to balance checkbooks, and what compound interest looks like. We can talk about how we manage our finances, how we choose to spend our money. We can talk about how we are saving for retirement.

We can share our financial choices – why we choose to work for someone else, or why we choose to run our own business, or if FIRE really is for us. And we can understand that our choices are not the same as other people’s choices. We can respect those choices and still, in increasing our collective understanding, help each other succeed.

Average Joes and Janes deserve the chance to retire without needing to take on a pat time gig in order to keep the lights on or put food on the table. And we as a society have to figure out how to make that possible.

The other fun note about this original post was that it is how I met my friend Joe. At the time, he was blogging anonymously under the moniker Average Joe. He is no longer anonymous, and if you are interested in at least starting to listen into the conversation about finances, I highly recommend his Stacking Benjamins podcast.