Reimagining Retirement

September 12, 2022

In thrilling news: I recently finished the book, The Psychology of Money by Morgan Housel. I know, I know—I’m very exciting, ha! But in all honesty, it was a great read for a couple of reasons.

First, I was pleased by how well it fit into my other recent readings in the historical finance genre. I’m now up to speed on things like how index funds were developed and the history of the stock market. 

Secondly, it firmly cemented my desire to understand more about how and why things begin. Knowing this helps me better collect context around why we do things a certain way, and it simultaneously opens a space to consider how we can do them a bit better. What can we build on and what needs to be reimagined and designed?

A great example of an area of finance that needs reimagining: retirement.

Let’s take a step back for a minute and think about your current view of retirement. Now, this is going to be different for everyone; much depends on how you grew up and how you watched your parents retire or prepare for retirement. Here are three very typical components used to fund retirement. 

  • Pension – a retirement plan your employer pays out monthly based on a percentage of your income from when you were working. You either have this or you don’t. They’re extremely beneficial for careers in government, teaching, and the military, for example.
  • Social Security – was created to pay retired workers a continued supplemental income for life. How this works out for people is complex and needs to be planned out based on an individual’s unique situation.  
  • 401k or other employer-sponsored retirement plans –  retirement savings and investment plans that employers offer employees. Contributions are automatically removed from paychecks and invested in funds chosen by the employee. 

In the most generic scenario, you work until 65, and then retire. You have some combination of pension, social security, 401k, and/or personal savings, and you begin to live off that money.

Pensions were originally started for soldiers who survived the American Revolution as an income for life reward. It continued within the military and then became adopted by corporate companies as a tax incentive for employers to invest money for employees’ future retirement income needs.  The idea is simple enough; however, the reality is pensions are now scarce due to mismanagement and the overall societal trend to not stay with the same company for our entire careers. Pensions aren’t transferable between companies, so if you change companies before a determined amount of time with the company, you won’t receive that pension. 

Social security, on the other hand, was intended to be a supplementary payment and not designed to be enough to live off. Many who find themselves trying to survive just on Social Security payments struggle to make ends meet. It was only intended to be a piece of retirement income. 

These issues with pensions and social security, combined with other factors, have largely shifted the responsibility of saving for retirement from the government or employer to the individual.

We can’t depend on a company, or the government, to take care of us when we are done working. Instead, today’s workforce has realized we need to be more in charge of our own retirement—and they’ve started to do something about it.

401ks, developed just over 40 years ago, for example, were the first to allow workers to contribute to their own retirement funds, with or without matching funds from an employer. 

The ROTH IRA is also fairly new, created in the 90s, with parameters fully in the individual’s control—no employer involved. And of course, there are myriad accounts and investment funds optimal for personal retirement savings.

Why are people feeling able to define their own retirement plan, you might ask? I’ll give my most common answer: the Internet. We have access today to all kinds of information and can be instantly connected with people and businesses all over the world. This has led to new and creative ways to make additional income—often from your living room couch. Think how easily you can manage an investment property from your smartphone.  We have new options, opportunities, and responsibilities.

This leads me to consider if we, as a society, are due for a new phrase. 

Maybe we should swap the term “retirement” for “financial independence.” 

With the responsibility of post-career on our own shoulders, we now have the option to decide for ourselves what 65+ looks like. It’s no longer a euphemism for irrelevancy or doddery Jeopardy reruns. Let’s think about what we want to do later in life. How do we want to stay relevant, to make an impact and continue to contribute to our communities?

The answer: saving now.

Over the 15 years in my career with my dad, we have worked mainly with people who are in the process of retiring. They’ve worked and saved. And without fail, almost every person says: “I wish I would have saved more when I was younger.” 

Saving more earlier is the key to investing, to gaining financial independence on your terms.

And the more you identify what you’re saving for, the more you’ll actually do it. Take things a step deeper and break down what you are saving for in your “financial independence” bucket. This is where you can think about what you want your retirement to look like. It doesn’t have to be golfing every day, traveling the world, or even trying to “beat the system” by retiring at 45.

It could be gradual. Maybe it’s pushing through the work now, with the goal you could become a consultant or start your own business with all your experience. You could bring in an income on your own terms and work from wherever you choose. When we think about saving and retirement more broadly as “financial independence,” we can dream bigger about where we want to go. 

We don’t have to be reliant on changing economies or employers to define our golden years—whatever they may look like. Instead, you can make decisions today with an eye toward the future, and it doesn’t have to be so far away. 


The opinions expressed herein are those of Anna Nelson and are subject to change without notice. This material is not financial advice or an offer to sell any product. Forward-looking statements cannot be guaranteed. This document may contain certain information that constitutes “forward-looking statements” which can be identified by the use of forward-looking terminology such as “may,” “expect,” “will,” “hope,” “forecast,” “intend,” “target,” “believe,” and/or comparable terminology. No assurance, representation, or warranty is made by any person that any of Anna Nelson assumptions, expectations, objectives, and/or goals will be achieved. Nothing contained in this document may be relied upon as a guarantee, promise, assurance, or representation as to the future. Anna Nelson is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training.