The 401k Retirement Plan.
Much has been written about the 401k retirement plan since the passage on November 6, 1978 of the United States Revenue Act of 1978. Since the passing of the Revenue Act, the 401k plan has become the primary savings vehicle for American workers. The 401k goal is to accumulate sufficient capital to subsidize Social Security while providing for a sustainable standing of living in the final chapters of our lives.
To even consider the idea of having a carefree lifestyle, the accumulation of sufficient savings is paramount. The fact that many Americans are falling short is common knowledge. There was a time in the twentieth century when American workers could invest their time and energy with one company during their working lives and know that Social Security and company pensions would provide a sustainable standard of living long after they were no longer able or willing to work.
Today more than ever, the landscape is much different. For starters, living in today’s environment is expensive. Housing, transportation, healthcare, technology, education, food, and entertainment expenditures all command a larger share of our wallet. Today, Americans are bombarded with marketing ads through social media, emails, television, and sporting events. These advertisements work by playing on our emotions and lead us to believe that the quality of our lives and inevitable happiness depends on the very products that are being sold. Our banking system provides the needed credit to help make our dreams a reality. Today, Americans are carrying more debt than ever before. And lastly, the media has widely reported that wages in our country have been stagnant since the passage of the Revenue Act of 1978.
What is the answer? There are no easy solutions to complex challenges. Books have been written and make the argument that our current system should be replaced with something more like a national government pension system. How our current system will change and evolve in the future is uncertain.
What is true for me is that I personally have complete disdain for this term “retirement”. The retirement mantra is constantly touted at every turn. ‘Retirement this’ and ‘retirement that’ is relentlessly heard in advertisements by the financial services industry. Is the industry really concerned about our well-being or do they just want our money in order to charge fees?
Have you ever looked up the definition of the word retirement? What is interesting is that every time I ask someone this question, the answer is always no. According to the Merriam-Webster (Unabridged) Dictionary, the definition of retirement is:
1) An act of retiring or state of being retired: such as a:
- a) Falling back
- b) Withdrawing into seclusion or retreat
- c) Withdrawal from office, active service, or business
- d) Secluded condition or state; withdrawal form society or publicity
2) A place of seclusion or privacy, a place to which one withdrawals or retreats
For someone that worked hard labor for forty years and is just absolutely worn out, I support the retirement concept of being able to withdraw into seclusion or retreat. But for most of us in today’s world? Really?
What if the old paradigm of retirement is reframed with a new mindset of reinvent? That’s right, reinvent. You decide how much you are willing to change, even to the point that you may appear like an entirely new person. Think about it! Pay off your debt. Save up some cash so you can pay cash. Simplify your life. Discover the new you. Stay engaged with something you are passionate about, something that gives your life connection, purpose, and meaning. And stay engaged by giving back while getting paid. Continue to reinvent yourself until the very end!
