Alternative ways of thinking of retirement

[TexasHusker]

Not everyone has an inclination or opportunity to run their own business. Look how many jobs there are out there that are JOBS. And in modern society it is not feasible for everyone to be a business owner. By definition there needs to be more workers than owners. But all of them will need to retire some day. Or will not be able to work any longer. What is the solution for them? For example what do you think your employees should do and how are you helping/encouraging them? Or do you think they are just idiots for working for you and they should not be doing it?

There is certainly nothing wrong with being a W2 employee; I did it most of my life. I think a better path to a comfortable retirement for W2 folk is working to find alternative income streams right now. There are all kinds of opportunities in real estate - single family, commercial, storage, apartments, land, rehabs, and so on.

I don't know if that qualifies you as a business owner by your definition, but it does by mine.

To your point though, I do think you have to own stuff to get much of anywhere, unless you save your arse off and foresake everything else for 35 years, and have some luck and timing. Technically you own a microscopic part of something when you have mutual fund share. In fact you own hundreds of little somethings. Unfortunately most of those little somethings are very mediocre companies, with paltry earnings.

[rennigade]

There are all kinds of opportunities in real estate - single family, commercial, storage, apartments, land, rehabs, and so on.

I don't know if that qualifies you as a business owner by your definition, but it does by mine.

97 would disagree with you. He retired at 39 and owns several properties.

To your point though, I do think you have to own stuff to get much of anywhere, unless you save your arse off and foresake everything else for 35 years, and have some luck and timing. Technically you own a microscopic part of something when you have mutual fund share. In fact you own hundreds of little somethings. Unfortunately most of those little somethings are very mediocre companies, with paltry earnings.

My portfolio would disagree with the paltry earnings

[ThinkingCapital]

Interest rates are low and many salaries are not increasing with inflation. This makes it tough for people to save and doesn't give them much incentive to do so. Retiring, unfortunately, won't be completely realistic for many people. A lot will have to keep working, at least in some capacity, long after "retirement age."

[TexasHusker]

97 would disagree with you. He retired at 39 and owns several properties.




My portfolio would disagree with the paltry earnings

If you are content with your earnings, keep doing what you're doing.

[Nika]

There is certainly nothing wrong with being a W2 employee; I did it most of my life. I think a better path to a comfortable retirement for W2 folk is working to find alternative income streams right now. There are all kinds of opportunities in real estate - single family, commercial, storage, apartments, land, rehabs, and so on.

I don't know if that qualifies you as a business owner by your definition, but it does by mine.

To your point though, I do think you have to own stuff to get much of anywhere, unless you save your arse off and foresake everything else for 35 years, and have some luck and timing. Technically you own a microscopic part of something when you have mutual fund share. In fact you own hundreds of little somethings. Unfortunately most of those little somethings are very mediocre companies, with paltry earnings.

That is a highly dangerous view - that you need to "forsake everything for 35 years" if you want to plan retirement in a traditional way.

As for mutual fund - if you get a broad one, you are owning a slice of all the companies, basically a slice of the economy. It is self cleansing and, as it represents the economy, would by definition at least match the inflation over several decades. (In reality it is likely to beat the inflation).

[DaveInPgh]

How I wish that were true. Earnings haven't come anywhere close to keeping up with inflation. That's a big part of the squeeze on the middle class. I've certainly experienced it personally. My income has been flat for years and years.

Same here

When I originally created my retirement spreadsheet, I felt I was being conservative by using 3% for my annual increase in my calculations. Historically to that point, I never had anything below 4.5%. My last 8 increases are listed below, and those increases reflect an employee who has had good to great performance ratings. So the increases are not a reflection on my work. They are in line with what others get. If we weren't aggressive savers, we would be screwed!!!

Year Increase
2009 0.00%
2010 2.00%
2011 1.77%
2012 1.80%
2013 1.54%
2014 1.54%
2015 1.64%
2016 1.99%

[disneysteve]

My last 8 increases are listed below

I'm jealous. I wouldn't be complaining about numbers like that. I wish I had gotten raises every year like you have.

[Fishindude77]

I can't speak to your particular situations, but we have a few employees that are topped out at the top of the pay scale and they can't really earn anymore unless they are willing to take on additional workload or responsibility, which they don't want.

they are getting fair market compensation, and about all we can do beyond that is periodic cost of living adjustments.

It's a competitive situation out there and you can't under pay for fear of losing the employee, or over pay for fear of not being competitive.

Luckily, inflation has been pretty minimal for a few years.

[TexasHusker]

That is a highly dangerous view - that you need to "forsake everything for 35 years" if you want to plan retirement in a traditional way.

I agree. I came to the same conclusion at about age 40. 15 years late but oh well.

[LivingAlmostLarge]

We haven't discussed risk with owning your own business. What are you doing for non-employer provided health insurance? Did you start out with debt from college? Did you have savings? How did you mitigate risk to start the business?

Starting a business has it's own risk. one that you have to measure. What is the ability of the person to jump ship and go back to corporate if it fails?

Or as a landlord, how long did you keep your day job before you went full time? How long did you have an income safety net outside of the rentals?

If small business is so easy to be successful then everyone would do it. I think Nika's initial point that people are finding it hard to get motivated to save and get ahead is valid.

[97guns]

i prefer rental income over a small business income unless the business is service based, i see too many risks involved with a business. i once thought about a resturaunt but after crunching the numbers i would have to sell something like 1000 lunches every month before i put a penny into my own pocket and that us just too much work to be doing for someone else such as the landlord. start up costs can send you in a death spiral quickly

rental income is a business with fantastic tax sheltering and rents move in tandem with inflation/cost of living

[Nika]

Reading these boards you would think that all our society needs are landlords and small business owners. We don't need lab technicians, nurses, teachers, web developers, maintenance workers, supermarket staff, etc... Or, those people do not need retirement or savings.

Can you even entertain ideas outside of tunnel vision of "I do this"?

[GoodSteward]

Reading these boards you would think that all our society needs are landlords and small business owners. We don't need lab technicians, nurses, teachers, web developers, maintenance workers, supermarket staff, etc... Or, those people do not need retirement or savings.

Can you even entertain ideas outside of tunnel vision of "I do this"?

Yeah, that is like saying "everybody needs to buy a used car!" Well sure, it is more sensible when you factor in the decrease in value, but someone has to buy new for us to buy used. I also felt the same way reading a vitamin brochure. The way they mention what each thing does it makes it sound like you can't be healthy unless you are taking everything in there.

I heard the same thing in Primerica, that the only way to build wealth is to be in business (they are setup to make you a business). It might be true that business owners can make more money, but I've witnessed first-hand someone emptying all 300k of their retirement to start a business, just to go broke a few years later. I've also heard that when you factor in all the overhead, the avg small business true bring home is more in the middle-income range (50-60s). And a small business owner has a lot of responsibility to run it, too.

Maybe most people just enjoy working at a job, and going home letting someone else figure out how to run it. You don't have to make a lot of money to retire happy.

[TexasHusker]

Reading these boards you would think that all our society needs are landlords and small business owners. We don't need lab technicians, nurses, teachers, web developers, maintenance workers, supermarket staff, etc... Or, those people do not need retirement or savings.

Can you even entertain ideas outside of tunnel vision of "I do this"?

If you own a mutual fund share, you're a business owner.

[FLA]

Even truer for someone in the lower/working class.

I'm lucky to see a 3% raise and that doesn't even match inflation, so effectively I'm working more for less each day.

I suppose you could argue that I should take out tens of thousands of dollars in student debt for a 4 year degree, but the unemployment rate of college graduates is nearly double the national average.

Well, why not a 2 year certificate from my local trade school? I have looked into it. I was going to go for phlebotomy - until I looked up job postings. One opening in my city for 13 hours a week (4 separate days) and one other part time job (30 hours) 40 miles away in a neighboring state. Then I looked into plumbing and electrical engineering. Both start as apprentices for a couple years earning $13 an hour. At $13/hr I would be taking home as much as I am now, because currently I can get Medicaid ($300 monthly value for FREE, with NO DEDUCTIBLES!)

Something has got to change in this country. There is more than enough to go around. Doctors and lawyers aren't the only essential jobs. Someone has to wait tables and drive the taxis.

I agree with you. What did you end up doing for a career? I am shocked phlebotomists aren't in higher demand.

I have a son who decided college was not right for him right out of HS. He worked like a dog this past year and is going to luthier school, a trade program to learn to hand make guitars. He saved his own tuition and is aware that there is not high demand for luthiers out in the cold hard world. But it's only 6 mos and he wants to take a stab at it.

I feel for the millennials, it's not easy to get your foot in the door these days