Personal Finance - Part 2

This is the second installment in a three-part series about personal finance for the conscious green Edmontonian. It will cover:

  1. day to day finances
  2. retirement
  3. investments



Freedom 55. You may remember the phrase as part of a brilliant ad campaign (not sure if it’s ongoing) that promised a millionaire’s life upon turning 55. Just follow our advice…invest in us…this could be you.

The meaning of the word retirement has changed dramatically in the past 75 years. Pensions were first introduced in Canada in the early twentieth century. My grandparents became eligible for Old Age Security and the Guaranteed Income Supplement in the 1960s, sources of income that kept them and other pioneers and homesteaders from the Slave Lake region going through the 1970s and 1980s.

But these hardworking people did not “retire”, as we have come to know it. Most of them worked in some capacity until they were no longer able, and work was a source of pride and joy rather than a grinding burden.

These days, we have put idleness on a pedestal. Retirement seems to mean the time in your life when you lounge about all day. That may seem tempting when viewed through the screen of our Blackberry as we answer our fourth work-related email of the day at 7:20 in rush hour traffic.

But I don’t think that doing nothing every day (or golfing every day or sitting on the beach every day) is all it is cracked up to be. In fact, I think that having no work to do, ever, would spoil most leisure activities. People need the satisfaction of contributing to those around them.

The worst part is that we have become retirement slaves. Our financial planners tell us that we need $1,000,000+ dollars in order to do nothing all the time when we retire. So we invest in the stock market, continue our 50-hour/week jobs and demand that the economy keep growing until we cash out. We can’t afford to not invest in coal and mining companies because, after all, we need to hook up with that beach time when we’re older!

The New New Retirement

I propose a new new retirement. It begins sooner and lasts longer. And it includes the positive stress and fulfillment that meaningful work can provide.

If one plans to work to some degree as long as one is able (there are many possibilities, from seasonal part-time to working only during tax season to straight volunteer work), the savings requirements for retirement become drastically reduced. This allows one to work less today because tomorrow isn’t so demanding.

Retiring the new way goes something like this:

Throw out the notion that spending the rest of our lives in an all-inclusive resort upon retirement is really living. I for one would be fat and listless within months.

The next thing to do is take control of our money and therefore our working lives. I’ve already recommended Your Money Or Your Life for help in doing that. Embracing voluntary simplicity allows one to depend less on wages, and to therefore cut down on paid work much sooner than retirement age, if one so desires. My wife Rechel and I joke that we’re semi-retired now because we work part time (other parents of young kids will understand why we think that’s funny). Even when our kids become less demanding of our time, though, we don’t plan on working again (for money) for 40+ hours per week if we can help it. Our “retirement” has begun.

The final thing is to decide on something else to do with our money besides the futile pursuit of becoming a retired millionaire through the stock markets. I’ll talk about that next time.

While this post may not seem to directly relate to living greener in Edmonton, it’s my opinion that the utter dependence on the stock marker that our view of retirement demands is one of the primary drivers of the earth’s destruction. My final post in this series will discuss why investing in the stock market is unnecessary and dangerous, and what my family has decided to do with our money instead.

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