The Financial Industry is Lying To You
In fact, it’s worse than that. The financial industry and the news media are in cahoots to keep you scared.
I know it sounds like a paranoid conspiracy theory, but hear me out.
The biggest lie they are feeding you is about the size of the nest egg you need to retire.
Why are they doing this? Money, of course. Greed.
When you look at headlines that say you need $1.7 million to retire, or whatever the current astronomical, unachievable number is, how does it make you feel?
Scared, anxious, hopeless.
These are the emotions that keep us engaging with the news. They are also the emotions that keep us shoveling money over to our advisors to invest for us.
The financial industry clearly has a vested interest in you over-saving. They get commissions when they sell you products, and they take a cut when you keep money in those products (for example, trailing commissions on mutual funds). This can be a deeper, more nuanced discussion, but you get the gist.
If you realize you might need only $700,000 or gasp $500,000, then the financial industry stands to lose money. That will never do.
They’d also like you to die with a lot of money still invested, because they have a chance of capturing the wealth of your inheritors as well.
If we can’t believe the news headlines, and can’t necessarily believe what our financial advisors tell us, then how do we know how much we really need?
The issue is complex. Retirement is, after all, a fairly recent invention. People used to work until they died, unless they became too infirm to do so, in which case the state looked after them.
We have bought into the idea that we must work really hard during our prime years and amass a fortune so we can retire and enjoy the spoils in our old age.
Does anything seem backward about this concept?
We need more balance in our lives. We should aim to work moderately in our prime years so we can also enjoy our good health, our young family, the activities and hobbies we enjoy pursuing, etc. At the same time, we can choose to live well within our means and save 10-20% of our income. This is difficult, especially in an era of high inflation, but not impossible for most.
Assuming you start young, and invest wisely, with the power of compounding, by the time you reach your late fifties, you could pull the plug on paid work, if you want to.
Hopefully, by striving for some type of work-life balance, you have reached this stage with your health intact, a variety of pastimes, and a family who still loves you…in addition to money in the bank.
Capitalism would have us believe that the only worthy way to spend our lives is to work very hard, hoard as much wealth as possible, and then finally quit work at 65.
The problem with this model is that if your life has revolved around work for decades, you will be depressed and aimless when you retire. Not to mention, your health and relationships have likely suffered. But hey, you’re probably well off financially, so there’s that.
More and more people are dying with too much money in the bank. This pile of unspent money represents pure waste - they worked too long and too hard and didn’t even get to enjoy their money. Perhaps they will have the “satisfaction” of passing it on to heirs or donating to charity, but it’s hard to be satisfied when you’re dead.
The media and the financial industry have cooperated to keep you at work as well. All the minions are needed to keep the corporations functioning and posting huge profits, so the money socked away in the stock market can keep growing. We are the hamsters powering the entire thing, because we’ve bought into what they told us.
What if we could reduce our desires and wants and live a life we design for ourselves, without the influence of our peers, neighbours, or marketing? What if that life actually cost a fraction of what we currently spend, and we could invest the difference, and achieve freedom much sooner?
What if our lifestyle is so satisfying, we have no need to spend beyond that, and through some basic calculations, we find out we could pull the plug on paid work long before we thought?
The less you need to consume, the less you need to save.
I’m not preaching an anti-consumer minimalist lifestyle (well, maybe), but I am suggesting you take a close look at your consumer habits. Do you get commensurate satisfaction from the financial outlay for your purchases? What is driving you to get the latest or biggest this or that?
The frantic, hectic life of the stressed out office worker has contributed to financial waste. We buy convenience foods or go out to eat because we are too tired to cook. We buy the kids whatever they want because we feel guilty for not being around or too stressed to argue about it. We buy the $5 coffee and $30 lunch every day because we don’t have time to make our own. We spend $10,000 a year to vacate our life on the two weeks we are finally unshackled from the desk.
Going out to eat or taking a vacation are not necessarily a waste of money. But when we go through the motions and act unconsciously or not in accordance with our real values, mainly because we are tired and stressed from our jobs, that is a problem.
The lies you’ve been told have kept you penned in. You believe you have to work too hard and for too long, so you can one day live the good life. You’ve been told to save too much, because that serves the people who have lied to you.
Stop reading the news, or at least stop believing everything they tell you.
None of us have a crystal ball that will tell us exactly when we will die. We will have to make adjustments as we go - the idea is to flow with the changes that will inevitably come. Nothing is permanent.
But some things are certain. If you burn yourself out, your health will suffer. If you neglect your relationships because you work too much, they will deteriorate. If you don’t develop your spiritual side because you’re busy worshipping at the altar of accomplishments and money, then you will feel empty and purposeless.
Like everything else in life, learning to be a good steward of our resources is a matter of becoming aware, and then intentionally raising your level of consciousness. This is a process that takes time, but will transform your life if you dedicate yourself to the pursuit.
It’s not just how you use your money, but your time, your words, your thoughts, your life.
Become a conscious user of money. When you become mindful, everything changes. If you’re conscious and mindful, you won’t need anywhere near $1.7 million in retirement to live a great life.
Besides, you would’ve been living a great life all along.
If this work enriched your life even a smidge, would you considering giving a modest tip?
Great article, thanks. It is implied in the article but I'd like to emphasize a parallel point we've taken to heart in our spending habits:
First off, we take vacations rarely, and usually don't go very far. The "goal" of a vacation can be achieved a mere 100 miles away, no need to go 5,000. They are also fairly short. The "goal" is usually achieved after 3-5 days. No need to be gone for two weeks. The return on investment is just not there in either case. If you had to pay by the minute to charge your phone, why leave it in in for a day when it's fully charged in an hour?
INSTEAD, we have stopped stressing about our groceries. We buy the expensive cheese/kombucha/nuts/cuts of beef because we enjoy them way more and it's only a few dollars' difference. We get that funny cat toy even though it's $30 because the fun we'll have watching them is worth it. So we always sort of feel like we're splurging without actually spending thousands for a week in a tourist trap.
Our culture has made such an unquestioned virtue out of travel. People scrimp in their daily lives all year long to save up for this precious little week. Not nearly enough is written about travel's negative effects. We say, skip Belize and get that juicy prime rib you're craving at the store.
Most people's biggest fear is healthcare. There's so much uncertainty in that area that it makes it hard to budget for.