Your Parents’ Retirement Strategies Won’t Work for You, but That’s a Good Thing

The following is adapted from Don’t Save for Retirement by Daniel Ameduri.

For our baby boomer parents, it was possible to earn a college degree and apply it to a relevant career field. They could remain with the same employer for thirty years, earn a pension, and be commended for their company loyalty.

By the time we millennials joined the workforce after the 2008 market crash, the economy we heard about no longer existed. We found ourselves in jobs we did not want, with debt we could not control.

The world has changed, and change can be both good and bad. In this article, I’ll talk about some of the unique challenges we face as a generation as well as some of our unique opportunities, including a new way to think about retirement.

The Bad News: We Have More Debt and Fewer Retirement Resources

As millennials, we have two huge problems we face as a generation: our nation’s public debt and our college debt. The first problem is largely out of our hands. Past generations voted for an unsustainable government and borrowed prosperity to the detriment of the present day. Social Security is a resource that millennials and subsequent generations will not be able to access.

Our college debt, however, is possibly the biggest burden we face as millennials. Universities raised the price of tuition to astronomical levels, and the government funded school loans with no expectation of payment while we were in school. Basic economics tells us that if the cost of behavior is removed from the consumer, reckless spending and a volatile situation present themselves.

At eighteen, students borrow money for tuition with little thought to their post-college years. Sometimes, they are overly optimistic about how much money they will make when they enter the workforce; other times, they are naive to the reality of loan repayment. Universities aren’t just businesses. They are smart businesses that charge their customers anything they want, knowing that the government will fund them.

Once students graduate, they face a large amount of debt that is sometimes equivalent to a mortgage. The first years of adulthood look bleak for many millennials, especially considering the fact that only half of all college graduates are employed at a job that requires a college degree, according to Forbes. Perhaps, they have a degree in software, but they work as a bank teller — this is an all-too-common scenario.

Graduates also face a volatile employment situation because many employers are struggling with the various government mandates and employment regulations that have changed the employment landscape. Decades ago, employers used to be able to hire employees for a service with no strings attached. Now, depending on the type of employee, they are legally required to provide healthcare and worker’s compensation. Retirement planning and company-matched funds may even be part of the employment package. From the employer perspective, employees are no longer a valid partner in the business.

The reciprocal impact is that the benefits many employees once experienced are becoming relics of the past. In the late 1970s, the 401(k) was introduced, followed by the IRA in the 1980s. Baby boomers were showered with new employment incentives and benefits when they first entered the workforce. As millennials, we are now on the other side of that. These programs and incentives have either crumbled, been drastically reduced, or been completely eliminated.

The Good News: Technology Has Given Us New Opportunities

While we have undoubtedly lost many of the advantages that our parents had, technological advances have given us new opportunities.

Being on the cutting edge of technology benefits millennials in many ways. We can, for instance, purchase stocks straight from our phone instead of setting up an appointment with a broker. We have countless investment choices, like crowdfunding, that were not options when baby boomers first started participating in the economy.

Thanks to the internet, the way we work has changed too. Many employers are hiring a new type of employee: the independent contractor. This rise of the freelance economy gives us more freedom and independence in our work. With a smartphone, tablet, or laptop, I can work from anywhere that has wireless, free of charge. We are a mobile generation, with the trend toward working from home only increasing in popularity.

And if you want to be an entrepreneur, it’s now easier than ever. Millennials, especially, are involved in new business ventures that did not exist ten years ago. People are writing profitable blogs, starting their own consulting services, investing in cryptocurrency, and selling products direct to consumers by going to GoDaddy.com and purchasing a domain to start their own website. Companies like Facebook, Twitter, Instagram, Snapchat, and YouTube are now huge vehicles for blossoming businesses and new entrepreneurs.

The old way of thinking tells us that if we want to start a business, we need a building and a product. For instance, twenty years ago, creating a viable newsletter would have required the cost of paper, printing, and mailing fees on a weekly basis. Think of the time and expense this would impose upon a tiny startup. Today, I can do everything online without the need for a large warehouse to protect everyone’s data, since I can easily use Google’s resources. I am able to benefit from the infrastructure of a billion-dollar server with all of its features and security, and I don’t have to pay a thing.

Rethink Retirement

Social Security is bankrupt, pension plans are on the verge of bankruptcy, and we are finally growing out of the idea that the stock market is a reliable place for our retirement dollars. Traditional retirement planning fails to deliver the financial security and fulfillment we thought it would, so it’s time to rethink.

Instead of planning a life you want thirty or forty years from now, start creating the life you want right now. Are you doing what you love to do, and are you putting money toward the people and the things that matter most? As millennials, we are good at reflection and self-introspection — let’s use this ability to figure out when we want to work, how we want to work, and why we want to work.

It’s time to stop thinking about retiring and start thinking about achieving financial independence. Once you set financial independence as your goal, you will never look at retirement the same way again. Working toward financial independence means building passive income rather than saving a large lump sum.

This strategy can allow you to retire far earlier than your parents did. For years, we’ve followed the retirement age of sixty-five because of Social Security, but now the rules have changed. In fact, there are no rules. We can no longer rely on traditional retirement strategies, but who would want to when we have such exciting new opportunities?

For more advice on how to rethink retirement and achieve financial independence, you can find Don’t Save for Retirement on Amazon.

Daniel Ameduri is the co-founder of the Future Money Trends newsletter and FutureMoneyTrends.com, which, with nearly 150,000 subscribers, is the most widely recognized online authority in investment ideas and economic advice. He’s been featured in The Wall Street Journal, on ABC World News Tonight, and on Russia Today TV. Daniel correctly predicted the collapse of Lehman Brothers, AIG, and Washington Mutual on “Vision Victory,” the YouTube channel which now has had more than thirteen million views.