2009-11-05: Change Now, To Benefit Later
Cicero said something similar in his famous essay on old age, "De Senectute," from which my father often quoted. Almost everything you have in your older years is by reason of having it passed down to you by your younger self. Your habits of life and health, your home, your family, your savings. So said Cicero. (That's alliteration, friends.)
This is a powerful lesson for us all. If we want to have a decent life in our latter years, especially with Social Security and Medicare nearing collapse, we need to accumulate while we are young. We most of all need to accumulate habits of sensible living -- and especially not spending beyond our means.
The young you can save money, teach the old you how to live sensibly and train the old you in decent habits of care. The young you might want to take a few minutes every day to imagine the old you, unable to work, possibly because of health, possibly because of the economy, and plan accordingly.
We run headlong into the future, not stopping to think about the fact that whatever we save today is what we'll have to live on tomorrow. We spend hundreds or thousands of dollars per year on entertainment and electronic trinkets. And by living so lavishly, we train our next generation to expect to live like this. Instead, we should be living in the smallest home that will meet our needs, insulating it, adding a garden in the backyard and solar power in sunny areas or wind power in windy areas. We should be diverting as much as we can to savings, eschewing spending on present-day luxuries in favor of providing for ourselves in the future.
Not that we should put those funds into banks, where they'll earn two or three percent if we commit to leave the money in there for years at a time (less than that if we won't make that commitment). Instead, much of that should be placed in federal savings bonds, where we can expect the funds to be repaid with a decent interest rate and to be secured from loss up to an unlimited value, for as long as the government stays in business. Perhaps some could go into stocks, into state and local government bonds, and into investing in small, locally-owned businesses (SLOBs), the engine of the economy and source of 70 to 80% of all jobs.
It is exceedingly difficult to imagine how rough things can get, but many who were born toward the end of the "baby boom" generation or in the succeeding generations will find out that our lives of luxury were bought at the price of leaving nothing to live on in our twilight years. Further, our corporate overlords have shipped almost all our production overseas, because of the much lower labor costs. When Social Security is gone and we can't even get jobs as greeters at that Big Blue Discount Store, we will be getting what we earned.
I know what you're thinking: "The government will not allow Social Security to go down". Not that you can live comfortably on Social Security alone, anyway, but you know better. Deep inside, you know that even the AARP cannot forever resist the population curve. Thanks to our modern economy that is not based around small family-owned farms focused around subsistence farming, people are finding the cost of having and raising children to be very high. Thus most couples use birth control and other measures to keep themselves from having large families. The time is coming when we won't have enough births to replace everyone who dies. Only immigration will keep our population from declining, and even that will only continue until neighboring countries get far enough with economic modernizations that fewer of them need to leave home and they also start having smaller families as a result of the changes.
There is a "hump" of baby boomers working its way through the workforce. It is now starting to reach the far end, where death and retirement pulls people out of the workforce. The size of this hump is such that it will only be a ten or twenty years before there could be two retirees for every three workers. I mention this because that's the time when supporting retirees could take half or more of a typical worker's income, and that's not counting all the other government agencies and programs out there that will require funds. Yes, Social Security as we know it is going to go down, and all the increases in withholding rates will do little to change that. It just isn't sustainable with the inverted population curve ahead of us. (You can tell I'm not a politician. You cannot get them to admit this yet. They won't admit it until the very day they vote to replace the present SS system, but any thinking person can see that they'll have no choice about it.)
Wherever you are, this is the time to start. Instead of spending hundreds of dollars on music and movies and dining out, join Netflix, Gamefly, or similar services, to keep your costs down while you eat your home-cooked dinners. Now, Netflix doesn't support streaming to Linux devices yet, so if I ever did have time for entertainment, I wouldn't use them. But you may not spend six to ten months per year working out of state or you may be using a supported platform, so their model may be right for you.
The days of eating out more than once or twice per month, likewise, have to end. Whether it is breakfast, lunch, or dinner, you cannot afford to give away money that you should be using to provide for your future.
Unfortunately, we are not teaching our younger generation this. I found that even providing the tools and the opportunity to train oneself in skills that could help earn more income does not motivate them to use those tools and the opportunity. They'd rather spend their time posting suicidal-sounding "emo" lyrics on social networking sites and moan about not having any skills to start a band than actually study and practice a skill. That goes for any skill, including guitar-playing, computer graphics, speaking a foreign language, or shooting a basketball, once they get to the point where they have to expend effort in not-very-enjoyable practice sessions.
The main point is that you and I must change what we are doing, or we can expect to join the ranks of those sitting at busy intersections with signs saying "homeless; anything will help". We also have to get it through to our descendants that they also have to change. At the rate they are going, they'll be homeless before we will. They will then try to come home, without dealing with their spending problems first.
Think about this: you already know that your company job is in danger. You know that the management will try to give you the least possible amount of advance warning before they dump you and close their local operations. Why haven't you kept your resume updated and sent occasional copies to other employers? Why haven't those who have always dreamed of independence gone ahead and started doing business on the side when they are not at work? In general, it comes down to allocation of efforts. In order to provide for your future, you have to be active and you have to be watching for opportunities to change what you are doing--changing positions, changing employers, changing locations, changing professions, changing outside-of-work activities--and you have to be faithful in looking out for your own interests (and often those of your family and close friends).
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