This is what happens in a country where everyone is told that someone else is responsible for their welfare, whether it is the government or their employer. Years ago when I started working for myself I would constantly get the question from my friends who had "good" "secure" jobs with lots of benefits (they'd always insist these benefits were "free"). The question always was, how could I deal with the uncertainty of not knowing how much I was going to make every year? I'd tell them they had the same uncertainty, they just didn't realize it yet.
Like most small business owners, my income has varied enormously year to year. I pay for my own "benefits", namely health insurance, disability insurance and pension (at least I know exactly what they cost and I control the assets). I'd sit down and explain to them how I dealt with it, by living on half my after tax income and re-investing the rest because I believed that my investments would eventually outstrip my ability to grow my income. People's ability to grow their income usually levels off after 45 so you have a limited time to grow out of things like big mortgage debt or student loans.
Then I'd very patiently explain to them, this job which they had which they thought of as "secure" wasn't the slightest bit secure because companies don't last forever, in fact very few do. Government guarantees don't mean much either. The guarantees were made by people who may not have their own job in 10 years let alone, 30 years.
I was unemployed as soon as I finished the last job on my desk, at least I knew when I would be unemployed, it didn't come as a shock. I have no unemployment insurance other than savings and investments (and the spouse).
Between 2000-2002 my income dropped to a 3rd of what it was in 2000. I had to retrain to do something quite different from what I was doing in 2000. I'm not going to say that it wasn't painful, but it turned out to be one of the best things that ever happened to me because it got me out from under a business that was dying, slowly becoming obsolete and capital intensive ( as well as low margin Hell) into one that was growing rapidly, requiring small amounts of capital investment and very low overhead (high margin Heaven). I'm back to my previous income level.
I'm exactly 50 years old. If one can believe that stat about 50 year olds only having 40k of net worth then I can say I've got someone elses savings, a lot of other 50 year olds savings, as do many of my contemporaries. This stat doesn't come as a surprise to me. A good 20% of the population never does any kind of productive work at all and the ones who do, they habitually spend more than they make. While I was driving a 10 year old car, they were driving a brand new Beemer. As we were taking camping vacations, they were headed to Europe first class. When I was buying a Fridgidare they were buying a Sub Zero. As I was funding my Keogh, they were taking loans out of their 401 to send junior to private school.
Years ago I'd ask my running partner, who has a similar habit of living far below her means, what were all these people going to do when they were too old to work, they couldn't think that they'd all be supported by the government, where would the government get the money? After I'd say these things, there would be this moment of silence and then one or the other would say, but of course, they'll get it from us. We've saved, we've lived within our means and we will be punished for it. We live in a society where people aren't expected to be smart enough to take care of themselves, smart enough to plan for risk. Who can blame them for not being prepared to take on risk after 50 years of socializing any and all risks? |
