Saving for Retirement with a Stingy Employer

Saving for retirement is harder than ever as many employers are shifting more of the burden on to employees. See how you can respond.

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We discussed saving for retirement and stingy employers on The BIGG Success Show today. Here’s a summary of that discussion.

This show was inspired by a New York Times article by Nelson Schwartz and Michael Corkery. It compared the retirement plan of Sears and Amazon. Sears was more generous.

Why don’t companies take care of their employees the way they used to?

If you really want to see how different companies are today compared to how they used to think, check out Sears’ 1940 Annual Report. This was three decades before they built the Sears Tower, the tallest building in the world – generally considered their peak.

In the report, look at how they paid particular attention to the well-being of all of their stakeholders. They proudly talk about how workers was growing as the company grew and how Sears had “Sears Social Security” twenty years before our country had Social Security.

Why the shift? At least part of the reason stems from a modern finance concept which asserts that the #1 priority for a company is to maximize shareholder wealth.

Wall Street professionals believe this is one of the sacred principles of finance. And theoretically, it’s correct. The reason the goal is focused on shareholders is because they are the last in line. So if they’re happy with the spoils, everyone should be happy with their share.

The problem, in application, is that it requires a long-term mindset in a short-term minded world. The focus often leans too much on the next 3 months – i.e. the next quarterly report – and not enough on the next 3 years or more.

And bad decisions get made as a result.

How can an employee prepare for their future?

If you have little or no retirement at work, we suggest you do three things to make saving for retirement more fruitful on your own:

1) Run your life like a business

One side of business finances is revenue. In personal finances, we call it salaries, or wages, or earnings. You need to focus on increasing your income.

It could be a raise. It may be a promotion. It might be a side hustle. But somehow, someway, always be looking for ways to bring more money into your life.

In the long run, your savings can only grow as fast as your income.

2) Make lifelong learning a way of life

You need to learn how to sell. You sell yourself every day, whether you realize it or not. You sell to get a date. You sell to get married. You sell to get a raise. Learn the tips and techniques of selling, even though you may never be in sales.

Learn how to negotiate. Women, in particular, need to learn this trait because they often don’t ask for enough. Learn the tricks of the trade.

And learn how to market yourself. You may do something great at work. But if your boss doesn’t know about it, it’s as if you never did it. Learn how to market yourself so you can showcase your successes without looking like a showboat.

3) Consider taxes as you continue to save and invest for retirement

We highly recommend talk with a financial advisor about saving for retirement, given your situation. You may consider an IRA, a Roth IRA, or even an HSA (Health Savings Account) to maximize your after-tax cash flows.

What should you do now?

Understand your money flows.

That’s the first step.

Do this even before searching for more income. Your money flows are like a plumbing system. Leaks are costly. So plug the leaks (unneeded costs) before you turn on the water (increase income).

The BIGG Success Financial Freedom Tool will help you plug the financial leaks so you get to keep more as you earn more!