The end of pensions as we know it?

The end of pensions as we know it?

That’s right ladies and gentlemen, Verizon recently announced that they were replacing their pension plan with a 401(K) Plan. With GM also announcing changes to their health care benefits, we are witnessing the gradual but certain decline of pensions as we know it. Therefore, your retirement will be whatever you want it to be….literally. In other words, the amount that you have to retire with will depend on how much you contribute to your 401(K) or what ever retirement instrument your employer utilizes.

So let’s start with the fact that most people coming of age will be switching careers four to six times. This means that you won’t be at any one job for the majority of your life (where pensions serve as incentives for employees to stay at one firm) and even if you were do that, you probably still won’t look forward to a nice pension.

Moreover, our generation will be leading longer lives which in turn demands more money to cover living expenses. As a result, our generation will have to be a lot more intuitive to various financial tools because retirement is way more important than rubbing your toes in the sand and sipping a fruity drink with a mini-umbrella. For anyone who plans on having children, a thoughtful retirement plan will allow you to help pay for your kids college in part or in full. And for anyone who has student loans, you know that if Mom and Dad could have taken care of the finances, life would be a lot easier. Aside from college, how about leaving a little nest egg for the kids once you pass away? Just think about having to work well into your sixties, seventies, and eighties? Now if your parents do this and they are happy then fine, more power to them. But there is a big difference between wanting to work and having to work. Strive for the former, I beg of you!

So I have a couple things that I think could help make your quality of life better.

1) Whenever possible, start investing in your firm’s 401(K) because most companies will match up to 6% of your salary for this. Also, most companies will allow you to rollover your retirement accounts from your old job but be sure to see if your new company will be as generous with the benefits.

2) You can’t invest anything unless you live below your means. As a recent addition to corporate America, I can say that this is difficult to do, but by no means is it impossible. Most financial advisors will tell you to strive to invest 5-10% of your salary. And as my good friend Garlin advised me, your ultimate goal is to have the revenues from your investments be such that they cover all of your basic living expenses. (Rent, mortgage, car note, insurance, etc.)

3) Mutual funds. Mutual funds. Mutual Funds. Did I forget to mention mutual funds? I say that because for the long term, investing in a mutual fund for say 15-25 years will likely be a profitable investment. I say likely because the stock market is not certain. But at least with mutual funds, your money is pooled with other peoples (to minimize the risk) and invested in a portfolio and it works to your advantage to keep your money in there for an extended number of years. Some mutual funds let you start investing with $50!!

4) Start a relationship with a financial advisor so you can get some sound advice about where you are at financially and what steps you need to take to get to the next level.

For the record, I am not a financial advisor and this advice is my opinion. Therefore it should not be taken as professional advice. Having said that, we will have more financial tips in the future because a lot of people say that money doesn’t solve people’s problems but that’s a bunch of crap! We should not be obsessed with money but when used properly, money will allow you to do a lot of things you want to do while lending a helping hand as well.

Stay up fam,

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About Garlin Gilchrist II

I am the City of Detroit's first ever Deputy Technology Director for Civic Community Engagement. My job is to open up the city's public data and information for the consumption and benefit of all Detroiters. I currently live in Detroit, my hometown, with my beautiful wife Ellen and our twins Garlin III and Emily Grace. I'm from Detroit. I created Detroit Diaspora, and was formerly the National Campaign Director at MoveOn.org. I also co-hosted The #WinReport on "The Good Fight," a an award winning, nationally syndicated radio show that was one of Apple's Best of 2013. After graduating with degrees in Computer Engineering and Computer Science from the University of Michigan, I became a Software Engineer at Microsoft. By day, I helped build SharePoint into the fastest growth product in the company's history. On my personal time, I sought out opportunities to connect my technical skills with community building efforts across the country. This led to my co-founding The SuperSpade: Black Thought at the Highest Level, a leading Black political blog. I served as Social Media Manager for the 2008 Obama campaign in Washington, and then became Director of New Media at the Center for Community Change. I spent two years creating and implementing a strategy for the Center to take it's 40 years of community organizing experience into the digital age. I speak before diverse audiences on effective & responsive government, empowerment in revolutionary new organizing spaces, increasing civic engagement & participation through emerging technologies and protecting civil rights in the age of the Internet. Full bio here.

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