How to launch a new future for yourself
Ric Edelman: It's Wednesday, February 8th. Yesterday, I talked about the fact that you'll likely need millions of dollars in savings in order to retire in financial comfort. That raised a question from William in Albuquerque. He sent me an email that said the following:
"Ric, no one wants to confront age discrimination. I think it's a potentially huge obstacle to anyone's efforts to achieve financial independence by retirement. I lost my well-paid job at 58 and I went to an unemployment seminar that was sponsored by the state of New Mexico, and the presenter said if you're over 40, getting a new job that is equivalent to the job you just lost is improbable, if not impossible. I can also say that after being unemployed for a year, anyone near 60 is likely unemployable at all. I've seen studies showing that employers don't care how much experience you have. All they look at is how long you've been out of work. And there's no way that anyone near 60 will be perceived to be cool enough or able to fit in with the current group of younger employees. Every time I go for a job interview, the person interviewing me is half my age and they don't want to hire grandpa. How do we save for our future at the very moment we're getting laid off in our prime income and earning years? I was expecting my 50s and 60s to be the years when I'd be making the most money and saving the most money. But now I'm doing neither. How do we deal with this annoying reality so that our future isn't destroyed? I'll be 70 in November and I only have about $100,000 saved. I may have to work till I'm 80 if I can find a job at all. What do you suggest?"
Well, thank you William from Albuquerque. And it's a very profound and eloquent email that he sent to me. First of all, if you missed yesterday's podcast, go listen to that, because it sets the stage for William's email. And William, I think you have, in fact, stated the situation perfectly. Everybody realizes the need to save. And these days, everybody wants to save. But so often people are thwarted in their efforts to save. Some people simply don't earn enough money.
Let's remember that the average income for US households is only $54,000 a year, according to the Labor Department. That means half the country net of taxes, is living on about $3,300 a month. You try to pay for a mortgage or cars, clothes, food, insurance, gas for a family of four on that income. And what if you or your kids or your mom get sick or you have a car accident and so on? 40% of adults say they can't afford to pay an unexpected bill, $400. And if they can't afford that, you know they're not putting money into their 401k.
But you figure that's not you. You've got a great career. You're earning $150,000 or $200,000. You're a senior manager in your career solidly for 30 years, but suddenly now you find yourself in your 50s and you get laid off. Your boss figures they can hire two younger workers to do your job at half the price, or they'll just dump your work onto other workers and hire nobody and save the total cost of your comp.
So far this year, Amazon, Oracle, Microsoft, Salesforce, Facebook, they've all done massive layoffs. All told, the tech industry laid off 150,000 people last year, and in just the first three weeks of this year, they laid off 50,000 more. It's not just the tech sector on Wall Street. BlackRock has cut about 3% of its workforce. So did BNY Mellon. Goldman Sachs cut 3,200 jobs. In retail, Bed, Bath and Beyond, Carvana, Hasbro, McDonald's and Stitch. They've all dumped tens of thousands of jobs. In crypto, Coinbase, Crypto.com and Genesis have fired 20% to 30% of their staff. In manufacturing, Dow and 3M and others are firing thousands as well.
You think all these workers getting laid off are just in their 20s? No way. Lots of them are in their 50s and 60s. What do you do if that's you? Well, as William noted, try getting a new job equal to your old job at the same pay and benefits if you're in your 50s or 60s. Not very likely. So what do you do about all this? Well, that's what William is asking me. I bet you are, too. So here's the answer.
Start your own business and keep reinventing yourself
Start your own company. You've got the knowledge. You've got the skills. Instead of selling them to one customer, you know your former boss. Sell your knowledge and skills to many customers. If you're working for an auto body shop, get one paycheck from one boss. You have one egg in one basket. When you get laid off, that one egg gets broken. So go do work for lots of people. Get lots of people to pay you. You can do this these days, pretty much in any career - education, manufacturing, retail, sales, management, tech consulting, transportation.
You get a lot of benefits of being your own boss. The tax code really favors self-employed people and you get to work when you want with who you want. There is an obvious downside to this. Of course, you need capital to start a business and while you might have expertise and passion in your subject, you might not know anything about operating a business. The tax issues, legal, HR, operations, all that stuff.
So here's the good news. Today, you don't have to be an expert in running a business. Introducing the Internet. The Internet has created the gig economy, the rise of the on-demand worker. I talked a lot about this in my bestselling book, The Truth About Your Future. About 20% of the US workforce is now people who are independent contractors, meaning self-employed people. We're talking about on-call workers, temp workers, workers who work via contract firms.
Think about the person who mows your lawn, delivers your pizza, paints your house, babysits your kids. All these workers come when you call them. They perform a task and then they leave. No single customer will pay you $150,000. But when you add up lots of customers, you can make a lot of money.
The New York Post just had a story last week about a 35-year-old guy who used to be a schoolteacher. He's now a full-time dog walker. He's earning $120,000 a year; three times more than he was earning as a teacher. How do you get people to let you walk their dog? You don't have to go hustle for the gig.
There are now thousands of websites that will create job offers for you. Everything from Uber and Lyft to Rent The Runway where you rent clothes to people. The website bellhops, helps people market their business. If you're an interior designer, you can make your services available via Laurel & Wolf. Handy.com matches homeowners who need work done with people who can do the work. Maybe that's you.
Instacart is your site if you want to be a personal shopper. JustPark lets you rent your driveway to people needing a place to park their car. And BorrowMyDoggy lets you earn a living as a dog walker. If you're a chef, you can cook a meal for people using the site, Eatwith. Fiverr, lets you offer your artistic and professional services for a fee. Skillshare lets you teach any course you want. At Catalent, you can be a business consultant. All these ideas and a lot of others are listed in my book, The Truth About Your Future. There are tens of thousands more available on the Internet. You don't like the idea of any of this? Well, get over it.
If you're out of work involuntarily in your 50s or 60s, you need to reinvent yourself, because as you have now discovered, that job market is not what it used to be. That old idea of womb-to-tomb employment with a single employer or your whole career, that's pretty much over. You need to adapt to the times.
And I've got a prediction. Once you get into this, I think you might just really like it. But quite frankly, liking it is not a prerequisite. That's why they call it work. Nobody wakes up saying, 'I'm going to go to fun today'. We're going to work today. It's the way it is. And while we might wish things could just remain the way they were, we have to accept the fact that they're not going to be. So let's deal with the world we're in, okay. And not sit and mope, wishing that things were different. The gig economy, it's where you're going to find your future.
Oh, and speaking about your future, how about the future of crypto? If you missed my one-hour webinar that we did yesterday, you can watch the replay. It's at DACFP.com. You'll discover whether the crypto winter is going to come to an end or not this year. What is happening in the rules and regulations as a result of FTX? Matt Hougan of Bitwise Asset Management and I tackle all this and a lot more. I encourage you to go watch for free at DACFP.com.