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Dr. Kalinda Rose Stevenson
If It Is To Be, It’s Up To me
Welcome back!
Have you heard the old story about the frog? Put a frog in hot water, and it will jump out. Put a frog in cold water and turn on the heat. The frog doesn’t notice the change until it’s too late. The frog will stay in the water and get cooked.
Sometimes changes are so slow that you don’t notice them. And sometimes changes come as suddenly as an earthquake or the sudden devastation of a tsunami.
A Parable
Once, there was a skillful electrician. He worked for a company that maintained oil burners. He was an excellent employee. The owner relied on him to handle the most difficult jobs and many regular customers insisted that he was the only technician they would allow to service their furnaces.
After several years, the owner of the company decided that it was time to retire. He offered to sell the business to his most valued employee.
It was a once-in-a-lifetime opportunity for the electrician. He could buy an established company with an established client list, providing a service he understood thoroughly.
He went home and talked with his wife about it. They decided that they couldn’t afford to take the risk. They had a family to feed. They had a mortgage to pay. They had all of the benefits that come with being an employee. And so, he turned down the offer to buy the company to stay with the safety of his job.
And before too long, he discovered that the safety of the job was an illusion. The new owner fired him. For a while, the electrician went from job to job, until he finally found a job that would pay him a guaranteed pension if he worked to the age of seventy.
And so he did. He got his pension and monthly Social Security check. He died as he lived, an unhappy man who never took the chance to create his own financial independence, because he wanted to be safe.
This parable is actually the true story of my father-in-law. I was not part of the family when he made this decision. I did see evidence of an unhappy man who felt that he had no choices in his life. I often wondered how his life would have been different if he had decided to risk creating his own financial security rather than to depend on others to provide if for him.
My father-in-law lived and died in an era when an employee could trade choice for the security of a guaranteed pension. Leaving aside the reality that he was an unhappy man, his choice did bring him a certain level of financial security.
The fact is, we are living in different era. Employees can no longer rely on guaranteed pensions and the entire Social Security system has become the object of speculations, rumors, and proposed restructuring. By the time the politicians are through taking an axe to the system, who knows what will be left. To depend on Social Security for your financial needs in retirement is about safe as building a house on a mud flat in earthquake country. And to depend upon a guaranteed pension is to risk going to sea in a leaky boat.
Anyone who is depending on a pension to fund retirement needs to pay attention to the financial tsunami that occurred last week. On May 11th, a federal judge made a fateful decision about the pensions of United Airlines employees.
“Tuesday a U.S. federal Bankruptcy judge approved a plan by UAL, the parent company of United Airlines, to transfer its pension plans, which are underfunded by $9.8 billion, to the Pension Benefit Guaranty Corp., which is itself underfunded…”
“The decline of pensions is likely well past the tipping point already. No so long ago, the defined benefit pension — guaranteed retirement income — was a prevalent aspect of the U.S. financial scene. But no more. In 1980, 38 percent of Americans had a defined benefit pension as their primary retirement plan. By 1997, just 21 percent of Americans had such plans, according to the Pension Benefits Council. That percentage is certainly lower now, and more and more plans have been passed off to the PBGC, a federal agency that insures pensions, but which does not necessarily pay the benefits retirees expected.”
Dan Ackman
Forbes
For businesses, the decision to transfer pensions to a federal agency makes economic sense. By shaking off the burden of funding retired workers, companies can be more competitive. For employees, the decision is a clear sign that companies are setting them adrift to fend for themselves.
The news media has published stories of 30-year employees who feel betrayed. Sixty year old employees now face the prospect of getting only a small fraction of their promised benefits. At the time they were planning to retire, they are faced with drastically reduced retirement funds.
The real warning of the UAL decision is that the water in the pension kettle is almost boiling and the employee frog is almost cooked. No employee can depend on financial security from any outside source, including a promised pension.
“Yesterday’s ruling is a real landmark, not only for these industries but for American culture,” said William Rochelle, a New York corporate bankruptcy attorney. “What we have in politics and business today is an assault on the well-being of retires.”
Adam Geller
Associated Press
The safest way to secure your own financial future is to take on the mindset of an entrepreneur, and create your own economic security. The way to real security is willingness to risk. As recent events demonstrate, the “risky” way of the entrepreneur is far safer than the illusive “safety” of the employee.
The ultimate sad irony in my father-in-law’s decision was that playing it safe came at a high cost. Maybe he would have failed in the business. It is more likely that he would have succeeded and created greater financial security than he got with his social security check and his monthly pension. And I am convinced he would have been a happier man.
At least my father-in-law had the choice between the constrained safety of a guaranteed pension and the calculated risk of an entrepreneur who would rather risk than play it safe. Most of us no longer have that choice.
And this brings me to the entrepreneur’s primary motto, “If it is to be, it’s up to me.” If you are playing it safe, check the temperature of the water around you before you get cooked. If you are depending on someone else to provide for your financial security, now is the time to jump.
For the full article, please visit http://www.abundantlyalivenow.com
Discover how to take the consumer money mindset lid off your real estate investing.
Click here: http://www.nomoneylimits.com
© 2004 Kalinda Rose Stevenson, Ph.D.
Debt or Alive, Inc.
2248 Meridian Blvd. Suite H
Minden, NV 89423
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