By Julian Guilfoyle
“We now live in a 401(k) world – a world of defined contributions, not defined benefits.”
-Thomas L. Friedman Op-Ed columnist for the NY Times and author of The World is Flat
In “It’s a 401(k) World”, author Thomas Friedman summarizes the great possibilities and degraded safety net now faced by Americans. He states, “If you are self-motivated, wow, this world is tailored for you. The boundaries are all gone. But if you’re not self-motivated, this world will be a challenge because the walls, ceilings and floors that protected people are also disappearing. That is what I mean when I say, “it is a 401(k) world.” He continues, “Government will do less for you. Companies will do less for you. Unions can do less for you. There will be fewer limits, but also fewer guarantees. Your specific contribution will define your specific benefits much more. Just showing up will not cut it.”
The theme of Friedman’s article reminded me of the changes faced by many, especially in the Midwest. I’m from Northeast Ohio, a region once dominated, for good and bad, by the steel industry. Many of my friends were born into families of steel workers. Whereas their mothers and fathers were able to walk into the factory a day after graduating high school, these opportunities were not available to my generation. No longer can we rely on assured employment and use hard work to advance through the ranks. In short, individualism has now shaped our lives. For example, “Shark Tank”, a popular TV show, allows entrepreneurs to showcase their start-up companies to investors, who in turn can invest in the companies they feel worthy. Kickstarter.com allows start-ups to reach the masses in the hopes of obtaining an infusion of cash to turn their dreams into reality. From this, we enjoy greater independence and creativity, but at the cost of stability.
This independence has spread to far more than employment. We live in a DIY(do it yourself) world. Web sites have sprung up offering a template for the average citizen to complete their own legal work. Many workers and retirees now manage their own investment accounts through the various financial websites available. Just as with employment, this can be both beneficial and disastrous. From a positive standpoint, people are now taking more ownership for their own lives and their legal and financial security. On the flip side, without the proper knowledge or education, this can lead to disastrous results. When Friedman stated that “everyone needs to pass the bar exam”, he meant that the world is so complex at this point that people must develop specific skills to survive. And these skills will be measured with increasing accuracy, whether by an employer as Friedman asserts, or by life itself.
The point is, that unless you are willing to self-educate in all aspects of life, you may want to consider leaning on advisors for topics that seemingly may not interest you. For example, if you asked people whether or not they wanted to leave a mess for their spouse or children, I would bet that most would answer emphatically, “No!” However, if you asked those same people whether or not they wanted to take the time to learn about potential hazards that can cause this mess, such as probate, or the steps that you can take to avoid them, see your eyes are already glossing over. I think people want to spend their retirement traveling, spending time with their families, and reinventing themselves. If you reinvent yourself as an attorney or financial advisor, more power to you. But if you would rather learn about the hazards that directly befall you and how to avoid them, you may find it better to subcontract to trusted advisors who work for you.
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