You’re on Your Own

Richard Quinn

A WRITER RECENTLY asked my opinion of gig economy jobs and how they could benefit retirees looking for extra income. I looked up the term to be sure my understanding was correct. It was—except we used to call the jobs “temporaries,” “part-time,” “project work” or “consulting.” As I told the writer, a gig economy job sounds pretty good for us retirees who want to keep active or supplement our income, especially if it doesn’t involve being a crossing guard.

But I’m not sure the whole gig thing is great for younger workers. I realize I’m a dinosaur when it comes to the workplace and my work experience has long been buried beneath the remains of the last Ice Age. Still, right or wrong, society must come to grips with the employment changes it’s wrought.

Gig work has helped sever the old relationship between employer and worker. Gigs provide flexibility, but they also place far greater responsibility on the individual. Gig economy workers need constantly to find new work, while also planning and taking action to safeguard their financial future, including retirement.

My experience could hardly be more different:

  • I worked for the same company from 1961 to 2010.
  • I have a pension and 401(k) plan.
  • I have retiree life insurance and health insurance.

In 2019, finding such a job is virtually impossible, except perhaps in the public sector. In fact, such jobs don’t even exist at my former employer. Companies have all but abandoned pensions and benefits that encourage long-term employment. At the same time, it’s near impossible to find workers who want to spend most of their life at one company.

Given what you now know about me, it’s no shock to learn that my retirement planning was minimal, because that’s all that was required. I checked the progress of my growing pension and the survivor benefits that were part of it. I monitored my 401(k). In short, I could bank on guaranteed income, health benefits and life insurance, plus survivor income for my wife.

From age 18 until the day I die, my financial life has been and will be secured by my employment with a single company. I suspect that’s a strange and perhaps even scary statement—one that younger workers simply can’t relate to.

In 1995, with my employer facing stiffer competition, benefits were scaled back for anyone hired after that year. As the person in charge of employee benefits, I initiated those changes. The company-employee relationship that started in the early 20th century was gone: No more traditional pension, no more retiree health insurance, no more retiree life insurance. Since then, my successors have made additional changes, even trimming future pension benefits that older workers were counting on.

Recently, my former employer announced that retiree health and dental benefits would cease January 2021, and be replaced with a health reimbursement account, or HRA. Previous commitments to workers are easily discarded. Paternalism is passé.

While most Americans never had the benefits I’ve enjoyed and even fewer worked for the same employer for half a century, it’s clear that—beyond a paycheck—employers can’t be counted on as a source of financial security. The message to everyday Americans is clear:

  1. Don’t look to one employer for more than a short period of income—maybe three to four years and even less if you’re a gig worker.
  2. While you’re at a company, leverage every financial benefit it offers—the 401(k) match, stock purchase plans, health savings accounts and so on.
  3. Take financial planning, including retirement planning, very seriously—and adopt a lifestyle that allows you to save for the future.
  4. Manage your ongoing spending to account for periods without a paycheck.
  5. Maintain a healthy emergency fund.
  6. Don’t put too much credibility in an employer’s “promises,” especially if those promises involve long-term employee benefits.

Yes, you’re on your own.

Richard Quinn blogs at Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include What’s Your PlanStaking Your Claim and What Do You Mean. Follow Dick on Twitter @QuinnsComments.

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Kristine Hayes
Kristine Hayes
3 years ago

You said your former employer decided to change retiree health care benefits in 2021. Does that decision mean your own retirement benefits will change, or just the benefits of future retirees (ones who retire after 2021)?

3 years ago

Actuaries did their best, but no one thought to allow for improved healthcare and thus greater longevity. Even now, pensions for fire and police still assume retirement at age 55, instead of shifting older workers to desk jobs and setting pensions to start at age 60 or later – making state and local governments struggle to cover costs.

Rick Connor
Rick Connor
3 years ago

I had a somewhat similar experience in my career. I gave similar advice to myself children and the younger employees I managed in the 2000s. Great article.

Danielle L. Schultz
Danielle L. Schultz
3 years ago

And yet another scam you don’t mention: public sector pensions here require younger workers to work for ten years before eligible. In the meantime, if they leave, any contributions to the retirement account by the employer are clawed back, and the worker gets NO return on any money they deposited. Similarly, 401ks can and do claw back all employer contributions if the worker stays less than 3 years. Young people are screwed.

Francis Sam
Francis Sam
3 years ago

Thank you for the insightful post.

It’s a bleak inventory of the situation for a lot of folks who will have to figure out and take on more than previous generations.

Since those tailwinds won’t be there, people shouldn’t expect to sail. They should adjust expectations to include more rowing.

3 years ago

I worked for a company for 33 years and reached the Director level. Then one day, 18 months before my planned retirement, I received an invitation to a mandatory webinar, hosted by the General Counsel. He said that the company had decided to go in another direction and that everyone on the webinar was being shown the door. That was 3/4 of my department, including my entire section. Both my boss and his boss were let go too. What a bunch of sad faces on the webinar!

It made me very glad that I had a traditional pension and had maxed out my 401(k) for years. Also, my spouse and I had been maxing out our Roth IRAs for years too. No debt and no mortgages. So we are getting by just fine and enjoying volunteer work. I feel sad for the few employees left to cover all the bases, shorthanded, for a company that continues to cut benefits. And management complains about the lack of employee loyalty…

Peter Blanchette
Peter Blanchette
3 years ago

I am curious about something. What is the “Quinn” plan for citizens living in the state of Alabama, for example, who currently find themselves in the lowest 20th percentile in their state with an average income of $17,486 while those in the top 5 per cent have an average income of $255,862? Would those people in the lowest 20th percentile be ahead of the game if they followed your 6 point game plan? It is obvious that those in the top 5 per cent have been reading your columns VERY religiously. I think it is OUTRAGEOUS that Jamie Dimon recently seemed to indicate that he believes there is income inquality in America.

Richest households capture
largest share of Alabama
Top 5% of households…
receive 18% of income
Ratio of average household income for
the richest 5 percent of households to the
poorest 20 percent of households, 2015
The top 5 percent of households receive
18 percent of the income, even without
counting capital gains.
Income inequality has grown in recent decades

After decades of growing inequality, Alabama’s richest households have dramatically
bigger incomes than its poorest households.
The top 5 percent of
households have average
incomes 15 times as large
as the bottom 20 percent
of households and 5
times as large as the
middle 20 percent of
Poorest 20%
Alabama Among States with
Highest Income Inequality
Middle 20%
Top 5%
Source: CBPP analysis of 2015 American Community Survey household income data. Income includes estimated SNAP payments,
payroll taxes, and federal income taxes (including Child Tax Credit and Earned Income Tax Credit) but omits capital gains income.
Incomes are for family of four in 2015 dollars. Top 1 percent comparison extends through 2013 and uses IRS data from EPI, “Income
Inequality in the U.S. by state, metropolitan area, and county,” June 16, 2016. For more details see CBPP, “How State Tax Policies
Can Stop Increasing Inequality and Start Reducing It.”

Roboticus Aquarius
Roboticus Aquarius
3 years ago

I have to admit, I’m grateful for our 401(K) plans – in our names & fully vested, our employers can’t touch a penny. In contrast, my pension has been changed multiple times over my 25 years with my employer; it’s now worth a fraction of what I originally signed up for. Sure, I could have left, but there were good reasons to stay as well. My wife has no pension. I am hanging around at my current employer for 24 more months until official retirement, so I can vest into their health care retirement benefits (and nothing else really. My tiny cash pension is already vested, and there are no other reasons to stay other than a salary and something to do during the day.)

I counsel my son, saving a lot and saving early is so important. If I had to do it again, I’d set a goal of financial independence by 40. Tough, very tough to do, but the mindset will force the right decisions. The idea isn’t to retire at 40 (though if that’s what you really want, more power to you) – it’s to be able to work where and when you want under the conditions you want.

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