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Rick's thoughts: 


It's a funny concept - a pension. Dive into the past a little bit and you'll begin to wonder whatever could we be talking about ... somebody you don't know gives you money for the rest of your life for not working ... strange.

In the past there were - keeping things simple here - two kinds of people. The first kind saved a bit of their money every time they earned some, and eventually built up a balance big enough they could quit working and start drawing it down. The second didn't save any of their money and therefore kept on working until they died.

Of course there were variations on the theme. Some people were given a big chunk of money by their relatives and never even had to start working in the first place. And some, on the other end of the spectrum, just scratched by begging and eating crumbs (which, come to think of it, is just another form of work, without the bother of a boss). For now let's ignore everybody but the savers and the non-savers.

There are plenty of places to read about the origins of pensions in various countries. Might I suggest Wikipedia? [And don't forget to throw a couple of fivers their way once a year - it keeps 'em in business, and keeps us semi-educated.]

Racing forward into the present, a lot of people seem to think they have a 'right' to a pension. Right ... 

No, I don't think so. A 'right' is something you have, which nasty people try to take away from you. Read about your rights in the Declaration of Independence and in the Bill of Rights. And don't spend a bunch of time searching for 'pension' in there.

A pension is actually just a promise somebody makes to you. It could be a government (in which case the old stinky alert should start flashing in your brain), or it could be an employer (in which case the old stinky alert should start flashing in your brain). Somebody promises to give you money for the rest of your life for not working? I'd check that out with the biggest magnifying glass you can get your hands on, because, on the face of it, it doesn't sound very likely to be true.

That said - no surprise here - the promise your employer makes is a lot more believable than the one your government makes. Or anybody else's government - just about every government in the world has made pension promises it has absolutely no intention of keeping (not to mention the means of keeping). Including the United States government - the one stinking up Washington DC. [OK - it is true - there are a few countries whose governments have refused to make these fraudulent promises. Find 'em and love 'em.]

The best pension of all is the one you get by ... you guessed it ... saving up your money every time you get paid, until you have enough you can quit working and start drawing down the balance (did I read that somewhere ... ?). That's what I did. At a very early age I decided I wanted to hang up the work pants before I was 50. I had other things I wanted to do, and 40 hours a week would interfere with them. So I started packing away my paycheck in a safe place - the stock market.

Instead of spending the whole paycheck and being forced to smoke generic cigarettes the last two days of the week, I smoked 'em all week long. My savings balance started small, but for 24 years it grew. I never touched it - just tried to put as much into it as possible. I lived poor (not dirt poor - certainly not like poor people have to) for the express purpose of retiring early.

Then I did.

To make sure we are clear on this - I did start a company, but I did not own the company. So I never owned any stock in the company (it was a cooperative - nobody owned any stock in the company), and I never 'cashed out.' My retirement comes from saving, not from selling.

To make sure we are even more clear on this - they paid me a bucket load, which made it much easier to save money than, say, for a poor person. I was lucky. What I knew how to do, they wanted somebody to do, and we both went away happy from the bargain. Everybody can't do what I did, so please understand I am not flaunting my ability to save money. But ... not too many people saved money like I did, and I started it long before they were paying me a bucket load. One year as a uniformed police officer (before I even started the company) I was paid about $8,500 and saved about $5,000. That's what wanting to retire before you are 50 can do.

So ... here we are in 2014 and a lot of people think they have a pension coming from dear old Uncle Sam. Let's start talking about that ...


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