Lab b3: Life and Retirement Planning

Life and retirement planning

On OboxPlanet, young people decide on their work and retirement plans. Then, as their lives progress, they adjust them as their goals and circumstances are changing. Retirement plans on OboxPlanet are flexible and nobody is afraid that the system will go bankrupt. 

Get ready for some eye-opening insights! 

Whenever we propose this idea, two questions tend to come up. Firstly, how can we make sure young people take retirement planning seriously and don’t end up old, poor, and needy? Secondly, isn’t this all too complicating and uncertain? How can we know how old people get and how long they can work?

We propose that retirement planning can be simple and exciting. Here comes the proof.

The most basic model has six factors:

      1. Age when I plan to start earning.
      2. Age when I plan to retire.
      3. Income after retirement in % of last working income
      4. My personal life expectancy
      5. Expected return on my savings, inflation adjusted.
      6. What percentage of my income do I need to save to reach my goals.

Points 1 through 5 are either flexible or unknown and point 6 is the result of the assumptions on point 1 through 5. How can we deal with such uncertainty in the most efficient way?

Here is what happens on OboxPlanet. Young adults, as a matter of course and even before they start their working careers, consult a financial planner. They start with some assumptions on points 1 through 5 to find out how much they must start putting aside from their first income. At this stage in life, this is all they need to know. Then, throughout life, they reconsider their plan: have my assumptions or have my plans changed? Do I want to work less now and extend my retirement age? Or do I plan to retire step by step, like between 60 and 80? Or has longevity medicine extended my life expectancy to 120 years, with expected working ability to 100? Or have I inherited or won money in a lottery?

When we compare the individual life plans, we see that there are about as many different plans as there are humans. Many take time off for educating their kids, others travel for a year or do charity work for the less well-off. The great wealth on the planet allows for an infinite variety of life plans. 

When we compare the individual life plans, we see that there are about as many different plans as there are humans. Many take time off for educating their kids, others travel for a year or do charity work for the less well-off. The great wealth on the planet allows for an infinite variety of life plans. 

Life and retirement planning on the OboxPlanet is simple, individual, flexible, sustainable, and much more affordable.

This chapter highlights the remarkable freedom stateless solutions on the Obox planet provide, contrasting them with the overly restrictive government regulations on Earth. Interestingly, we can easily implement these solutions on our own planet!

In many richer industrialized countries on Earth, an official retirement age was established in the mid-20th century. The concept of retirement itself raises intriguing questions. It essentially suggests that one becomes socially useless after a certain age, a notion imposed by the state

On Earth, the retirement age was typically set between 60 and 65, aligning with life expectancies at the time. However, today, we live much longer—15 years and more on average. Many individuals who retire in good health often express a desire to continue working. Depression and increased mortality rates after retirement are well-documented phenomena, and taxes rise for the growing population of older pensioners

On the Obox planet, there is no fixed retirement age, and no wealth redistribution occurs—neither from the young to the old nor between genders or any other categories. People enjoy complete freedom to plan their lives, which they do regularly and eagerly and efficiently.

Slow down, you might think, how can we trust individuals to be able and willing to take responsibility? How can a young person take full responsibility for deciding on a life plan, including career, retirement age, and life expectancy?

Surprisingly, the results are more satisfactory than on Earth.

On Earth, politicians construct a “standard life plan” which assumes some standard period of employment, compulsory taxes and savings plans, a fixed retirement age, a state-planned pension amount, and an average life expectancy.

This is in fact an extremely patronizing plan and an arrogance of knowledge about life expectancy, interest rates, the economy, and more. And how can the politicians who made the decision take responsibility if their plans turn out to be wrong? Exactly, they can’t, as they are no longer in office.

Here’s how it works on the Obox planet: Young people entering the workforce consult a financial planner to discuss their current life plan, focusing on personal aspirations, beliefs about life expectancy, and economioc and interest rate trends. This process results in one simple number, a specific savings percentage needed to realize the life plan.

As a matter of fact, and when we look into investment opportunities, a host of insurance companies offer competitive retirement plans. Usually individuals choose several plans, in case a company or a retirement vehicle goes bust. Saving and investing is much more easier and less risky than nowadays, as there are no central banks distorting prices and creating booms and busts. Most savings occur either in real assets (i.e. stocks, or simply in gold). There is no government which forces retirement funds to buy government bonds and then inflates away the real value of these bonds, thus impoverishing entire generations of the retires, such as happens often on planet Earth.

Life and retirement planning on the OboxPlanet is simple, individual, flexible, sustainable, and much more affordable. q.e.d

What experiences on Earth, past and present, help us understand life on the OboxPlanet?

Most countries on Earth frequently undergo Social Security reforms that typically involve increasing taxes, reducing benefits, and have short-term horizons driven by political considerations. The prevailing mindset is often to avoid financial instability during the current administration’s tenure.

One fundamental observation is that the “pay-as-you-go” public pension systems can be relatively costly compared to private savings plans. These public schemes rely on current workers’ contributions to fund the benefits of current retirees. As the population ages and the ration of workers to retirees decreases, the system cannot be maintained with the same contributions and pay-outs.

However, we do have alternative models with less state involvement on Earth. For instance, the Chilean pension system stands out as an example. It allows individuals to invest directly in the market, offering the potential for higher returns on their retirement savings. By shifting from a public, government-managed system to a private, individual capitalization system, Chile has sought to empower individuals to make their own investment decisions and accumulate personal wealth for retirement. It has sparked discussions and debates in other countries about the merits of adopting similar systems or incorporating elements of private investment options within existing public pension frameworks.

While private savings plans tend to give more freedom to choose, there are often political smoke and mirrors and strings attached to the plans.

One political cheat is the illusion that “the employer matches” the employees contributions while in reality, employers always calculate in “gross costs” of the employer, meaning that the employer has to earn the employers share. In other words: if the employer didn’t have to put money into the pension scheme, pay-out wage to the employer could be higher.

The 401(k)-scheme lets you avoid income taxes while you save, but you have to pay taxes when you want to use your savings. In addition, there are rules for what type of investments you may choose.

All in all, pension plans on Earth tend to be heavily regulated, to the point that a good part of the population relies on the state to see that “things will be ok for me”. So far, with for example 3 people working for 1 retiree, things could be worked out with increasing contributions. But with the prospect of 1 to 1 within a few decades, the real test is yet to come.

Life and pension planning is one example of a solution that can give you serenity and optimism today. Thinking about the OboxPlanet solution makes you relaise that if the state’s system goes belly-up, we have an idea of how an alternative could work.

Now it’s your turn.

How would you plan your work life and retirement? Would you want to work 100% to a fixed age and then do nothing for the rest of your life or rather plan to spread work thinner and longer? How would that change your feelings about your life? 

Things we could learn and implement from the OboxPlanet:

Eliminate a fixed retirement age goal, make all programs flexible. Let people invest however they choose and with whomever they want. Let kids “opt out” of all government programs.


John Stossel: Free-Market Social Security