WHAT YOU SAY? IS THIS BLASPHEMY? HOW CAN PEOPLE PLAN FOR THEIR FUTURE WITHOUT TAKING ADVANTAGE OF THEIR WORKPLACE RETIREMENT PLAN?
Employers don’t need to wring their hands if some of their employees don’t participate in the retirement plan. Sure, it is helpful to most of your employees to inform and educate them about your plan and how it can benefit their future. But you’ll never know the specific situations of all your employees and it is not your business to pry. Of course, I’m not encouraging anyone to skip out on their retirement plan and for employers not to care about it, but for some people it’s just not a big deal. These outcasts tend to fall in one of the following groups:
THE RICH. There aren’t really all that many of these people, at least from my perspective, but they don’t need to worry too much about putting money in their 401k plan (if they are even working with the rest of us stiffs), SEP, Solo 401k or whatever they might have access to. Maybe they won the lottery, benefit from a trust, received an amazing inheritance, their spouse/partner has a seven figure income, etc. It can happen any number of ways. However it happened doesn’t matter – a pre-tax savings plan is just a drop in the bucket for the rich.
THE PENSIONED. Yes, these people are still out there. They have some excellent pension plan that will provide more than enough income for them in their retirement years.
THE OTHER INCOME PERSON. These people have relatively significant income from some other source, like a farm or business, rental units, royalties, etc. Many of these people plan on selling their business later in life or just living off of the income until they pass away.
THE LOW EXPENSER. Really! People with little or virtually no expenses. They live with friends or other family members or in an RV. They might receive support for food and basic necessities from others and don’t buy much of anything else. Some are professionally frugal and amazingly thrifty. I think many industry commentators and observers would be surprised at how some have learned to get by in this fashion!
THE WORK FOREVERER. Why save for something that you will never need? If you are the work forever type, then what is the point of having or needing a 401k account? (High regret possibility with this one!)
While there may not be many of these people, guess what – THEY’RE REAL. I have met several of these folks over the years. If they don’t want or need to participate in a retirement plan, that’s their decision. Most will end up fine – others may regret their decision.
Have you come across these people before? Do you know of any other categories?