The Smith and Wesson Retirement Plan

Smith and Wesson is a gun company, and their so-called retirement plan is to work until you physically can't, then live until you run out of money, then kill yourself. (Or alternatively, commit a crime to go to jail, which might also involve a gun)

My retirement plan is not so morbid, but the name stuck.

I'm not saving for retirement. Not more than I'm legally required to through taxes.

I'm not advocating for avoiding financial planning, just the locking away of money in something like an RRSP which penalizes me if I take it out early.

First, people in my field tend to retire very late, I have co-workers going strong in their 70s. I want to keep working for 40+ more years myself. But what is the financial world going to look like in 40 years?

We're at a critical point in history (yes, that's now-centric, but I believe it), where the range of scenarios for humanity over the next 40 years is extremely wide. From worst to first, all of these have a non-trivial chance

1) Civilization could collapse under the weight of climate change or war or disease and the world's utter inability to carry 10 billion middle class meat-eaters.

2) The world of finance could collapse in a way that abstract financial instruments like stocks, bonds, and government debt lose most or all of their value, rendering traditional investments before that point worthless. 40 years is time for 3-5 recessions, and multiple rounds of technological disruption.

3) The world continues to be just prosperous enough that financial comfort in old age can be relatively assured with personal, dedicated savings, but not without it.

4) The economy advances to the point where we keep all our old above the poverty line, regardless of their financial planning in the meantime. Given demographic trends and the number of working age people without a personal retirement plan, making this a priority for governments in the coming decades.

5) The economy advances to the point where basic comforts are universally guaranteed, and scarcity is mostly academic.

To financially prepare for retirement is to prepare for Scenario 3. We don't know the probability of it, but it isn't 100%, and that needs to be priced into planning. Without any qualification to say so, I would peg it at about 70%. That means a dollar locked away in an RRSP is only worth about 70% of the advertised value. Sure, that dollar might grow as part of a long term investment, but it could do that in any number of ways in which I maintain access to or benefit from that dollar in the meantime.

One might give a Pascal's Wager style argument that it's always better to plan for the future, but money is by definition scarce. By locking money away for 40 years, my family and I are suffering more in the intervening time.

I could pay off a loan or purchase something I need in the meantime, or make an investment that pays off earlier at a time I control. But saving specifically for retirement? That's for suckers.