One of the ways I got my nearly disastrous financial life back on track was by reading a lot of economic advice online. It helps to be part of a community of people thinking hard about their values and their money and the alignment of the two. And it helps to read a wide range of opinions.

I also experimented with various online financial tools, and while some were helpful, I realized that there are five common ones to use only with caution:

1. Salary comparison tool
The reason salary comparison tools exist is so people can make sure they’re getting paid enough. If you need to use such a tool, however, your career is in trouble.

First of all, most comparison tools give you an average salary within a 25 percent margin of error. If you don’t know what you’re worth within a 25 percent margin of error, that’s a problem.

Why not just compare salaries with friends who are in your field? If you’re in a business in which you have no contacts, you’re not worth the average amount anyway, because you’re so ineffective at connecting with people around you that you’re compromising your ability to add value to a company.

Finally, these tools presume an outdated notion that people work only for the money. Sure, money is good, but people rank other things as way more important. So until there’s a salary comparison tool that takes flexibility, opportunities for personal growth, and available health care providers into account, they’re not worth your time.

2. Cost of living calculator
The problem with this kind of tool is that it gives you information you can’t use. You need to know which city will make you happy, not which city will save you $20,000 in housing costs.

Let’s say you’re thinking of moving from San Francisco to New York City. They’re both really expensive to live in, so the difference in your salary isn’t going to matter. You should probably think harder about their respective cultures than about money; very few people fit in well in both cities, and most feel like they belong in one or the other. A calculator can’t tell you that.

Now let’s say you’re moving from New York City to Los Angeles. You’ll save money on housing, of course, but you’ll need a really good car.

In L.A., a BMW is totally reasonable. You’ll end up spending more time there than in your apartment. In NYC, however, owning a BMW is commonplace only among millionaires. For most New Yorkers, having such a car is absurd — they just don’t drive enough. But online cost of living calculators don’t have a “BMW: yes or no” option.

And what if you’re moving from Chicago to, say, Kankakee, Ill.? You can compare home prices and taxes, but here’s something a calculator won’t tell you: Whether there’s a Nordstrom store there. If you have to drive 100 miles to shop anywhere besides Target, then the cost of living calculator is pretty much irrelevant — the parameters of “living” change significantly depending on the services available where you end up.

Read the rest at Yahoo Finance.

37 replies
  1. Anirban
    Anirban says:

    I’m seeing the single star comments on yahoo finance, and laughing. People are so attached to their materialistic possessions that they seem to feel threatened when that thinking is challenged.
    The basic premise of this article is true. The goal is to refuse to let your life be measured and ruled by numbers like your net worth,salary reports, and become active in following one’s passions and define your own criteria of success.

    The specific examples here(BMW, Nordstorm) may not apply to all- but I would certainly feel happier in cities where I had old friends close by. Or the weather – which is why Bangalore in India continues to grow as an IT destination, in spite of higher costs. Likewise, at certain times in your life you may want to live in a happening city rather than a old fashioned one. So cost calculators don’t work.

    I think there is a delicate balance between following your passions and everyone will have their own opinion.

  2. d
    d says:

    1) Like it or not, salary surveys are a necessary evil. HR departments use them (i.e., Radford) to set pay scales.

    With this in mind, I’ve used salary surveys to buttress my demands in two recent salary negotiations: One negotiation was for a raise at my old company; the other negotiation was as a (then-)prospective hire at my new company.
    The surveys were a valuable piece of the arguments I made to my respective employers, both of whom gave me what I asked for.
    I also have a problem with Penelope’s idea of comparing notes with friends. 1) In polite company, this is a no-no; if anything, it reeks of the basest materialism! 2) Citing a “professional-“looking source like salary.com sounds a heck of a lot better than, “Uh…my buddy John at XYZ Corp. earns $x, so I want to, too.”
    2) Commenter Anirban, above, seems to offer a false choice between quality of life and “materialistic possessions.” During my recent aggressive pursuit of a fairer wage, I retained all my quality-of-life benefits: ample vacation time, telecommuting, flex hours, etc. What’s the point of making money if you can’t enjoy your life?

    * * * * * *

    Re comparing notes with friends: I think it’s really important for employees to talk about salary. The only person who benefits from employees keeping quiet is the company owner. I have found that if I talk openly about how much money I make then the people around me do, too, and we all benefit from being smart about how much people earn.

    In terms of coming off looking materialistic, people who think money is super-important worry about talking about it. People who think money is just one little piece of life think it’s just one little piece of information and can talk about their salary with anyone.

    Penelope

  3. Dan
    Dan says:

    Penelope,

    I’d change the title of this article: The five
    online tools you shouldn’t base your decisions
    on.
    The information that those tools give is
    often a valuable first glance on the problem, they
    just shouldn’t be used as a last instance proof.
    When combined with good judgment and local knowledge, like your comparison L.A. vs NYC, they’re pretty valuable and save lots of time by
    bringing lots of information in one place.

  4. Dan
    Dan says:

    Hi P,

    Thank you for your blog on financial matters. No tomatooes or stones will be thrown…

    It is interesting Yahoo labelled the column–“When a Mouse Click Isn’t a Career Move.” It is a bit different from your listing.

    Please consider these three financial activities for readers before crisis, when in crisis, and after…
    Budgeter from Microsoft. It allows professionals to determine how much income they need to break even, where their assets are going and offers the potential to better manage asset (income/spending) movement.
    Credit cards. Oh, my word. So many individuals have over-extended themselves. (1) use only low rate cards, unless you pay off your balances every month (2) use EFT to pay on time (with balance protection in your checking account) (3) when you renew your cards, ask for low rate or “0” rate that you can get with other cards (4) develop a “pay-down plan”
    Turbotax earlier than the 1st quarter of filing year. You can determine an organized plan for estimated taxes, deductions, investment decisions. Develop a plan with investment counselors on how to minimize taxes. New tools are continuously being developed that middle class individuals can use and benefit from.

    Your five items are the tip of the iceberg that you intended to remind readers are “not enough, or sufficient, or perhaps beneficial…”

  5. DJ FunkyGrrL
    DJ FunkyGrrL says:

    In my opinion, best way to gain a perspective concerning another city or company vibe to talk to locals online or in person from ‘different age groups’. Cost of living estimates portrayed in media sometimes slanted towards a different demographic. Chicago isn’t as expensive to locals as newbies. Why? Newbies not accustomed to the many amenities of the city which are hidden. Online tools are ok for estimation; however I would not use them as a replacement to talking people residing in those cities. For example, I’ve always loved San Diego, I’ve spoken to locals they have ‘given me a different vibe’ of the city counter to what I’ve read in ‘travel guides’.

  6. Matt Bingham
    Matt Bingham says:

    What up P,

    I’m not so sure that you “Shouldn’t Use” these tools, but use them with caution. We are allowed to talk to our friends about salary but our HR departments and boss’s arent. So, you need something to take to them to be able to justify your request. That is the only reason I use them. Cost of living calcs give you a “standard” picture at an area – but if you are relocating ask future co-workers and take a few visits out there (if possible). Also, real estate agents are knowledgable in this area so turning to them is a good idea as well. Good ideas though – I really like your mentality on “Quality of Life”. It’s something my wife and I talk about often.

    Matt

    * * * * * * *
    This is a good example of why I said people shouldn’t use these tools at all. Becuse even for something like baseline cost of living, there is a better way to do it: Housing costs. Look at the median cost of a home in that city. Becuase financial wellbeing is a relative feeling — relative to your neighbors. And a home is the way you typically will judge that. Not by the cost of orange juice or if a movie is $6 or $8. Also, with a cost-of-living calculator you have no idea waht’s being included (car costs in LA? car costs in NYC? and if not both then how are you comparing apples to apples?)

    –Peneope

  7. thom singer
    thom singer says:

    There is a difference between using the tools to gather information, and thinking that these online financial tools are God.

    Saying you should “never” use them is not true, but saying “user beware” is right on the money.

    * * * * * * *

    Yeah, you’re probably right that the title is too strong. But I think people use these tools becuase people don’t want to do the harder things involved in crafting a life.

    -Penelope

  8. Rachel
    Rachel says:

    I think this is one of the best things I’ve read on this blog. Most of the disparaging comments (esp at yahoo) seem to have not read the piece all too carefully. It’s such a clear, well-argued piece, that I’m not sure what they’re all going on about. And it fits in so well with the work-life theme that you’d think the yahoo finance trolls would finally understand about the “life” part!

    Great post, relevant, well-supported, seems to sum up your blog. Now, what I would love to see would be some online tools I SHOULD use…. We all spend some time clicking away not-so-useful sites– what should we do instead? I love the specific examples in this piece (BMW, Nordstrom’s), and I’m looking for the “Where should I live?” page that includes those questions. Any ideas?

  9. mark
    mark says:

    Don’t plan and/or save for retirement? You have got to be kidding. Even your most fervent cheerleaders have to see through this…

  10. Andrew
    Andrew says:

    Penelope couldn’t be more right on #1. As an HR professional, I have had no shortage of candidates and employees attempt to use Salary.com as a negotiation tool, only to find they are woefully misled by the data. Not only is the margin for error huge, but there is no source information available for the data. Imagine if every post on this blog refused to cite sources – would you trust it? But people think that the data must be true, because it’s readily available online, which is quite the opposite.

    Another commentor mentioned Radford, which is a great source, but not publicly available. However, when I’ve sat down with people and showed them radford data side-by-side with Salary.com, they get the message.

    The problem with online tools is they are geared toward a consumer. In the case of salary websites, companies have no interest in making that data publicly available, so the consumer served here is the employee, which naturally means the data has an inappropriate bias.

    I will say one other thing – employees shouldn’t always discuss salary, because often people don’t understand the relative value of their experience to an employer. Two people may have the same job, but that does not mean their skills and experience are equivalent or disparate. Though this is a manager’s tasks to address when it arises, openly discussing salary can lead to morale issues between employees.

    This becomes more apparent as baby boomers don’t understand that it doesn’t matter if you’ve done your job well for 20 years if someone can come in and do it well two years out of college. Both employees have the same relative value to the employer – why should one be paid that much more (or less as the case may be) for their experience?

    * * * * * * *

    This is a great comment, Andrew. Thanks. There’s a lot to learn here about what salary negotiations are like from the HR perspective.

    -Penelope

  11. Heather
    Heather says:

    Penelope, I cannot believe that, as a writer, you are unable to spell the word “because”. In every reply you make to a comment, you misspell the word. It’s not that hard to spellcheck.
    * * * * *
    Heather,
    It’s an issue of cost-benefit analysis. The amount of extra time it would take me to import/export my responses to comments in order to spellcheck them would make me never want to respond.

    I spellcheck the posts. So maybe you should read those but not my comments :)

    -Penelope

  12. Pirate Jo
    Pirate Jo says:

    I thought this was great advice! Regarding the rent vs. own decision, I compromised by buying a condo. Cheaper than a house, low-maintenance, and all the space I could ever need. Someday the payments will end, and I can get a reverse mortgage on it when I’m old for the extra income.

  13. Leslie M-B
    Leslie M-B says:

    Penelope, I don’t know how you can deal with those negative comments from the fools over at Yahoo! Finance. You’re a much stronger woman than I am.

    This post rings very true for me. I’ve lived mostly in California, where home ownership is only affordable for most people if they also accept a huge commute to work. And yes, in the past a home was a terrific investment (my parents’ home, for example, has appreciated by about $1.5 million over the past 40 years), but I’m not so sure it’s such a good investment today. I can rent a modest home for $1500/month or pay $5000/month in mortgage on the same home. As a recent Ph.D. with a bunch of student loan and consumer debt, that’s a no-brainer for me.

    Thanks again for keeping up the good work!

  14. finance girl
    finance girl says:

    couldn’t agree more!!!
    Those tools are way too general and usually are way off.

    Salary? Sure, ask around, but also keep what you want in the back pocket until it’s absolutely necessary to divulge. Then go high.

    Cost of Living? Again, ask around, esp. people that actually live where you want to live.

    Retirement Calculator? Duh, save as much/as often as you can! Put $ aside until it hurts, then put 1% more aside.

    Rent/Own? Usually you are better off owning, but only if you will be there long term and have at least 10% to put down on a fixed loan.

  15. Lola
    Lola says:

    It is better to use salary surveys from professional associations in your industry.

    * * ** * *

    Yes. Great point.

  16. thom singer
    thom singer says:

    You said, in response to my comment above:

    “Yeah, you're probably right that the title is too strong. But I think people use these tools becuase people don't want to do the harder things involved in crafting a life”.

    I think you are right, but what does this say about your readership and people in general? I think that your onto something here and have the basis of a whole new book for you…..”The Hard Thing You Must Do To Craft A Life” by Penelope Trunk. I see best seller!

    thom

  17. leslie
    leslie says:

    I agree that the current paradigm of retirement is becoming obsolete. Unfortunately, what isn’t obsolete are skyrocketing medical costs. It is important to have a career that is flexible enough to allow enough time for family and physical activity (i.e. trips to the gym, hiking, whatever) because both of these lifestyle choices contribute to good health. Some very high paying jobs are not very flexible.

  18. katie
    katie says:

    I saw all the one-star ratings on Yahoo and had to laugh. This must be a generational difference (which Penelope has addressed many times). As a generation-Yer, this article made perfect, rational sense to me. It seems as if the older generation just doesn’t get it. Our priorities are different than theirs. We saw our parents struggle to provide material items and sacrifice their lifestyles for material goods. We saw that, and we want to do things differently. Kudos to you, Penelope for pointing out that there are other paths to take!

  19. wayne
    wayne says:

    You said: “The only person who benefits from employees keeping quiet is the company owner.”

    Quite profound.

  20. mark
    mark says:

    Katie,
    If this is perfectly rational advice, where is the money going to come from to pay for your living expenses and health care when you are too old to work? Mom and Dad’s basement will probably not be available when you are in your 60s. Oh yeah, you might inherit some money from those evil boomers whose money-grubbing ways you despise. Let me know (you too Penelope) what the plan is for your 60+ years.

    * * * * * *
    I’m just saying that the idea of saving for retirement did not exactly work for the baby boomers. Most do not have enough money to retire, and even if they did, they wouldn’t want to. So it makes perfect sense to me that gen x and gen y would not fall into the same trap the baby boomers did where they worked and worked for retirment, thinking it was some holy grail and then it never came.

    –Penelope

  21. Nina Smith
    Nina Smith says:

    Penelope, good thoughts!

    Regarding real estate: it certainly is worth considering the pros & cons of owning vs. renting, but don't throw the baby out with the bath water – especially for those in expensive markets.

    People can continue to rent and buy a home in a more affordable location (and renting it out). For example, rent in Brooklyn but buy out of state (preferably in the Sunbelt) where you can find a home for under $130,000. The investment pays for itself (cash flow positive) and your tenants eventually pay off the mortgage. After you get comfortable with this concept – rinse and repeat. At sixty-five, you will still be enjoying theatre on Broadway, but you'll own a home (or homes) free and clear, and receive monthly rent checks.

    Home ownership builds wealth and provides tax benefits. Every investor should have some real estate in his/her portfolio since diversification limits risks. Plus, saving for a down payment gives twentysomethings a goal that provides confidence and discipline to learn to live within their means.

    "The best investment on earth is earth." – €“ Louis J Glickman

  22. Joseph
    Joseph says:

    More of the same old shtick. Follow the formula: make a bolded list of semi-controversial, or at least unconventional, points—five will do. (Remember, “conventional” is banal, and it sure doesn’t make good copy.) Then add some arrogant or implicitly self-congratulatory remarks on each.

    Wouldn’t we all be better served taking advice from someone who is exceptional in terms of their success? If you had a “nearly disasterous financial life,” how can we be sure you are on the right track with what you write now? What exactly is it in your background that qualifies you to tell others how to make key life decisions?

  23. Anirban
    Anirban says:

    Ok, here is my issue with Salary calculators. How do you compare these 2 jobs:
    1) $120,000 as an economics analyst in an finance company
    2) $65,000 a year to work as a researcher for a year with a nobel prize winning economist.

    Which has greater longer term gains ?

    Calculators work when all other variables are equal,not when career choices are drastically different. People either drift where the currents of money takes them, or they swim where they want to go.

  24. Pirate Jo
    Pirate Jo says:

    “So it makes perfect sense to me that gen x and gen y would not fall into the same trap the baby boomers did where they worked and worked for retirment, thinking it was some holy grail and then it never came.”

    Exactly! The idea that people are able to (let alone ENTITLED to!) spend the last thirty years of their lives not working is a relatively new one, and one that is completely unrealistic and unattainable for most of generation x or y. This is not a disappointment to me and doesn’t bother me in the least. In fact, once I realized the truth of it, I felt kind of relieved.

    I’m 37 and won’t see a dime of Social Security, which is nothing but a ripoff Ponzi welfare scheme that transfers wealth from the working to the non-working anyway. Nice going, “greatest generation,” I see you made out like bandits on this one. Way to vote yourselves a big share of your grandchildren’s money. Hope you’re proud of yourselves and are enjoying your RV’s.

    I will probably live to be 90, so if I was going to retire at age 60 and never work again, somehow I would have to spend the next 23 years of my life paying for all the people currently taking money out of SSI and on top of that save hundreds of thousands of dollars to cover my own retirement. What a living death. I’m simply never going to make that much money, and I make more than the average person.

    Well so what? A little work never killed anyone. I will work less as I get older, but I will get my house paid off and continue to work at least a few months a year. In the meantime, yes, I do set aside some savings, and I’m sure I will tap into some of that money when I am in my 70’s and 80’s, but I can get some cash flow from working, too. I will probably never fully quit working until maybe the last five years of my life.

    Last month I met an 80-year-old woman who rode her bicycle all the way across the state of Iowa. I am in good health and intend to keep it that way by being responsible and taking care of my body. Getting too old to work, whatever. I don’t carry bricks for a living, I sit in front of a computer. I am not going to work and work and work and scrimp and save and deny myself everything, all for some magical, “golden years” fantasy about living on a cruise ship. My golden years are right now, my life is happening right now, and I am enjoying it right now.

  25. Joshua
    Joshua says:

    I enjoyed the post, although I disagree that salary calculators are not worth people’s time. Even if your peers will discuss their pay, people often lie about their jobs to make themselves seem more important.

    Also, as posted above, industry salary surveys are rarely available to non-HR folks. However, I work at Salary.com, so I’m biased on this issue.

    @Joseph

    >>Follow the formula: make a bolded list of semi-controversial, or at least unconventional, points – five will do.>Wouldn't we all be better served taking advice from someone who is exceptional in terms of their success?

  26. Joshua
    Joshua says:

    Sorry, my comment above got cut off.

    @Joseph

    — Follow the formula: make a bolded list of semi-controversial, or at least unconventional, points – five will do. —

    Yes, lists are formulaic. Writers do it because it draws an audience, both online and in print. Readers like lists.

    — Wouldn't we all be better served taking advice from someone who is exceptional in terms of their success? —

    Not necessarily. Frequently, the best teacher is someone who has made mistakes, who can emphasize and explain in a person’s own language. This is the key to support groups like AA.

    A paragon of financial success would be difficult for an average person to relate to, and their financial advice would seem less relevant.

  27. Gina
    Gina says:

    While I agree that cost of living calculators don’t help us with what is most important to our own lifestyles, I do feel the salary comparison tools are sometimes valuable.

    For those of us who make our homes in Middle-America or in communities that are not near larger cities (I’m 2-3 hours from Chicago), we often work for organizations where there is only ‘one of them’ in town. For example, I worked for our tourism bureau for almost six years, which represented eight surrounding counties. It was the only tourism bureau. The only way I was able to get a raise was by researching what other bureaus in similar-sized communities were paying people in similar positions to mine. Currently, my day job is working for a United Way, and once again, it’s the only one in our area. The national United Way website lists salary ranges for a variety of positions throughout the system, and that is how we negotiate our salaries. (Although, I often find this slighlty biased as it falls to the law of averages, and I consider myself a little above the average – not to sound boastful. For example, we do our own design work in-house and save money on advertising agencies, etc.)

    In addition, I think salary comparison tools can be somewhat helpful for when we’re establishing new, freelance jobs. While we may have to start small and work hard to obtain the higher paying projects, at somepoint freelancers also have to give themselves a raise. The salary comparison tools can be a starting point for researching competitive fields.

  28. Lee
    Lee says:

    I beg to differ with the end of Andrew’s 8/16 post and would like to know Penelope’s thoughts about this particular comment:

    “…it doesn't matter if you've done your job well for 20 years if someone can come in and do it well two years out of college. Both employees have the same relative value to the employer – why should one be paid that much more (or less as the case may be) for their experience?”

    This seems to contradict a point made in the previous paragraph, which was: “Two people may have the same job, but that does not mean their skills and experience are equivalent or disparate.”

    Specifically, do you believe that people should be rewarded for their tenure and loyalty to a company?

  29. Kathryn
    Kathryn says:

    I can take this one. “Tenure and loyalty” don’t translate into “successful worker”. Someone who has worked at a company for 20 years should fall into one of three categories:

    1) Started at the bottom and has risen to a higher level every couple of years. This sort of person is probably quite gifted at what they do and would probably earn more than a new employee in an equivalent position.

    2) Has only progressed through a few positions, with significant promotions merited about every 4~5 years. This person would probably be quite competent, but would only earn as much as a newer employee due to lack of “flashiness”.

    3) Has stayed in essentially the same position for the last 20 years. Probably not especially gifted at (or interested in) the work. I can easily see how this person might be paid less than the new guy.

    I used to work in a motorcycle test facility (2004) and there was a position equivalent to “Test Administrator”. Test Administrators were an interesting mix of newly graduated engineers and promoted riders/mechanics. Some of the engineers were obviously being paid more highly than the non-college graduates. But there were other cases where the former riders were obviously being paid more than the engineers. Ostensibly all of the Test Administrators were doing the exact same work, but it was obvious that the ones with more talent for the job were considered more important to the company. Since I left the facility, the Test Administrators displaying the most talent have been further promoted. These include 2 engineers and one guy with 20 years of experience riding bikes.

  30. mark
    mark says:

    Your quote:
    “I'm just saying that the idea of saving for retirement did not exactly work for the baby boomers. Most do not have enough money to retire, and even if they did, they wouldn't want to. So it makes perfect sense to me that gen x and gen y would not fall into the same trap the baby boomers did where they worked and worked for retirment, thinking it was some holy grail and then it never came”

    is bizarre. A, it is a gross generalization (something you excel at), as there are a lot of people who have satisfactorily saved for their retirement. B, even if many or even all haven’t satifactorily saved, does that mean that saving is bad/wrong/unnecessary? I’ll repeat the question I asked before – working until you are 80 is fine, but what is your plan if you are unable to do so?

  31. Dave Y
    Dave Y says:

    Penelope, I couldn’t agree more about point 3. Playing the stock market is much like gambling no matter how you invest, regardless of what a Personal Financial Advisor might tell you. :) My only other suggestion in that area is that folks invest 50 percent of their money you’d put in a stock index fund in bond index funds for added diversity and stability.

    As you say, focusing on your career more than your investments is a much better path to financial success. And even if you do well, you won’t suddenly lose it all for no reason.

  32. Martin
    Martin says:

    Agree with blog/yahoo distinction. This piece works well with sympathetic readers (like myself), willing to give P. benefit of the doubt and an extra second (or sixty) of thought to figure out what point she is really trying to make.

    Unfortunate thing, the points P. is making (assuming I understand her correctly) are quite commonsensical. She seems to make them more provocative by her writing style. I think – on purpose. A bit overdone, IMHO

  33. Pirate Jo
    Pirate Jo says:

    “Working until you are 80 is fine, but what is your plan if you are unable to do so?”

    Just die, I guess. Maybe blow through my savings more quickly than expected? Go on welfare? Honestly, I’m not the least bit worried about it. I’ll have enough money to take care of myself if I can’t work at that age, but don’t consider that a very likely possibility. (Shockingly, I also don’t have a plan for what to do if a hurricane hits my house in Iowa.)

    Not having any savings or investments is foolish. But some people live their lives ruled by fear and insecurity about the future. You don’t need a plan for everything. It will be 43 years before I turn 80, and I’m not going to spend all that time planning for it. I put a certain amount into retirement savings every year, but beyond that, I just spend the rest of my money and enjoy life. I am not going to skip a single vacation or deny myself a single pleasure that life has to offer me here and now because I am worried about having enough money when I’m 80. For all I know, I could get hit by a beer truck by then.

  34. mark
    mark says:

    Pirate Jo,
    Thanks for the comment – can respect and appreciate your position. However, I am guessing the probability of you being unable/not wanting to work at 80 (based on what I observe of the majority of current 80 year olds) is much greater than a hurricane hitting your Iowa home or being hit with a truck.

  35. Gobbles Jones
    Gobbles Jones says:

    I would like to ask a question to those here. I would consider myself a “Yahoo User” as I disagrre with PT’s columns there more often than not. My biggest problem with this one is the fact that she says you shouldn’t save for retirement because you’ll always want to work and shouldn’t stop to “do nothing”. The questions is, what do you do when the workforce as a whole doesn’t need you anymore? Where does the income come from and what will you be living on to support yourself? If you lived in the here and now your whole life and didn’t save anything or plan for retirement, what then? As confident as you may be and as knowledgable as you are, there will come a time where someone younger, better, smarter will come down the pike and make you irrelevant. You may not have that mentality now, as the Gen-Y group that PT extols the virtues of, fits that description, but 40+ years from now, that future generation will consider you disposable, just as you think of the current workforce.
    * * * * * *
    Thanks for this comment. You pose an interesting question. The answer, I think, is that most Gen X and Gen Y workers assume we will be laid off/downsized/bored within a 2-5 year timespan of a job. So we expect to reinvent ourelves for the market constanty. The people who are irrelevant in the market are people who did not spend their whole career reinventing themselves and rebranding themselves and switching things up to meet market demands.

    I’m sure my generation will have trouble in old age, but it’s not going to look like the baby boomer trouble. It’ll be different, because we’ve made different decisions for our lives.

    -Penelope

  36. Gobbles Jones
    Gobbles Jones says:

    “I'm sure my generation will have trouble in old age, but it's not going to look like the baby boomer trouble. It'll be different, because we've made different decisions for our lives.”

    Can you specify the differences between the Baby Boomer trouble and the Gen Y issues? What are the issues the BBs you are referring to and why will GY be different? Is it just because they took much different career paths?

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