By Manuel Carvallo

In order to properly plan for retirement, we need to have a vision of it. Dreams of our future retirement are never a one size fits all. The retirement vision varies from person to person, and it depends on several factors: personal goals, family situation, and type of work. This last factor will largely determine how one should prepare for retirement.

In my previous post I mentioned that retirement plans were originally designed to provide benefits to the long-term employees of corporations. The problem we face today is that in the U.S. economy there is plenty of work, but employment is scarce. The retirement model that works for employees, is not well suited to cover the needs of workers.

It is important for the independent worker to visualize retirement, but the uncertainty of long-term income associated with work arrangements creates a tunnel vision that impedes seeing long term, and retirement is a long-term project. It is futile to push retirement saving strategies designed for formal employees, on an independent workforce.

In my decades of experience in this area, I’ve come to the conclusion that the capacity to visualize retirement is as important as the capacity to save, because creates the motivation, but vision is reduced as the uncertainty of income grows. Let’s look more closely at the relationship between these two factors by outlining different types of work and their relationship to long-term planning.

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