Is it better to have a full-time job or be self-employed? What about retirement? Health insurance? How does a person who has been self-employed for 2 decades look at all this?
This post was originally written in 2008, in the thick of the economic downturn at the time. I have done a few little updates to the post in 2019 and left it here as some food for thought. Enjoy!
Years ago, my wife wrote a blog post about what it’s like having an entrepreneur as a husband. Unfortunately, that post is no longer online (she took her blog down). But, she asked me about how I plan for my “golden years”. In other words, am I planning for my retirement? Do I worry about not having a pension plan or a 401(k)? Do I worry about not having a steady paycheck?
In her blog post, she said (and this is the one quote I have from her original post):
So I guess part of me does feel somewhat insecure about having a blogger for a husband. I do think about what it will be like when we get old and have no 401k or any other income to fall on, I think about the $2500 we have to shell out of our pocket before the health insurance kicks in if any of us gets sick. I think about the economy and how it is going to affect our small business.
This post was originally written in 2008. It was in the thick of the economic downturn. It was also before Obamacare kicked in. The idea of having only a $2,500 deductible on insurance is pretty laughable for us now.
She also mentioned my small ordeal in getting approved to buy my first house. This is true. In retrospect, I may have stressed about it more than I needed to, but I did have to jump through a few more hoops to get approved for that mortgage because I did not have traditional pay stubs. Plus, they saw my income (from my tax returns) go from a small amount (due to a college job) to a full-time income even though I was technically unemployed. It didn’t make any sense to them because I didn’t fit the normal template.
Who knows, maybe they thought I was a drug dealer or something. 😉
All of this speaks to the various “downsides” of running an online business and being self-employed. But, are they really downsides?
Today, running an online business and being self-employed in this fashion is, perhaps, more normal than it was back in 2008. But, many of those same concerns can still come up.
Is having a regular job more of a safe bet?
Is The 9-5 Job Really That Secure?
I think it is an artificial faith to think that having a 9 to 5 job makes your finances more secure.
For instance, if there are uncertain economic times, what if your company lays you off? If you get a 401(k) or other retirement plan, how secure is it really? There are quite a few people out there who have lost a lot of value in their retirement nest eggs because of the stock market fluctuations. If you need to make more money, what do you do? Beg your boss? Cross your fingers? Kiss the right butt?
What it comes down to is one thing: you are not in control.
When you work for a large company, your financial security is only as secure as that company. And, most likely, that company is not controlled by you. It is controlled by management and is dependent on whether they make the right decisions. And when it becomes necessary to cut expenses, for THEM to make the decisions necessary to see through tough times, who do you think is most susceptible to getting the axe? You are, of course.
On the contrary, when I need to make more money, I can create a new product, run a sale, get inventive. In other words, I can make it happen, on demand. And it is based on one person – me. I have no boss to beg.
So, who is more secure in an economic downtime? The person who has to hope their boss makes the right decisions? Or the boss himself?
Working for a large company, you might think they are so big that nothing will hurt them. Well, remember General Motors? Seen some of the retail companies that have folded lately? Remember Enron? Big companies can and do fail. They are subject to the same rules as a small business. In fact, many times, big companies are LESS able to maneuver in tough times than a small business.
It is true that a small business can be like a little boat in rough waters. You can get rocked around alot and sometimes much more than a larger company. It can make you feel pretty good when that paycheck comes in every couple weeks like clockwork. But, it works… until it doesn’t. In the end, I believe it is a myth that there’s something inherently more secure about a traditional job. In both situations, you have to deliver value. And in both situations, you’re subject to external circumstances.
What About Retirement?
It’s true. Being a professional blogger or online entrepreneur doesn’t provide a retirement plan. But, I don’t care. Because I realize that there is nothing secure about any retirement plan I might get from a company.
Besides, would retirement be a reason to get a 9 to 5 job? Am I supposed to suffer my way through that slavery for most of my life so that I can sit there and be lazy on a retirement pension when I become old?
No, I can create my own retirement plan – one that I know will be there when I’m older because I have control over everything involved.
A 401K plan has drawbacks. Yes, your employer matches your contribution (free money!), but at the same time, it isn’t really your money until you meet the eligibility requirements to withdraw it. Until then, those funds are subject to every fluctuation in the market and there’s limited things you can do to shelter it from loss.
In the end, I don’t really like having investment vehicles that I am legally not allowed to touch. I’d much rather have control over where I put my money… and when I withdraw it.
As a small business owner, my income isn’t capped by anything other than my ingenuity. Plus, a revenue-producing business can be a good retirement plan of it’s own.
In the end, I think having a retirement plan is perhaps one of the worst reasons to have a traditional job.
What About Health Insurance?
The simple truth is that our healthcare system here in the United States is pretty screwed up. The Affordable Care Act made it much worse, too. This tends to get glossed over in all the political rhetoric about having provided insurance to millions of uninsured, but they don’t mention that that is only because of subsidies. For those of us who don’t qualify for subsidies, insurance costs are utterly ridiculous. My own family insurance went up about 5X because of the “Affordable” Care Act.
So, it is true that in many cases, having a traditional job does make health insurance more accessible. If you’re in a situation where you absolutely need that coverage, then perhaps you have to do what you have to do.
I’m a bit of a rebel, by nature. I’m the kind of guy who questions the established assumptions. And, when confronted with the new “affordable” insurance plans where I’d be spending more money every month than my home mortgage for insurance that would likely never kick in, I end up questioning whether I need insurance.
Truth is, right now we are not carrying health insurance. There are some group options we’re going to look into and we can just buy it on the open market.
I will admit that this idea of insurance used to be a much easier comparison for a job vs self-employment. That’s because, when this article was originally published in 2008, insurance was actually reasonable. But, to be blunt, the Affordable Care Act ruined it.
Entrepreneurs can carry health insurance, but it can be pretty damn expensive.
But, there’s also this viewpoint…
I do not live my life in order to provide protection against sickness. I do not let the small chance of sickness dictate what I do with the other 95% of my life. When I get sick, I deal with it. Group health insurance, where they pay for everything, might give you a warm fuzzy, but jeez, what a shame if you make that the focus of your life.
You can either focus on living or focus on sickness and death. Your choice. The medical industry would love to have you at their beck and call, sell you expensive “treatments” while knowing they can get paid by your insurance company. This whole society focus on health insurance is being SOLD to us as a bill of goods. All it does is turn everybody into good, paying customers.
Yeah, don’t even get me started…
What About the Steady Paycheck?
Some might find security in getting a steady paycheck, every two weeks, as expected. But, look at this:
It’s the same size check. Every time. Life changes. Your paycheck doesn’t. Where’s the security in that?
It’s true – my income changes every month. But, I get paid a LOT more often than every two weeks. Plus, I have the GAME of increasing my income. I CAN make more money if I want. I don’t have to ask for a raise. And, I make more money than most people with a 9 to 5 job.
It’s a Mindset Thing
There is a mindset that our society teaches: to fall in line, keep your head low, work for the paycheck, retire and die.
When you do as everybody else does, it gives a sense of security. And when people decide to go another way, we have people telling us it’s risky. That there is a chance of failure. That we have to work too hard.
The one thing, in this society, that is consistent is that when you stick your head above the crowd, somebody might try to shoot it off.
The first step to success, in many ways, is to DISAGREE with the status quo.
Perhaps it is true that being self-employed just isn’t for everybody. I have a hard time believing that, but it’s true that somebody out there has to screw the lids on the jars for us. But, I believe the American dream is to be your own boss, make a good living, have the FREEDOM to do what you want. And I will continue to remain an evangelist for that lifestyle.
I am happily unemployed.
In fact, I am unemployable. I can’t even imagine having a regular job.
I realize others have different opinions. Some people are more comfortable being in a situation that other people are responsible for. They find security in that. And there’s nothing wrong with it.
I just like to do it my own way. 🙂