Since the invention of the very first spear, innovation has been the cornerstone of human livelihood. It created the tools that gave our ancestors the nourishment to mature as well as the clothing to keep them warm. Innovation built the homes that have sheltered us, and it assembled the vehicles that have been transporting us for generations.
Today, many view innovation as the engine of job creation and economic opportunity. But what is less obvious is the integral role that innovation plays in workforce evolution and its transformative impact on America’s retirement infrastructure.
America was founded by a nation of farmers whose "retirement plan" was essentially to work until you die.
America was founded by a nation of farmers whose “retirement plan” was essentially to work until you die. While this approach may have been well-suited for a bunch of self-sufficient laborers, it was not conducive to the developing labor force driven by the industrial revolution.
The industrial revolution, marked by the transition from a self-reliant agrarian economy to one dependent upon machines and factories, caused a major shift in lifestyle and brought about significant changes including the emergence of the capitalist economy.
As workers left their farms to work for industrialists, a new retirement method was born: the employer-sponsored pension plan.
Pensions eventually provided a way for companies to attract and retain employees. Although the pension system fared well in an industrial age, where long-lived company careers were commonplace and life expectancy was low, it became increasingly unsustainable when job-shifting was in vogue and individuals began living longer.
With necessity being the mother of invention, a new retirement structure for the modern industrial age was born: the 401(k) plan. Initially created by Congress in 1978 to give employees a tax-free way to defer compensation from bonuses or stock options, the 401(k) plan ultimately became a way for employers to transfer the responsibility of retirement savings back to the employee.
The 401(k) plan ultimately became a way for employers to transfer the responsibility of retirement savings back to the employee.
Unfortunately, 401(k) plans are only offered to a select portion of the American workforce. Not only are 401(k)s unavailable to the growing number of gig workers, but many of those who do have access to 401(k)s can’t afford to contribute to them anyway. To make matters worse, those with the means to make 401(k) contributions are prohibited from investing in many of the alternative assets that provide the diversification necessary to maximize risk-adjusted returns.
With the majority of Americans woefully unprepared for retirement (many without a nest egg at all), the nation, once again, finds itself relying on an outmoded retirement construct unsuited for a changing labor force.
Fortunately, just as traditional pensions are on the verge of extinction and the 401(k) structure is under scrutiny for exacerbating a retirement crisis, the next workforce revolution is fermenting. This one, driven by digital and decentralized innovation, will utterly reimagine how people earn, save and retire.
Today’s innovation not only makes it easier for individuals to be self-employed, but it is also unleashing an unprecedented opportunity for individuals to earn money without even working at all!
Soon, as fintech and web3 apps become more mainstream, many individuals won’t be limited to building wealth through paychecks and investments. Instead, they will be able to receive compensation by monetizing their daily activities such as learning, playing, exercising, engaging with brands, and yes, even, shopping.
Many individuals have already begun to earn and build nest eggs simply by engaging in their routine activities.
Today, more than 60 million people surf the internet with Brave, a web3 browser that enables individuals to earn financial rewards by browsing the web. There are also a growing number of move-2-earn apps that reward users for staying fit such as: STEPN, StepApp, MetaGym, and Race to a Billion.
Others are building nest eggs as they shop for goods and services via modern fintech savings apps, with roundup features, such as Worthy’s Digital Savings solution which enables users to accumulate their spare change in accounts that earn _xx%* per year.
As this participation-driven retirement solution scales, it will ensure that everyone - even the retired as well as the unemployed - is constantly accruing capital, essentially retiring the entire concept of retirement itself.
*_xx% valid through _expdate