Card Image

The Sovereign Pension: The Key to Funding the Modern Retirement

Posted by The Savvy Retiree on April 1, 2020 in Save Money

There is a certain sense of sovereignty I’m feeling today.

Last week, I was texting with a childhood friend in South Louisiana, where I grew up, and he told me that amid the corona crisis, his 50-year-old sister lost her restaurant job when a ban on gathering in public spaces forced the eatery to shutter. She was already struggling financially, and the loss of her sole source of income has her in a state of mental shambles.

I understand that at a visceral, personal level. As I’ve noted in past columns, I lost my job at 52. I was lucky in that I’d saved for years and had assets I could lean on to see me through. But even at that, the sense of stress was…well, have you ever woken from a dream and found the harder you try to remember the dream, the faster it fades? That’s exactly what it’s like watching your lifestyle vanish after losing a job.

All of which underscores the resolve I’ve felt in the last few years to not only rebuild my lost savings, but to create for myself what I now call my “Sovereign Pension.”

At its core, a traditional pension is nothing more than a stream of income. And for decades that stream flowed to retirees by way of companies and businesses that had promised to pay former workers a sum of money every month to help them afford their post-work life. Alas, we all know how those promises have largely worked out.

Thing is, we were only ever in control of one-third of our retirement lifestyle. I’ve talked in the past about the metaphorical three-legged stool of retirement: Social Security, pensions, and savings. Well, Social Security payments continue to exist only at the whim of elected leaders, and pensions are/were always controlled by businesses. The only facet over which we ever had any control was savings.

Until now…

Today, we can build our own Sovereign Pension, our own stream of income.

What I’m talking about here is our ability to exploit technology to create pools of income sources that we can tap into and which are always there for us. They’re not guaranteed…then again, how well did guaranteed pensions work for all those people who saw their employers axe or denude their plans? 

In the years since losing my job, I have actively sought ways to expand my knowledge base and my skill set, and to create multiple income-earning opportunities. I can’t say “streams of income” in that last sentence because not all of my efforts have yielded income yet. For instance, my screenwriting talents. While I’ve won a bunch of money winning various screenwriting contests, I’ve not yet earned that large payday selling a script. But that’s OK; I know Hollywood takes time and I continue along the path undeterred.

In the meantime, I’ve been building my online presence through various freelance sites. There, I’ve not only earned a nice chunk of change from one-off assignments, I’ve built long-term offline relationships with virtual employers who regularly hit me up. 

As I wrote in a column last weekend, I’m currently building a blog that I will monetize through affiliate marketing, online advertising, and the like. At the same time, I’m taking a book I wrote a few years ago on opportunities to profit from the rise of the middle class outside the West and turning that into an e-book. (I actually did that—posted it online—in 2017, but then promptly forgot about it as I returned to film school. Surprisingly, however, it earned a bit of money even without any marketing, so I feel confident that if I put some marketing effort into it, I’ll generate a larger sum.)

I’m also in the early stages of planning an e-book based on an idea that popped into my head during a recent conference call.

All of these sources of income are, in a very real sense, a form of Sovereign Pension. They all have the potential to generate a stream of monthly income—some of it based on ongoing work (like continual writing assignments and e-book ideas I have), some of it based on passive income (affiliate marketing, advertising, and book royalties). As such, they give me that sense of sovereignty: I’m captain of my own future, my own retirement lifestyle.

I want to be clear: You don’t have to be the creative type to build a Sovereign Pension. Writing is my talent, so I exploit it. But you have your own talents and your own skills to exploit, and you have beaucoup ways these days to use them to create your own Sovereign Pension.

In doing so, you will suddenly control 66% of your retirement lifestyle—you’ll control two of the three legs on that stool. You’ll feel that same sense of sovereignty I feel.So get out there and start working on your own Sovereign Pension. Take that first step and you’ll discover it’s easier than you think to take back control of your own retirement. 

Written by Jeff D. Opdyke