Why owning less stuff may lead to more happiness How we think about future financial independence and success is changing. Today, those two factors are best measured by our stuff. Our homes, cars, even the clothes that we own are signs of our financial well-being. It appears, however, that how we think about ownership is evolving. Imagine a world where you own nothing but you may feel like you have it all. Welcome to a new type of economy. The sharing economy, sometimes referred to as collaborative consumption, is basically the transformation of physical assets into services. Items that we normally own may morph into a service that you purchase by the hour, day or year. Travel and transportation are leading the way. The travel and leisure business is an innovative force in the sharing economy. One of the best known Internet services, Airbnb, offers nearly 200,000 rooms, apartments, boats, even treehouses in 190 countries. Transportation is also providing a very rich market for collaborative consumption. Rideshare services use smartphone applications to match rides with riders just about anywhere around the world in near real-time. Sharing is changing daily life. The sharing economy may also affect how we accomplish everyday chores. Need something done around the house? TaskRabbit lets users go online to post a job they need done, such as cleaning the basement or buying a gift. NeighborGoods allows members to share, lend, rent or sell nearly anything. For example, you can swap your bike for your neighbors vacuum for a day or two. Rent the Runway rents customers apparel for special occasions. When the party is over, you simply box up the dress and send it back. Meanwhile, other companies such as Poshmark allow users to buy or sell clothes by viewing the virtual closets of other people on your smartphone. What does all this mean for your retirement planning? The new sharing economy is based on experience over ownership. This may mean that cash flow, not assets, will be king. The cost of getting from one place to another, for example, may mean ensuring that you have the income to pay for seamless transportation on demand rather than parking thousands of dollars in a garage. By the same token, an owned home may become less of a priority than making sure you have the flexibility to pay for rent and other fees in the locations you want to be. In addition, these changes may provide a wide variety of services to help you or your loved ones remain independent longer. For people no longer able or willing to drive, for instance, the rideshare services may become the alternative to asking a neighbor for a ride to the store or doctor. Regular home maintenance can also become more challenging. To meet those needs, a trusted service provider could help with cleaning, changing light bulbs and even taking out the trash. The new economy is likely to have profound impacts on our experience and expectations for retirement. Moreover, it may be the key to our ability to live independently and better as we age.
Posted on: Tue, 12 Aug 2014 01:42:18 +0000