One theme from a recent conference on aging I attended has important personal finance implications, especially for the younger generations of workers: The trajectory of life is increasingly complicated with plenty of twists and turns. Variety is normal — and that realization should inform your personal finance habits.

Problem is, most of us still hold a simple three-part model of the life course. We go to school when we are young. We work hard at our careers after schooling ends. We accumulate savings to pay for our elder years. The third stage of life is retirement, meaning we say goodbye to our colleagues and embrace full-time leisure. These are the years we live off our savings (plus Social Security and Medicare).

The reality is that our lives typically are far more convoluted. Looking just at our work lives, the notion of a “job for life” and a steady career is a relic. So is retirement defined as full-time leisure. Growing numbers of older Americans are staying involved in the labor market, often through part-time work and flexible jobs.

The changing nature of work is pushing more people toward multiple jobs, fluid careers and on-demand tasks. Workers may find themselves entrepreneurs or microentrepreneurs for a period of time, followed by employment at for-profit companies, nonprofit organizations, government agencies and, perhaps, back to self-employment. Some of the transitions may be voluntary and other involuntary.

“Careers used to be linear with stages or steps that people could anticipate,” observed Dave Ulrich, professor of business at the University of Michigan and partner at the RBL Group consulting firm in an interview years ago. “Now, they are a mosaic where people move into and out of positions and jobs.”

The rise of the mosaic career means workers will need to devote more time and money to lifelong training, retraining and additional education. Young workers should save money for multiple transitions throughout a career. In practical terms, strive to set aside, say, 20 percent of income (if not more).

In other words, worry less about how much to put into stocks and bonds, particularly in the early years of a career. Yes, take advantage of an employer-sponsored retirement savings plan at work or, if self-employed, set up an IRA. Nevertheless, the key goal is to focus on building liquid savings to offset the risks and the opportunities — two sides of the same coin — embedded in the new world of work.


Chris Farrell is senior economics contributor, “Marketplace,” economics commentator, Minnesota Public Radio.