Are Those Golden Handcuffs On Too Tight?


You are an economic unit. You know your job is to maximize the resources you have at your disposal to lead the best life you can lead. And you are doing exactly that: you have a good job with a good company and you only have 10 more years before you get to retire at age 55 with a good company pension. Sounds pretty great, right? Tons of people would envy your position. You're set! 

So what's the problem?!

There’s absolutely no problem working for a company for many years. There are many jobs that we love to do day in and day out. We get up, feel good about going to work and feel satisfied with a job well done at the end of the day. 

If that is your reality, lucky you! If you have all that AND you have a great pension coming to you when you decide to hang up the uniform at the end of your career, even better!

90% of adults spend half their waking lives doing things they would rather not be doing at places they would rather not be.
— Barry Schwartz, Why We Work (2015), p. 3.

Chances are that’s not the case. If it were, nearly 70% of employees in the U.S. and even more worldwide would not say they don't feel engaged at work. If so many people are unhappy, why are they not doing anything about it? For some folks at least, the root cause is golden handcuffs*.

The Power of the Golden Handcuffs

Under the influence of [the endowment and loss aversion] biases, we commonly overvalue what we have and we consider giving it up to be a loss.
— Dan Ariely, The Upside of Irrationality (2010), p. 285.

When I was considering leaving my former employer, the fact that I was leaving behind a hefty defined benefits pension was not lost on me. In fact, it weighed heavily on me, despite how miserable I was and despite the fact that I didn’t really need it to ensure a secure financial future, but I still wanted it. 

I’d only worked with this organization for a dozen years or so and still had 17 years to go before reaching full benefits and it weighed on me. In a way, what did make the decision easier was knowing that every additional year of work would only make the golden handcuffs tighter.


Getting Them Off

If you're having trouble breaking free from your own version of golden handcuffs, here are my five suggestions to help you break away or overcome loss aversion or the FOMO**. They worked for me, so maybe they can work for you too:

  1. Work towards financial independence NOW. Pay off your debts—yes, including your mortgage) and pay yourself first by putting money aside from every paycheque (10% is the absolute minimum and more is better). The more money you have accumulated, the easier this decision can be on you and on those who depend on your income.
  2. If you’re lucky enough to work for an organization that offers a pension plan, always assume it will not be there for you in the future and save accordingly (see point #1). Planning your life around the fact that you’ll have access to a secure source of income is risky. There's no guarantee that your employer will be around in 10, 20, 30 or more years, that you will not be fired/laid off, or that the laws protecting your future earnings won't change. When in doubt, ask an Enron or BHS employee how they feel about their pension plan.
  3. Don't focus on what you’re losing, especially when it's not "real" yet. Nothing is guaranteed and you can definitely be shortchanging yourself by believing in a fictitious upside. We’re hard wired to think of what we’re losing and not of what might be in store for us by seeking out the unknown. Better yet, you might be surprised by the amount of funds that get turned over to you when you decide to take your vested pension payout (where applicable) and the options you have available to help you manage the accumulated sum.
  4. Think about how much you’d be willing to give up to be free? I'm not kidding when I say this. How much is the happiness and relief associated with leaving drudgery worth to you? Think about that number and make it real. You might surprise yourself. Sometimes the personal price tag attached to staying is WAY too much to pay, yet our focus keeps getting drawn to what we might be giving up. We are strange creatures, aren't we? 
  5. Start exploring other ways to add value in your life. Feed your need to produce something outside your current career path. Take a course, start a side business, take a part-time job. Expand your horizons. Make your current occupation less important in the overall picture of how you define yourself. These efforts can help you feed your desire to leave just enough to tip the scales.
[I]n addition to the dollar costs of labor and materials, we must add the psychic costs experienced by workers doing jobs they hate. If we redesigned workplaces so that workers liked their work, these psychic costs would become psychic benefits.
— Barry Schwartz, Why We Work (2015), p. 86.
[F]alse ideas can affect how people act, just as long as people believe them.
— Barry Schwartz, Why We Work (2015), p. 67.

The bottom like is that if the only reasons you can think of to stay with your current employer are monetary, and your work life is an important way in which you define yourself, it's time to take a hard look at your situation. Life is too short to spend 40+% your waking hours working in an environment you merely tolerate because of an expectation of future financial benefit. 

Security and certainty—when provided or promised by others—are an illusion, albeit a comfy one. 

*For the purposes of this post, golden handcuffs to be any deferred benefit an employer uses to entice retention in their organization. This could be the promise of company shares, a deferred pension plan, additional vacation time at various levels of service, even accumulated sick days (I left 163 sick days behind!) and so on. Essentially, its whatever an employee feels is owed to them and is sweet enough to not want to "miss out on" because they've been working toward it for some time.

**FOMO: Fear of missing out

Image credit/copyright: patrisyu/

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