Rethinking Retirement EGG-cellently

V.3, N.34

About five years ago, I collaborated with two organizations—the Sustainable Economies Law Center and LIFT Economy—to launch the Next Egg. Our original mission was to teach people how to use self-directed IRAs and solo 401(k)s to invest their tax-deferred pension savings locally. For those of you new to this subject, yes, it’s not only possible to create localized pension investments but also relatively easy and inexpensive.

Rather than invest your life savings in global stocks and bonds, you can begin to put your savings into local businesses, local real estate, and local personal loans. Using a solo 401(k), you can also give yourself a loan, which can sometimes be as high as $50,000, and use it to pay off credit cards or make a down payment on a home. You can then repay yourself over five years, and your retirement account earns interest on your payments.

Several hundred people have used the Next Egg’s resources, but now active members are asking harder questions: How, for example, can I invest in bringing down the costs of retirement? If I invest in making my community energy self-reliant on cheap solar energy, then I’ll need less money for future utility bills. If I grow some of my own fruits and vegetables, I’ll have lower grocery store bills.

We are pleased to feature in this MSJ Extra! an interview with Erin Axelrod, one of the principals of LIFT Economy, who now oversees the Next Egg. She shares many of the cutting-edge strategies for localizing retirement, including a novel kind of 401(k) set-up for LIFT Economy employees.

Erin would like to see a world where current investments bring down the costs of retirement to zero. Given rising health care costs for the elderly and likely cuts to Medicare and Medicaid coming from Congress, I’m skeptical about achieving that goal. But it’s certainly possible to use one’s solo 401(k) to invest in community-owned infrastructure to make retirement a lot more affordable.

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MS: Before we dive into the Next Egg, tell us a little about LIFT Economy. What exactly is the organization, who works for it, and what projects do you carry out?

EA: LIFT Economy is an impact consulting firm with a mission to create, model, and share a racially just, regenerative, and locally self-reliant economy. Our leadership comprises five worker-owners: Kevin Bayuk, Phoenix Soleil, Ryan Honeyman, Shawn Berry, and me. We also have several worker-owners, including Jeanette Morelan, LIFT Marketing Lead, and Emmy Allison, LIFT B Corp Consultant Lead.

Our projects vary quite a bit. Our Next Economy MBA is an online learning program that has been going for nearly a decade and has engaged more than 750 students. We also teach conflict resolution and team-building through our popular Next Economy Leadership series and personal life design through our Next Economy Living online training. Our consulting projects range from helping companies get certified as B Corps to consulting with Next Economy Social Enterprises. For example, we facilitated a collaboration between Patagonia and Winona LaDuke. We also help high-net-worth individuals and family foundations like Jonas Philanthropies develop their grantmaking priorities.

MS: When we put together the Next Egg about five years ago with the Sustainable Economy Law Center (SELC), our original vision was to help participants create and manage self-directed IRAs and Solo 401(k)s. The idea was to empower more people to redirect their tax-deferred pension savings to local businesses or projects. What appealed to you and your colleagues at LIFT Economy about this mission?

EA: Initially, the appeal was somewhat personal. In 2019, I wanted to earn a lower salary as a war-tax resistance strategy, and also to be less reliant on other people supporting me financially. Here was my big thought: What if I could use my pre-tax savings to build up the infrastructure around my bioregion so that more people might need less income to live? How can we all engage more deeply in a gift economy? I imagined that this would enhance my own sense of personal security while also making a bigger impact on the war tax resistance movement. My business partner, Kevin Bayuk, referred me to research that Janelle Orsi of the Sustainable Economies Law Center had done using their retirement savings. So I reached out to her, you joined the mix, and the Next Egg was born!

MS: What is the mission of the Next Egg, and what kind of resources does it provide?

EA: The Next Egg operates as a community of practice that aims to reimagine and transform the conventional understanding and use of retirement savings and individual wealth.

The Next Egg challenges mainstream retirement assumptions and advocates for a justice-focused “next economy.” We provide a platform for learning, community, and action. We encourage members to move existing savings out of harmful investments and into community-based investing via self-direction or by taking it out of retirement savings altogether and swallowing the tax penalties. This might include investing in transformative initiatives like land rematriation, local agriculture, and mutual aid. We also encourage members to use CDFIs, credit unions, and other Next Economy institutions. The Next Egg is committed to radical repair and systemic change.

We provide members with a wealth of resources, including a public-facing Google Drive where anyone can access our past webinars, read our published blogs, and more.

MS: The Next Egg now lives at LIFT Economy. Tell us a little about who’s participating. How many individuals use the platform? And who are they? What seems to be their demographic makeup?

EA: We currently have between 300-400 members who participate in a Mighty Networks platform, where they engage with one another on questions about retirement, both personally and collectively. Based on surveys we’ve conducted, our members have between $10 million and $15 million in retirement savings. Our members include certified financial planners, community organizers, longtime activists, solo-entrepreneurs, nonprofit leaders, legal and accounting professionals, and members of our Next Economy MBA alumni network.

Members are driven by the mission of creating life-affirming retirement strategies that weave together the goals of freedom, personal fulfillment, connection with others, and a comfortable elderhood. They also deliberate on common concerns related to retirement, like rising healthcare costs and higher costs of living. They want to develop greater literacy around retirement planning and managing investments effectively.

MS: What do you think Next Egg members have learned about self-directed IRAs and solo 401(k)s?

EA: I would prefer to ask the bigger question: What have users learned about retirement in general? And I would answer that a big learning for all of us is that since the passage of the Employee Retirement Income Security Act (ERISA) in 1974, the tax benefits of using traditional retirement mechanisms have decreased substantially. So we encourage our members to consider looking at other mechanisms for “saving for retirement,” which could include making investments in communal housing, off-grid energy and water systems, and resilient food systems, to name just a few possibilities.

That said, there is so much inertia within the existing retirement mechanisms that we cannot ignore them entirely. Solo 401(k)s are easy to create, and sooner or later, most people have the opportunity to roll over their existing retirement accounts into a solo 401(k) vehicle. These 401(k)s give users many options to invest directly in their community. We have lots of resources on the Solo 401(k), including an in-depth, all-day webinar we held on the topic.

MS: Well, the Solo 401(k) has been a lifesaver for me and my wife. You and your colleagues are now interested in getting members to think more broadly about their retirement savings. Can you elaborate on the kinds of conversations you want them to have?

EA: Yes! One difficult question we raise is, do you really need to have retirement savings at all? What is the world going to look like when you retire? How are the tens of trillions of dollars currently invested in the US in the name of retirement undermining possibilities for you to have a liveable planet to retire to?

The big three pension investment companies—Vanguard, State Street, and Fidelity—are, by and large, not investing in cooperatives, renewable energy, or regenerative systems. They favor priorities like surveillance, weapons, policing, carceral system, detention facilities, extractive mining, chemical manufacturing, perpetration of human rights abuses, criminalization of civic protest, and more ugly stuff. The Next Egg members want their money invested in a future that works for all of us, with no one left out.

Many of our members challenge our cultural norm that wealth accumulation in retirement is the sole means for attaining personal security. There may be better ways to redirect our capital towards more equitable, sustainable, and community-centric economic systems.

MS: When we first put together the Next Egg, we considered the possibility of creating our own Solo 401(k) product. I paid Rocket Dollar about $400 upfront for my Solo 401(k), and now pay a monthly maintenance fee of $15. I still believe these costs are way too high. Is there any interest in the Next Egg revisiting this possibility?

EA: Absolutely! In addition, we are exploring ways of reducing transaction costs through collective investment trusts. Through collective power, we can unleash ourselves from the traps of capitalism!

MS: LIFT Economy also has a virtual MBA program. Tell us a little about that program, who’s enrolled, and how they plan to practice what they are learning?

EA: Our online Next Economy MBA program is perfect for entrepreneurs, people in career transitions, students, and graduates interested in new economic models. It is the perfect program for impact entrepreneurs, those starting or growing cooperatives, people interested in steward ownership, impact investors and those in worker self-directed nonprofits We cover all the basic concepts taught in a traditional MBA program, but through a values-aligned lens that also covers non-traditional topics like nonviolent communication, democratic governance, alternative currencies, and much more. Your readers can learn more at our Next Economy MBA website.

Our fifteenth cohort will begin on September 30 and is a nine-month course that runs through June. Courses are taught in 90-minute live sessions every other week. I encourage anyone interested to attend a free introductory session taking place on June 24, August 5, August 21, and September 2.

For our wider audiences, we recently launched a course called Next Economy Living. Among the things we introduce in that course is a tool called the Radical Retirement Calculator. It shows that the average American using business-as-usual methods needs more than $500,000 to retire comfortably and have their needs met. If, instead, you spend your decades leading up to retirement investing in alternative living strategies such as in the realm of housing, food security, off-grid energy, and water catchment systems, and much more, you can reduce your financial needs for retirement to as low as zero! Folks can learn more about the course at go.lifteconomy.com/next-economy-living. Our next cohort starts on September 11.

MS: How did you personally get interested in this work? What was your professional journey before LIFT Economy?

EA: When I first started my career, I helped lead permaculture-oriented education programs. I was in charge of developing and launching gray water programs in collaboration with municipal governments. What I observed was that many of our volunteers were just doing this work on the side or as a hobby. I wanted to find a vocational path for implementing alternative living strategies. That is fundamentally what I see as my role with the Next Egg and our courses. I’m inspired by people like Ethan Hughes, who started an organization called the Possibility Alliance, which housed a couple of dozen adults and children for under $10,000 a year. And by the millions of people worldwide who are creatively meeting their needs outside of the financialized realm.

MS: Finally, how do you personally invest locally? Do you have a self-directed IRA or a solo 401(k)?

EA: At LIFT Economy, we set up an employer self-directed 401(k), which means each LIFT Economy worker-owner is both a trustee and administrator of their individual portions of our workplace 401(k) at LIFT Economy. Each of us has checkbook control, meaning we can personally make the investments. My own retirement savings in that plan are invested in a local ecovillage that practices regenerative agriculture.

Read all of our past interviews here.