Schrodinger’s Retirement




Subtitle: A paradox resulting from traditional retirement calculations.

Schrodinger was an outwardly successful middle manager in a small corporation.  He had taken a traditional career path … school followed by an entry level job and a few small promotions.  Schrodinger had saved throughout his life and now had an enviable nestegg.  It was enough to generate about 40% of Schrodinger’s current salary forever (adjusted for inflation).  At his current age, 50, he visited retirement calculators quite frequently.  They all predicted that in just a few years he would have enough to retire with their suggested rates of 70-100% of income replacement.  Perhaps a decade or so, depending on the calculator and the rates  and assumptions that they used.

Schrodinger wanted to retire, but would only do it when the retirement calculator would tell him it was safe.  But the instant it was OK, he would walk out the door.  He yearned to be free and become an artist.

One day Schrodinger’s company was purchased by a much larger corporation.  He was directed into a conference room to meet with a Human Resources professional.

“Your department has been eliminated”  she informed Schrodinger.  “Inside this envelope is your new assignment.  It was decided by our central computer program that optimizes each person’s utility to the corporate needs.  I don’t know what the computer has decided for your future, but I will help ease your transition to your new role and compensation.”

“What are the possibilities?” asked Schrodinger.

“There are three possibilities” she replied.  “You can be assigned to the mailroom, get a lateral move to a middle management position, or become a VP in a new division.  The mailroom is a low pressure job, but only pays about 40% of your current salary.  The middle management position is challenging and pays exactly the same that you are making now.  The division VP  is very prestigious and has a salary that is four times as much as you make now.  The information that I have is that each of these outcomes is equally likely.”

Schrodinger quickly reviewed the possibilities:
1)  His portfolio was generating the equivalent of the mailroom salary right now.  If he got the mailroom job, he could replace 100% of that salary and be able to retire immediately.
2)  The middle management job paid exactly the same, so he would be able to retire in a decade or so, the same as now.
3)  His portfolio was only generating about 10% of the VP position salary.  Given such a small salary replacement rate and his advanced age, it occurred to Schrodinger that he would never be able to retire with standard retirement contributions.

As Schrodinger reached for the envelope to find out his fate, he realized he was existing in three states simultaneously: about to retire today, ready to retire in a decade, or never able to retire.  It all depended what was sealed in the envelope.  Somehow it all seemed wrong to him – why is his entire future riding on a computer printout?  And why is it out of his control?  And does free will exist, or is everything predetermined?

And then Schrodinger opened the envelope.

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