Why you need to be a millionaire to survive retirement

Posted by David Hayes on Jan 17, 2018 9:21:09 AM














Some people say, “I love where I work.”

I say, “Great, but does your work love you back?”

How does a company show love?  They look after your current and future financial well-being. If the love was truly mutual, your company would offer great pay and benefits AND take care of you into your retirement years by creating a long-term compensation plan. In most cases, the truth is that the love is not mutual, because such a plan equals money out of the owner’s pocket.  It’s simple old-fashion greed, and you will feel the wrath of that greed once it’s time for you to retire.

Planning a Future Beyond Survival

To retire and live a comfortable and healthy life, the conventional wisdom is that you will be living on 70-80% of your current income and you need to have a total nest egg of about 10 -12 times your current salary—which basically means, yeah, you’re going to need to be a millionaire to retire comfortably.

National surveys recently shared in the Orange County Register demonstrates that only 8% of the population has a net worth of $100,000.

And only 2.5% of the population has a net worth over $1 Million.

Avoiding some tragic event, you will turn 50, you will turn 60, you will turn 70, 80, 90 and hopefully 100 years old. The reality of the situation is that once you pass age 65, staying employed is tough. So for most of us, ages 65 -100 is a time in our lives where we must have reserve funds to survive because it’s unlikely we’ll be able to earn.  If you’re not planning for this at 25, 35, 45 and on, you’re crazy!

But for most humans, ages 25 through 45 is simply about survival: paying the bills, saving for a home, paying off student loans, getting married, having kids, saving for college, and more. Retirement saving during these years usually consists of a 401k and any match your employer offers, but guess what?  It will NOT be enough, even with normal compounding of annual returns and even if social security continues (fingers crossed). You will need more, a lot more. So where can you get it? Well, a second job would help or the far better option is to find a company that offers a long term retirement plan for its staff, paid for and vested by the company.

The ESOP Way (Employee Stock Ownership Plan) VS. Everything Else

Skyline and a handful of others in the construction industry are ESOP companies, which are 100% employee-owned and issue company stock to our employees. This is important for your future because it serves as a supplemental retirement fund at no cost to you. It’s FREE MONEY.

I’ve worked for privately held S corporations & LLC’s for the majority of my life, sitting in both the employee’s seat and the executive’s seat. Believe me when I tell you that it’s extremely rare that these types of firms give a damn about your retirement. They’re offering retirement benefits to check the box and to remain competitive. They’re not evil, just greedy. After all, it’s their own money keeping the company alive and they pay big taxes on the profits, so they want to keep whatever profit is leftover.

When I became CEO at Skyline, my plan was ESOP or bust. I’d rather make 100 people millionaires, than make 4 partners worth over $25M each. This is simply better for society, and we’re in need of some strategic social financial thinking these days to solve long-term problems. Our employees enjoy ESOP stock, 401K contributions with a $6,000 company matching plan and annual profit sharing that ALL goes into a long-term, tax-deferred retirement plan. The company provides 3 extra buckets of funds to help prepare for future retirement. This is how we share the wealth and show our employees that the” love is mutual”.

The average construction field or office worker makes between $60,000 - $150,000, depending on their position, years of experience, etc. At Skyline, our employees make those same competitive annual base salaries with the ADDED benefits of ESOP stock, profit sharing and 401k matching. That means over the span of one’s career, the average Skyline employee is making anywhere from $500,000 - $1.8 Million MORE than the average construction worker working elsewhere. Those not working in an ESOP company could potentially be missing out on a financially secure retirement. It’s costing people a fortune to work at a privately-held company and they just don’t realize it.

The Reality of Our Situation

I hear all the time from entrepreneurs and executives that “greed is good”, it drives the engine of capitalism. I agree, it does. But when supporting that greed means citizens are left behind financially and we, the taxpayer, have to support them, eventually it will crush capitalism in the form of super taxes. The United States is now in the phase of social capitalism, where companies can be greedy but must take care of their employees long term. Basic terms, we are back to the days where companies must help employees formulate a robust pension / retirement fund as part of their employment and it has to go way beyond a 401k match.

$1 Million to survive retirement. And only 2.5% of the population is there now, which means the remaining 97.5% of us will have long, hard, golden years ahead after working our butts off for the majority of our lives. This is why having something like an ESOP is so valuable.  It is an extra bucket of funds, on top of your 401K, social security and any other savings, so that you have a comfortable retirement.

The Million Dollar Question

So, will you be a millionaire? If you happen to work for an ESOP company, all signs point to YES.

Skyline has been an ESOP company for 12 years. Today, about 10% of our staff have retirement balances over $1 Million through a combination of ESOP stock, profit sharing, and 401k + company matching; 30% of our people have retirement accounts over $200,000; over 60% have accounts over $100,000 and the others are well on their way.  That’s over 70 people just at our company alone who fall in the top 8.5% of the United States.  

Can your company make this claim? If not, maybe the love isn’t mutual after all.


Topics: jobs, career path, career advice, construction career, Construction Real Estate, retirement, ESOP, salary

Why does my office tenant improvement cost so much?

Posted by Craig Jones on Apr 25, 2017 2:35:18 PM

It’s a great question.  There are many factors that drive construction costs, most of which are controlled by the market and supply and demand (manpower, lead times, code changes and commodity pricing). Here is my take on the key factors driving current construction costs.

Banner - Driving Construction Costs.jpg


Title 24 regulations are costly

Title 24, or California’s Energy Code, is a hot topic in construction. It is a set of standards and regulations aimed to reduce California’s energy consumption. The Title 24 energy standards have changed twice in the past 2 years, each time driving up the price of construction. The 1st change decreased the amount of allowable use of energy for lighting, making it mandatory for contractors to switch from fluorescent lighting (cheaper) to LED lighting (energy efficient, but more expensive). This first revision also mandated each new electrical outlet to have a duplicate one within 6 feet that will automatically shut off when not in use (another added cost). The 2nd revision of the Title 24 code affected HVAC systems, requiring contractors to opt for Spiral duct (made of sheet metal) instead of Alumaflex (flexible duct).  Spiral Duct is more expensive than Alumaflex because of the cost of material and the additional labor it takes to install.

Manpower is at a premium

Clients are asking, “With Apple’s spaceship campus and other large Bay Area projects finishing, can we expect lower costs?” Seems logical, and I raised the same question to our subcontractors, but it’s unanimous that costs are actually rising. One of our subcontractors stated it best, “Unions are still lacking the manpower to meet project demands, so they pull workers from out of state and the project ends up taking more labor hours than we anticipated.” These “traveling” tradesmen often have lower productivity rates because they are not Bay Area residents and don’t have an incentive to work quickly for our local unions to move up the ladder. Instead, they do the job they are contracted to do so they can return home and find local work. The lower productivity rates increase the amount of tradesman to complete the same work and can prolong the construction project which results in increased costs.

Big Bay Area projects fill the pipeline

I’ve heard more Apple projects are upcoming, along with more projects from tech titans like Google. On top of tech are the SF Airport projects ($3+ billion of work), the SF Oceanwide Center ($1.5 billion) and the Warriors Arena ($1 billion) that are keeping the Bay Area very busy in construction.  This means the “travelers” are still needed. We also have certain trades that are very impacted, like Millwork (cabinetry and finished wood products) and Glazing (glass), which brings us back to outsourcing work and lower productivity rates. So what does all this mean? It means that with all these big projects on the horizon and impacted trades, we don’t expect construction costs to reduce in 2017 and into 2018.



  • It’s unlikely that construction costs will reduce from 2017 to 2018.
  • Economic slowdown effect: In my experience, I have found on average, it takes 18 months for the construction industry to catch up to the fluctuations of a market slowdown and then a market recovery. So although the rising vacancy and unemployment rates signal an economic downturn, construction activity will remain strong for the next 18 months.
  • Hot Market effect: Yes, the Bay Area construction market is hot. However, large scale projects drain resources, causing trades to outsource and lose productivity which drives costs upward.

Topics: Construction costs, Bay Area Trends, Real Estate, Construction Real Estate