YOUR MONEY-What if retirement security is not about the money?

NEW YORK Wed Jan 29, 2014 7:00am EST

NEW YORK Jan 29 (Reuters) - Pop quiz: What would it take for you to have true retirement security?

Odds are you just thought of a number - $500,000, maybe, or $1 million, or $5 million.

But Charles Eisenstein, author of "Sacred Economics," has a message for you: Whatever number you came up with, you got the answer dead wrong.

That's because real retirement security isn't about a number, as he discusses in his book. It's actually about the relationships in your life - the friends and family and communities you can truly rely on. After all, when the money runs out - as it will for many of us - those relationships are all you have left.

Reuters sat down with Eisenstein to discuss the "gift economy" that defined traditional societies for thousands of years and may now be making a comeback out of financial necessity.

Q: When we're talking about retirement security, why shouldn't we talk about numbers?

A: Numbers in investment accounts are actually pretty fragile. They can disappear overnight, either because of a financial crisis or foolish decisions. They're not secure at all.

I'm not saying we shouldn't make investments, but that we need to broaden our concept of what an investment is. Everybody understands the principle that whatever you put out, will come back to you: People who spend their lifetime being generous, find in old age that others will take care of them. That's the kind of real security money can't buy.

Q: For much of human history, that's how societies were organized.

A: In a "gift economy" like more traditional cultures, your wealth isn't about how much you own or control. It's about how generous you've been, because then everybody wants to be generous to you, too.

After all, what you have given is the one thing that can never be taken away from you. Even in the event of a revolution or a total financial collapse, what you have given will always be remembered.

Q: In a society where we are isolated in our own cocoons, how do we re-establish these kinds of ties?

A: There's no easy answer, but I see a lot changing already, because it has to. Some people think the trend of twenty-somethings moving back in with their parents is a bad thing, but maybe it's a sign of the rebirth of extended family and community. I hope so.

In the old days farmhouses were huge, because they were meant for grandparents, for uncles, for cousins, to all live together. Historically, single-family homes were an aberration, and grandparents were not always locked away in old-folks' homes. Families and friends had to rely on each other, and we may be moving toward that again.

Q: What if you are giver, but those around you are not -- doesn't the logic fall apart?

A: Yeah, there's no guarantee. But the reason to be generous is not a cold calculation that a gift is going to be immediately repaid. In any real gift there's a leap of faith, and you won't always know how it will come back to you.

But if we act from that place of security, usually we have experiences that confirm and justify that. I see all the generous people in my life being OK and enjoying riches, financially or otherwise. Things always seem to work out for them, because people want to do nice things for them.

It basically requires a different way of looking at money. We associate it with security, but that's a delusion. At some point every one of us will be on our deathbed, and we won't be able to take all that money with us. All we'll have at that moment is the satisfaction of having made the world a little better - even the most cynical investment adviser knows that.

Q: Since hardly anyone is saving enough for retirement, might more of a gift economy be coming whether we like it or not?

A: With an increasing concentration of wealth, stagnant incomes for most, and more and more of the middle class falling into poverty, people will naturally gravitate toward a gift economy. Because people do take care of each other in times of need.

It happened in my area a couple of years ago, when the Susquehanna River flooded. In times like those money is not going to rescue you, and so people formed long-lasting bonds in just a few days. In some ways we're being both pulled and pushed into a gift economy - pulled by a desire to be connected again, and pushed by economic necessity.

Q: Do you believe more crises are on the way, that will cause us to rethink how we look at money?

A: Things can change so much, so fast. In Cyprus recently when a financial crisis hit them, you could have a big fat bank account, but you weren't allowed to withdraw any money anymore. It doesn't take much for something like that to happen.

And when that happens, even having gold bars in your basement won't help. Wealth is ultimately a social agreement, an interpretation of what numbers in a computer mean, and that can change overnight. If you really want to be rich in a way that's lasting and secure, you have to have strong relationships.

(Follow us @ReutersMoney or here; Editing by Lauren Young and Dan Grebler)