I had, like most people my age I know, bought in to the message that I will never be able to retire. I, and many of my friends believed that the situation was almost out of our control. I listened to conversations my parents had about people living longer, and that there would be less state subsidies (state pension) and how future generations wouldn’t be able to afford to retire.
When we were recent graduates, we were probably lucky to be earning £20K and rent, car, phone etc.. ate up most of that. Most people I knew, said they couldn’t afford to put any money into a pension. Although I know, I somehow had money to go out, and money for clothes and tech so I now have to question this… Even now, well into our thirties, I would take a guess that many of my generation still make the minimum pension contribution, freeing up as much cash to spend as possible. No education is provided on what this means for your future.
Due to this excessive consumerism based society that we live in, we believe that we need more and more ‘things’ and this equates to us living paycheck to paycheck, living beyond our means, accumulating more debt, and leaves us with a picture which may leave us with no choice but to continue working and still paying off our mortgages at 70 years old.
Some might say, but people are living longer and therefore are able to work longer but the point is this should be a CHOICE and not a necessity. I have only come to realize this at 35 years old and I wish I had thought about this 10 years ago, it is frustrating to think that I would be 10 years further forward if I have understood this better before. What do I actually have to show for having more available cash to spend at the time? Some material things I had probably either sold for peanuts, given away or thrown away.
There is nothing I can do about this now but I can change what I do today and tomorrow. I can hopefully try and help you to learn from my mistakes if you are reading this, and help you to begin a journey to debt free, purposeful living.
I think in the UK, we believe far too much that the state will look after us. We are putting huge pressure on the available resources. Wouldn’t we prefer to be in control of our own destinies? And we are, if we budget for it!
Most people I know, have managed to get on the property ladder through help from their parents. And this is because a lot of our parents planned well for their future. For those I know who have managed to buy a property (given that we need such large deposits), they either stayed at home living with their parents so they could save like crazy (big pat on the back to you), or their parents gifted them the money or…. someone died. If we do not change our behavior, then we will not be able to offer the same support, and where does this leave our children? The last thing I want, is to be a financial burden to my daughter and I would like to be in a position to help her financially when she needs it.
There are tools which you can use to plan for your retirement. My pension provider has a calculator which you can enter in what age you would like to be what you retire, and it tells you how much you should be investing into your pension and what this will give you in terms of annual earnings after you retire. You will likely have access to this tool if you are in the UK and employed, as it is now the law that you and your company have to pay into a pension.
I would certainly like the option to retire before I am 70.