Editor’s note: A version of this article of mine was published in December, 2012 on Budgets are Sexy as a Guest Post: so if you read it there just go read something else. If not, please read on – it is not only one of my favourites but it also writing and researching it helped me change my opinion about retirement and pensions.
Some say that with age come experience and wisdom. This may be so but I feel much more excited to be visited by acceptance and reflexivity: these are/have been instrumental in replacing regret with optimism and worry with a specific plan for action. But let me tell you a bit more about what this is about.
Most of us have heard about generations; some of us have heard about different generations like ‘the lost generation’, ‘the baby boomer generation’, ‘the Beatles generation’ or ‘Generation Y’. But have you heard about ‘the missing out generation’? Didn’t think so! I hadn’t heard about it either before I started reflecting on my life (very mid-life crisis, I know) and realised that I belong to it. This is a group of people who were born in the early to late 1960s (at the cusp between the Baby Boomers and Generation X ‘proper’) and who share a collective regret about ‘missing out’ on things. What have we missed out on?
We missed out on the 1960s for start. You know, I am yet to meet someone my age who doesn’t harbour regrets for missing out on the 1960s; and I am yet to meet anyone who was old enough to enjoy life in the 60s and really did so – most suspected that everybody else is having a ball. Still, there is the small matter of music, flower-power and free love: and my generation missed out on all of that.
Yes, there was Tina Turner but there were also Bonnie M. Yes, we did have sex but it was a bit like a pleasurable way to keep fit rather than the political statement it used to be. As to flower-power…well, it completely lost to greed and ‘life in the fast lane’.
Now it looks like that my generation is going to miss out on pensions as well. To cut a long story short, different ‘properties of pensions’ have been going the wrong way. I wouldn’t be concerned if the retirement age was going down and the size of pensions was going up. Regretfully we are told that we will be retiring later and later and the pensions that we can realistically expect, after accounting for inflation, will hardly be enough for hot dogs and mushy peas dinner. Pension funds have been performing badly across the board and people are already feeling the pinch.
To add insult to injury, recently a government minister in the UK suggested that retired people should be made to work for their pensions. Wait a minute, now! Isn’t the whole point of retirement that people don’t have to/can’t work any longer? Or have I been labouring under the misguided believe that I am building a pension fund so that my dotage is peaceful and without the need to undertake paid work?
This is what did it for me; here is where I draw the line! I can’t bring the 60s back – this is something on which my generation missed out and that is that. But you know what? Missing out on the 60s music made us ‘musical nomads’. I am equally happy listening to Faure or Dr Dre: it all depends on what I feel like at the moment (and what I am doing; running listening to rap is great). The ‘sex as sport’ thing also turned out fine: once AIDS made the headlines we had to be safe, not make statements. Yes, my generation didn’t have jobs when we were starting out; but this only means that this time around we know what we are dealing with.
All it takes to turn a situation of loss to our advantage – and my generation has ample experience with this – is to change our thinking and, after that, our actions.
Let’s see what this means for our retirement – our last chance to make a stand against a string of misses. I believe that if we are to come out top trumps here, we need to move away from thinking about employment, pensions and retirement. Ironically, this is the one way that will allow us to have retirement.
From ‘employment’ to ‘work’
Most of us focus on ‘employment’, or jobs, most of the time and structure our lives accordingly. Even when we dream about ‘getting out of the rat race’ and ‘being our own boss’ we still think about employment – we only put ‘self’ in front of it. This is problematic, however, because ‘employment’ is our way to refer to the conditions under which we do specific work. Employment is about a contract between you and an employer (this can be a contract between you and yourself) and your job is what is in your job description – the things you do to complete specific tasks (specific work).
In other words, work is at the core of all this; work is the true measure of the value we contribute to organisations, society at large and people’s lives. Focusing on work, instead of employment, has two important implications:
a) One doesn’t need to be employed to contribute value; and
b) One can get much further in both employment and ‘working for oneself’ when one focuses on work and generating value.
Focus on work, contribute immense value and it is likely that you will be able to amass the wealth (and develop the income streams) you need so you won’t have to sell your labour, e.g. you won’t have to be employed.
From ‘pension’ to ‘income streams’
Most of us habitually focus on ‘having a pension’. Guess what? You actually don’t need a pension, you need income.
What I am saying here is that we have come to associate retirement with a pension (or annuity) so closely that when thinking of retirement we tend to think about only one possible financial instrument to ensure that we have income. Probably not the best one for that either!
Instead of focusing on pensions it may be better to start focusing on income early on. This opens a whole host of opportunities for generating this income.
From ‘retirement’ to ‘life-style design’
I know, I know. I have read Tim Ferriss and he is a great champion for, and example of, life-style design. But somehow, my generation is missing out again; or shall I say, we appear to be missing a trick or two here. Life-style design is still somehow seen mainly as something young people do. Well, young people and people without other responsibilities like children at school and college, elderly parents and aching joints.
I figure that my generation will do well to forget about retirement, doggy cardigans, twisted stockings and worn out slippers. We may as well forget about group tourism for senior citizens – at least this is what I am going to do.
I am determined to live the life I really want during the first part of my later years. I’ll walk a pilgrimage; I’ll chase marathons and take flamenco classes with the gypsies of Granada. I’ll live in interesting places and absorb the language, and the culture. I’ll write, educate and entertain. I’ll wear purple only if it is Prada!
And when the time to slow down comes, as it inevitably will, I’ll set up a commune for my surviving friends; no care homes for me. I’ll start my own place for ‘the elderly and the beautiful’.
This is how my retirement will be! And I have calculated how much I need to retire.
Before anybody mutters anything about ‘a mid-life crisis’ let me tell you: I am not missing out on this one either – I am embracing it and celebrating it. My friends, just watch out for a lovely middle aged woman on a motorbike riding through your town in 2018 – it may be me. Oh, and I’ll be wearing leathers!