Earlier today I spotted this tweet from finance expert, Jean Chatzky.
By the time you’re 30, aim to have 1x your annual income set aside for retirement. At 40, 3x; at 50, 6x; at 60, 8x; and by retirement, 10x.
— Jean Chatzky (@JeanChatzky) November 1, 2017
Personally, I think this is sound advice from Jean, who regularly tweets informative posts encouraging people to make saving money a priority. However, I did find myself asking the same question I ask myself whenever I see posts like this focusing on how much we should be saving for retirement: Is this really that helpful?
On the one hand, I think young people need to be reminded of the importance of saving money for a comfortable retirement. I also think we need all the encouragement we can get. The message needs to be clear: Save as much as you can, as soon as you can, because you can’t rely on the government to care for you.
However, considering the financial difficulties that young people aka ‘millennials’ often face in other areas of their lives, I often feel a little uneasy when I see people much older than ourselves who may have benefited from lower house prices, more affordable living costs, and more generous pension plans, demanding that we save 15% of our monthly income towards retirement. It’s often as if we aren’t already desperately trying to save for our own homes, emergency funds, families and just life in general.
I’m not suggesting for one second that Jean is guilty of the above. She does use the word ‘aim’ in her tweet after all. She softens her points in later tweets and when you look through her timeline, the majority of her posts are clearly aimed at people who actively want to build wealth, rather than those who are perhaps struggling to live day-to-day. I often say that not everything you read on the internet has to apply to you and I guess this is a prime example.
In some ways, I can identify with the frustration Jean might be feeling when reading her mentions right now. I regularly blog about saving for a deposit on my own home and although I’ve worked hard and have made a lot of sacrifices over the last few years, moving in with my parents to slash my living costs has played a huge part in my success.
This alone has seen me bombarded with criticism over the last 3 years from countless strangers who seem to think I’m some rich snob rubbing my privilege in their faces. It’s frustrating because in reality, I know that saving a deposit can be a lot harder for those without parental help and I really do try to convey this in most of my posts on the topic. So when people jump into my mentions and say “NOT EVERYONE CAN DO THIS. YOU’RE SMUG SCUM. I HATE YOU” it’s a little upsetting, in all honesty.
I guess what I’m trying to say is… I’m not attacking Jean here. Again: not everything we read on the internet has to apply to us. Nevertheless, her tweet did make me think about a much wider problem. It’s like her tweet was some kinda catalyst, I guess. It got me thinking about finance people who are far stricter, less understanding and realllly out of touch. I think I can summarise this problem with the following sentence:
The way finance companies and personal finance experts talk to young people is often unhelpful, discouraging and intimidating.
For example, a few weeks ago I met a pensions expert who insisted in no uncertain terms that young people need to be saving 15% of their income for retirement otherwise they’ll be thrown into the depths of poverty. I suggested to him that perhaps we’d see more young people saving for retirement if we gave them more realistic figures. Nope. He was adamant that there was no point in giving people lower figures because it wouldn’t be enough anyway.
Do you know what? He might well be right about the poverty bit, but I know enough about people my age to know that threatening us with grotty bedsits and cold tins of Branston (not even Heinz) beans and criticising us for not saving money sooner will do nothing for our motivation and self-belief.
When faced with threats like this, so many people I know have the attitude: “I’ll never be able to buy a house and I’ll never be able to retire so why fucking bother.”
Unsure how I feel about advice like this. It’s impossible for most of us to achieve this, but she isn’t wrong. We just won’t retire…ever ???? https://t.co/vvWdWWZNms
— Jenni Hill (@CantSwingACat) November 1, 2017
As a 27-year-old who has ZERO saved for retirement due to a combination of saving for my own home and working for a series of small companies that don’t even have pension schemes for me to contribute to even if I wanted to, I stand by my tweet above. Unless my blog takes off in a Zoella-kinda way in the next few years, there’s no way in hell that I can save my salary by the time I’m 30.
I’m not alone in this dismay. I asked members of the Money Mess To Financial Success Facebook group for their thoughts and their responses ranged from: “totally unachievable when house prices are so high” to “well, I’m fucked.”
I do think that teenagers who start saving for retirement can build themselves a healthy pension pot by the time they retire. Hell, they might even reach Jean’s goal by 30. But have you tried telling teenagers to save for retirement lately? Most of them don’t fucking listen to us old sods anyway. That’s why my blog isn’t designed for them. Even if I wanted to write for teenagers, I’m probably not cool enough. I only just found out who Cardi B is, I don’t know what it means to ‘dab’, and I have a hard time talking to my colleague Louis and he’s twenty-fucking-three. The other day he said ‘the problem with your generation…’ to me and I don’t even think he was joking.
But anyway, here lies the problem. Young people aren’t listening. When people my age were teenagers we weren’t listening either – many of us still aren’t. Often, when we do start listening, we’ve gotten to a stage where we’re surrounded by rich old people yelling “WHEN I WAS YOUR AGE I ALREADY HAD A HOUSE AND A WIFE AND A PENSION” into our ears. It’s overwhelming. It’s not helpful. It’s too late for this information. Give us something that’s actually helpful or clear off and be quiet.
When I was 16 and my parents told me to save 10% of my supermarket wages for old age, I laughed in their faces. I remember telling my workmates about it and they laughed too. Even the ones in their twenties laughed as if my parents were the most stupid people they’d ever heard of. I’m sorry, Mum and Dad. I do wish I’d listened to you.
Hopefully the auto-enrolment scheme will improve things and force young people to get in the habit of saving early so they don’t end up bickering with people on Twitter over nothing, but considering the vast majority of people reading Jean’s tweets and my tweets and all the other tweets from finance experts online are not teenagers, the scornful ‘SAVE THIS MUCH OR YOU’LL DIE*’ (maybe dying will do us a favour cos we’ll have to save less) advice is all too little too late for us. *Yes, I know Jean didn’t say this. I’m sure she’s lovely.
Without a workplace pension to actually contribute to along with a fucking DeLorean to travel back to 2006 with, I aint gonna have that pension pot by 30 and neither are most of the people I write for.
I don’t really know where I’m going with this. I guess I just wanted a little rant and it can be quite difficult to do that in 140 characters. I’m gonna call it a night and return to this post once I’ve calmed down. Maybe I’ll regret this whole thing in the morning and delete it. Who knows?
Anyway, I’ll leave you with some key retirement related takeaways that I hope a bit more helpful than the nightmare statistics we’re often flooded with:
Start saving for retirement as soon as you can. Even if you start off putting just £20 a month into a workplace pension, this is better than nothing.
Compound interest is your mate. Do you know what compound interest is? If not, don’t worry – I only found out a few years ago. Basically, compound interest is interest on top of interest. Let’s imagine you have £5,000 in a savings account and you earn £50 interest on that in a year. The following year, you’ll be earning interest on £5,050, so even if you don’t put any more of your own money in the account, your money will keep growing. This means that the sooner you put money in a pension, the better. Technically, if you’ve got a good enough pension deal, you could start saving for retirement at 16 and save for 10 years and stop! If you’ve put a decent amount of money in your pension, this money should keep growing and growing by itself. If you’re not 16, don’t worry. Most people aren’t. Just start with what you have.
Don’t put pension saving on hold to buy a home. I made this mistake and I really regret it. I wish I’d opened a private pension a few years ago and started saving for retirement as soon as I was made aware of its importance. Obviously I’m in the process of buying my own place so I’m in a more fortunate position than many, but when I do get my hands on a workplace pension in a few months’ time, I need to try and make up for lost time.
Make sacrifices. I know this is easier said than done and a bit ‘stop eating avocado on toast and you’ll be able to retire-y’ but try to sacrifice some fun stuff in order to save for retirement. I know it feels so far away and you probably care way more about your current self than you do about 70-year-old you, but when you’re old and wrinkly and trying to decide whether you’d rather eat a meal or put the heating on, you’ll regret not being a little bit more frugal when you were young.
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