Millenials, Boomers and Busters

Thanks to Monevator this week for pointing me toward an FT article which I would otherwise have missed, that seemingly caused a bit of a storm (or at least a heavy downpour) on Twitter. It had highlighted a calculation that suggested 25 year old Millennials will have to save £800 a month into a pension to generate an income of £30,000 a year from it when they retire. (It’s actually a summary review of an original article posted here.)

One of the funny things about this calculation is that I bet it confronts a lot of Millennials with a really uncomfortable truth: on the one hand they know that £800 a month is a serious amount of cash. It’s an amount of money that has a reality about it. Mentally, they can grasp it. That’s two months worth of weekend partying. It’s four hundred McDonald Happy Meals. Two hundred pints of beer. And they have to save that every month until they retire!

As if that’s not bad enough, I bet many Millennials will be aghast that such an immense monthly “saving” will only generate an absolutely paltry income of thirty grand a year for their retirement. Thirty grand a year?! Doesn’t Kim Kardashian spend this amount a month on her hair? Taylor Swift surely earns it in five minutes? Ed Sheeran hands this to his mum and dad as weekly digs money. Thirty grand a year? That’s almost literally nothing. Even a Millennial Junior Doctor earns more than thirty grand a year and they can’t survive on it. What chance the rest of them?

Thirty grand a year, however, still seems like a serious amount of money to me. And to the generation before me it will seem like a lottery win – my parents couldn’t even dream of earning that amount when they started out from school.

When the Millennials moan about how hard their lives are compared to The Boomers, it inspires irritated letters from their elders complaining that life isn’t all that much fun on the state pension either. Or by more affluent pensioners stating they worked, were taxed and then saved for everything they’ve got – the youth of today will just need to buckle down and do likewise.

I’ve sympathy for both sides of the argument. My son is leaving University with about forty grand of debt and will need at least another ten thousand if he wants to put a deposit down on a flat. Where is he going to get that kind of money if the “bank of mum and dad” doesn’t step in to help, if they can? Encouraging saving is one thing, but encouraging debt is a ruinous practice, and I find it hard to believe that successive Governments are fully behind it, fuelling the fire. Haven’t we learned anything?

At the same time, even diehard FIRE practitioners might struggle on the state pension, while those of us with personal schemes are chewing our nails about how much that pot is going to be raided going forward (the only guarantee is that it will be raided.)

For me, my personal pensions are now pretty much a zero sum game: the more the Government takes, the more I lose. I’m not contributing any more in and won’t benefit from any tax changes that might previously have gone in my favour as a wage earner. I’d settle for this, however, if Government would just pledge to stop tampering any more with them and allow us to plan with a bit more certainty for our future.

When it comes to pensions, time is no longer on my side (to an extent) but the combination of saving money over a long term and compound interest has served me well to date. It’s that principle that I’d like to impress upon younger people today. I’m not going to enter the debate over whether they should aim to save £800 a month or 10%, 20% or 40% of their net income – I’d settle for them saving anything out of their wage packet on a regular basis. Even a fiver a week, just to start the habit. If they can save five, maybe that will lead to ten. The important thing is to do it and never, ever stop. Just keep it going. What an advantage that will give them when they hit fifty. And think if two such like minded individuals get together and double up? Who knows how much they might accumulate?

For me, regularly saving money is the core competency that should be inculcated from birth. Or earlier. Everything else is just finesse. It seems to me that saving £800 a month is a daunting amount of money. It’s a mountain that seems so impossible to climb that you might as well not bother. Wouldn’t it be more positive to point out that if a twenty year old could save just £80 a month over their working lives they’d pick up a one hundred and sixty grand lump sum at the age of 60? Okay, I  know it’s not quite that simple, you might not average a 6% return and what about inflation etc., but it’s the point that counts.

The best financial decision I ever made was almost a mistake – I signed up for my company pension on my first day at work on the advice of my line manager. My financial education up to that point had been almost non-existent. I’d no idea what a stock or share was, never mind an Index Tracker. There was one big exception to this though – I had been brought up and educated to save money. From about the age of ten, my mum took me to the Post Office every Saturday to make a small deposit in a Savings Account she’d opened for me. (It was embarrassing when she was still taking me at thirty five, but the lesson stuck.) Today it’s a lesson that still needs to be learned and practiced by just about all of us.

You’re Not My Type

With time on my hands in “early retirement” I find myself wondering if I’m the type of person suited to the lifestyle? Would it be different for someone who not only relishes their own company, but is the type who likes to write lists for the day and then tick the boxes as they achieve the goals? The type who tidy the kitchen and shiver with satisfaction when forks, knives and spoons are all neatly laid in their proper places in the cutlery rack? In other words, is retirement better for the introverts as it gives more control over living your life, allowing you to structure it the way you want to?

The problem is, I feel, retirement offers not much in the way of structure, unless “get up, read the paper and have a biscuit” can be classed as a daily framework. Not that this bothers me, as I think I’m a bit more of an extrovert. By that I mean that I tend to construct my world through interactions with other people, which necessarily means that you’re a bit less bothered about being in control of your environment.  (I’m using the more technical definitions of introvert and extrovert here. Not “introvert” which people tend to picture as “shy loner with possible psychopath tendencies and a gun” or “extrovert”, as in “bigmouth life and soul of any party who goes home to cry alone”.)

The challenge for the extrovert in retirement is keeping the social network going. Sometimes, when my wife leaves for work and I’m left in the empty house, I do sense that feeling of almost fading away from the real world. This can be resolved by doing something like going to the gym and saying hello to a couple of the regulars (the extrovert ones; the introverts are thrashing themselves to their predefined goal on the treadmill or exercise bike with their iPods on. You don’t even get a glance from them.)

For those of us in longer term relationships, retirement can throw your introvert and extrovert tendencies into relief, because an extrovert tends to pair up with someone a bit more introverted and vice versa. Thus I heard a female friend (introvert) telling of the sheer horror of coming home from work to find her newly retired husband (extrovert) standing at the front door, desperate to see her and have a chat. He’d then follow her from room to room, asking about her day, while all she wanted to do was sit in her favourite chair in peace and quiet to enjoy her cup of tea and read of the paper. As she once could do when he was at work.

Fortunately we all have a bit of both tendencies inside ourselves, so retirement presents the opportunity to work on your “deficiencies”. I think I am getting better at constructing “to do” lists and ticking them off, enjoying my own company and writing more, which is an introspective, singular activity. I’m sure my other half will join more clubs and encourage more friends round when she decides to retire, because she’s a bit more of an introvert.

Years ago I was really interested in this subject, about how your personality type filters how you see the world and how you interact with it. I read a lot by the author  and clinical psychologist Dorothy Rowe, who is mostly concerned with the treatment of anxiety and depression – a must for anyone following Scottish football – but has a fascinating view on how humans “construct life and death“. It’s a long time since I read her books, but I remember they were really well written and definitely altered my way of seeing the world. (Scanning Amazon I see she’s written a book on growing old too, which might be relevant to retirement, but I haven’t read that one.)

So next time you’re visiting the local library look Dorothy up. I’m sure one or two of her books will be on the shelves.

Defending Consumerism



I recently bought myself a new Iphone 6 Plus with the profits I’ve made on Matched Betting (appropriate, because I bought it largely to cope with mobile betting websites. My Sony Xperia wasn’t handling them too well!) After a year of pretty much watching the retirement fund pennies, what a thrill it was to treat myself on something quite frivolous. Forget the “24 hour rule”, forget the fact that I had been doing the mobile betting perfectly well via an ipad tethered to my Xperia, forget the opportunity cost (I could have bought 100 pairs of quality socks instead) forget the notion that I’m a bling-and-brand-headed numpty, yes, forget all of that. Treat yourself. Live a little.

On the day of the purchase I was on the Early Retirement Extreme forum when I came across a post from a rebel within the herd. “What’s this all about?”, he asked. “Live twenty years frugally in a camper van so that you can live another twenty years living frugally in a camper van? Sod that. I’m going to enjoy myself”. I had to chuckle, because I sometimes catch myself feeling exactly the same way about consumerism.

Now, I’m as cynical as the next man about the capitalist and consumer society we seem to have created. I hate shopping for shopping’s sake, I literally cannot watch any TV, such as the Kardashians, that extol the cult of celebrity and mindless, tasteless consumerism (given I’ve never actually watched The Kardashians, I’m making a big assumption that it is actually about that! And, if my wife reads this blog, she’ll have another go at me for being an intellectual snob.) It hacks me off though, that there seem to be countless TV programmes about making money and very, very few entertaining ones about saving and investing, or even being frugal. If Kim Kardashian is the poster girl of mindless consumerism, fair enough, but who is the poster girl for frugality? I can’t think of one, but why, when I try to, does the image of Hilda Ogden keep springing to mind? (Coming to think of it, we used to have a “poster couple” for frugality, Tom and Barbara Good. Ah, “Felicity, Felicity, you fill me with electricity” as Rik from the Young Ones ….jeez, I’m getting old.)

As I often mention, I’m a fan of the Tim Ferriss podcast but one thing that bugs me about it is that he increasingly seems fixated on money and celebrity. Just because you are a tech billionaire or a Hollywood celebrity with something to plug (Kevin Costner) doesn’t make you intrinsically interesting. Am I much different ‘though? Haven’t I just bought an iphone when I had numerous much more financially sensible alternatives? I’m just as influenced by branding as anyone else, providing I have the financial means to indulge them.

Let’s face it though, frugality is not sexy nor exciting. It’s dull, dull, dull. Mr Moustache can harp on about the virtues of his Honda Accord, but I think we all know that what he really wants to have in his drive is a Ferrari. Ladies, come on, have you ever seen a hot bloke in the aisles of Poundland? And men, Victoria’s Secret or The Women’s Institute?

Not only is the frugal life unsexy it’s also, in the long run, boring. The novelty of shopping in Lidl and Aldi begins to pale after a year when you’re standing in the store staring at the same old selection of meats, ready meals, cheeses and beers. I found myself in the beer aisle the other day looking at the relatively limited selection of standard ales plus the one or two “guests” that some supplier is trying to shift. I’ve tried most of these now and increasingly leave my beer buying until I pop into Tesco’s to see what their relatively vast selection has to offer. And, although I try to tell myself it’s not true, I’ll feel differently about reaching into the fridge and grabbing a bottle of ice cold Peroni versus a can of Tesco lager (mid-tier version, not Everyday Value Lager. I do have some standards!)

With regards to other things I buy, I can spend an hour happily enough in the Oxfam bookshop, but if I could afford it, I’d much rather spend that hour browsing in Waterstones. I often think that if I won the lottery, I’d visit Waterstones on a Saturday morning while the wife went shopping, buy half a dozen new hardback releases that I fancied, and then relax in their coffee shop to browse through them, treating myself to maybe two large, ridiculously priced, cappuccinos. And a biscuit.

The psychology of money is a funny thing and I can’t work out my own contradictory attitude toward it. What I think as “Value for Money” will differ from you, fair enough, but when it differs for myself I begin to question a lot of other stuff too!

I think it’s a fair assumption for me to make that the majority of folks reading FIRE blogs probably aren’t going to end up retiring as multi-millionaires. We’re probably going to be financially secure and comfortable according to our own material ambitions, but I doubt that those ambitions will have anything to do with Rolex watches and Louis Vuitton handbags. All the same, those financial ambitions shouldn’t be solely aimed at eating lentil stew every night and sawing dishwasher tablets in half. Consumerism isn’t a crime and hankering after Apple gadgets doesn’t make me a bad person. Does it?


Fantasy Job

What are you fantasising about these days? No, coming to think about it, I’d rather not know, but I find daydreaming is just as nice a pastime in retirement as it was in work.

When I was working, one of my regular fantasies used to be about Early Retirement. What would it be like? What would I do with my time? Would it be like one big holiday? What would I need to fund it? How would it affect my social life, my family relationships? Just how Awesome would it be?

Now I’m living the Early Retirement dream. Guess what? I now find myself fantasising about returning to work.

Not to my old career, of course. I’m done with that. Okay, that’s settled, but what would I like to do or be in a new working life? Unlike the accountant in the Monty Python sketch, I don’t want to be a lion tamer. I also really, really, really want to avoid anything that involves being stuck back in Big Corporate Life. The longer I’m out of that, the surer I am that I have done my time on the slippery pole of office politics. It was fun while it lasted, I tell myself, but goodbye to all that.

If not Big Corporate, what would I consider? One of the fantasy jobs I think quite a lot about is running my own business. No, strike that. What I fantasise about is running my own successful business. There’s a big difference. Of course, I have no idea what this might be, but that doesn’t stop me thinking about how it will make me a billionaire for a three day a week commitment.

Government(s) often boast about the small business culture that they have fostered in the UK. Since being made redundant aged in my fifties, I’m wondering how many people are forced down this route because they can’t seem to regain a foothold in corporate life? It’s a sad reality – and I speak from my own previous experience as an employer – that older candidates for certain jobs have a harder sell in an interview situation. I now also know this as a potential candiadate because, over the last year, I have gone along to the occasional interview, either directly with an employer or with the inevitable “Recruitment Consultant” who seems to need to meet with you face to face. Now I’m on the other side of the desk, being interviewed in my fifties, it’s really not a comfortable position. Would I employ an old, “seen it, done it” grouch like me? Fortunately, I’m Financially Independent and therefore generally couldn’t give a toss what way the interview goes. (Which is possibly why I’m not landing any corporate roles!)

Working for myself, however, seems a different proposition to working for someone else. If I can find something I really want to do, and I can do it at my choosing, that would seem the dream ticket. “Find a job you love and you’ll never work another day in your life”, as they say.

I feel that this notion is a tributary of the same flow that brought me to FIRE. I still want to get things done, contribute to the community, construct tangible targets and achieve them. The world of “work” offers loads of options and alternatives in this sphere and you might even get well paid for it. My current experience of voluntary work in the community hasn’t much floated my boat. It just doesn’t seem to have the edge and urgency that working for money once did. Perhaps that makes me a capitalist pig dog, but I suspect not. There is a dignity in labour, after all, and even more in well paid labour!

I’ve had a year to think about this and look into some ideas, but I’ve yet to strike the “Aha!” moment about the business I’d like to set up. Part of the trouble is that one or two of my ideas would have me potentially risking some of my investment funds, and I worked too hard to risk them on something I’m not fully committed to.

A decent halfway house then might be to work for a smaller, local business on a part time basis? Increasingly, I find this idea appealing and I’ve started to make an effort to see what might be out there and how I might be able to engage in it.

It does strike me that many people attracted to the idea of Early Retirement could very well find themselves with the same “problem” when they reach their non-working nirvanah. They may well be the type of people least suited to a “retirement” lifestyle. For many, achieving FIRE will mean working like a dog and saving like a bigger dog for years to get to their objective. You don’t have to read many FIRE blogs to realise this. These people have dreams and they work to make things happen. They have to be doing things, planning, scheming, plotting and mapping out their future. Money? Of course, but this will merely be a measuring stick to chart their progress, the majority of it banked until it reaches the point that it can facilitate their ambition. It seems to me that many FIRE aspirants need to be occupied and want to be master of their own destiny. They do not want or need a boss telling them which way is up or where to go next. This drive and restlessness means there will be no putting their feet up in retirement, or not for long anyway. They’ll quickly be seeking the next thing to do.

The more I read the blogs and experience Early Retirement myself, the more I come to the conclusion that “retirement” isn’t actually what many of us want. Sure, it’s a lovely fantasy when you’re stuck in a nine to five that you hate (or can barely tolerate) but we’re not the kind of people who are drifting through our lives, are we? No, we’re used to setting goals, and having dreams and ambitions that we actually and actively want to realise. What we are really fantasising about is being able to do what WE want when WE choose to do it. And, if we can generate an income from it, what’s not to like about that?