I came across a comment in the Sunday papers this week that made my jaw slacken a little: “The liability of final salary retirement schemes for NHS staff, police, teachers and other state workers rose by £190 billion to £1.5 trillion in the 12 months to March last year, according to official data”. Yikes!.
When you consider that statement above, you come to an inescapable conclusion: we just cannot afford to retire in the way many of us had expected to. And certainly not when you apply the dwindling money available to the increase in years it might have to be spread across.
On the pages of this blog, I lightheartedly discuss my dilemma, “Retire early or work: work or retire early?”, and usually comment about what a nice problem it is to have. But increasingly I feel that my generation might be one of the first and last to face it because, as a society, there’s no way we can fund forty years of retirement. It’s just impossible. It might actually be impossible for me too, a thought that often undermines my own contentment and nudges me toward thinking that, really, earning a bit more money while I still can might not be too bad an idea.
To an extent, we already know we have a big pensions problem – the state pension age is stretching out further and further while the collapse of BHS and Tata steel are seen to be exacerbated by horrendous pension deficits. This makes me chew my nails over the stability of my own private Defined Benefit pension scheme while my wife, who worked for a time in the NHS, wonders if she’ll be allowed to pick up her NHS pension at 60? I personally know policemen, firemen and doctors who are keeping rather quiet about the fantastic public sector deals they have that will see them quit their jobs “fully vested” on the pension front at fifty five. I think they’re almost scared to mention it in case someone in Government realises the magnitude of the problems we face, and whips it out from under them. Now, I’m not about to enter the pensions debate on either side about the private versus the public sector, partly because through my public sector Darling Other Half, I’ll hopefully benefit from both. I’ll state that for the moment I seem to be one of the lucky ones, and leave it at that.
In this blog, the financial underpinning of my early retirement is a given, and I’m very conscious of it even if I choose not to expose the detail of it in public. The choices that I have were enabled by the personal workaholic and tight-wad decades that came before retirement, where I worked and saved, worked and saved and worked and saved, until I’d had enough of that lifestyle. Plenty of bloggers are focused on those aspects of working and saving and funding early retirement, so I tend to focus on the non-financial ups and downs of this kind of life, where fifty years of playing golf suddenly doesn’t seem to be the perfect existence I once imagined it might be (and certainly not when the first ten of them are playing golf either on your own or with the “real” pensioners of the generation ahead of me.)
So I often muse about the working life with the undercurrent sentiment being that I think I need to go back to work, despite the fact that, financially, I don’t really “need” to. Frankly, I feel I’m too young to retire in my fifties. I know I’m not alone in this. The aforementioned policemen, firemen and doctors of my acquaintance are thinking the same way – what other jobs can they land once they crystalise their pension? A bit of consultancy three days a week, maybe? A bit of private practice at the hours of their choosing? A bit of standby employment when needed? And a general annoyance that, with “everyone” thinking the same way (whilst ageist employers are generally not) those options may be more limited than they could be.
The fact is, the old model of how we saw life panning out – education, work, retirement – is a busted flush. It’s just not fit for purpose any more. I’ve recently read that the young already know this and are carving out different options for themselves between the ages of 18 and 30 which, like the advent of the “teenager” in the fifties, is becoming a distinct life stage. Well, I’m thinking that I’m at the other end of it, trying to carve out options for a life in the years between 55 and 70. I’m just not ready for full time retirement, but neither do I want to return to the working life I had – the sixty plus hour working week, the time away from home, the politics of career building, the status anxiety of earning a crust. The options that the 18-30s are adopting are probably the ones I’m going to have to look at: self-employment, learning new skills, taking interim roles, part-time work, six month contracts, maintaining networks and asking for roles that might not yet have become conventional ways of working. Flexibility on what you do, how you do it (and what you might be paid for it) will be key.
This trend might be increasingly self-evident, but it strikes me that I’m choosing to seek this option out. Millions won’t have that choice – quite simply they will NEED to find work between the ages of 55 and 70. I think that many of the roles that might be available for the 55 to 70 year olds are going to be those sought out by the 18 to 30 year olds, and it’s going to be “interesting” to see which age groups settle into which roles and how our society is going to have to change to accommodate it.
sex health money death 
Hi Ermine,
Its an interesting one for sure – I hadnt seen the stats on the public pensions, but that is shocking! I think we already knew that DB pensions are in reality gone (I have one small one, worth about 1k a year if it still available when I eventually get to retire!) – but all my provisions are based on my assets – I am assuming even the state pension wont be available to me when I get to the current state age. In the meantime I am plugging as much into my pension today, even thought as it stands I wont be able to access it until I am 57.
I just hope the Millennials (and others) are saving from the higher rate they get for the contracts rather than spending it – from what I have seen they appear to just be spending it.
Interesting you are thinking about going to do some form of work – I do often wonder what I would do if i were to retire – however I dont have enough time now to do everything I want so am sure it will give me something to do!
Sadly, at least another 10 years before I can think about it…. assuming I stay in London of course!
London Rob
LikeLike
Gah sorry Jim – I replied on the wrong name as I had just come from Ermines site – sorry!
LikeLike
Actually, I take being mistaken for Ermine as a complement! 🙂
LikeLike
The contractors at my place seem to be extreme polar opposites of each other. Either complete spend thrifts or really believing in YOLO and driving about in Tesla’s.
LikeLike
Erm, isn’t a spend thrift someone who spends all their money? 🙂
Jim you mentioned DIY /physical labour in another post. Why not take on a decent home improvement project to keep you busy and build up some skills?
Having done a few in my time off recently I can attest the fact that this definitely feels like work and rather than get paid you get to save on workmen fees and also get to say “I did that” at the end of it, both of which are very satisfying. Or is SHMD HQ already as ship shape as you want it?
Cheers!
LikeLike
my excuse is that having the word SEX displayed across the heading means I know I have to be fast at work if I am reading your blog 🙂
LikeLike
Haha – same here!
LikeLike
I have a good friend who is not planning to retire until he is at least 60 because he feels that he needs to set aside as much money for his children as he can. He also believes that the economic model is broken, and since he makes a good living, he can help them better than they will be able to help themselves.
LikeLike
“…personal workaholic and tight-wad decades that came before retirement” –> Yep, that’s my approach for the moment.
In terms of earning money could you not do something completely different to before, as a learning exercise with any income as a benefit? I changed career a while back, and I got nearly four years of exams and some paid leave to complete them. I treated it as learning for curiosities sake whilst getting paid for it. Not quite perfect as it was a full-time job complete with all the performance management and bureaucracy shite that makes working a pain.
Something niche, say, like a metal sculptor? All you need is a thermal lance and some welding equipment in your shed, what could go wrong?
I do think the general consensus is, in the FI community, save like a bastard for a few years then ‘retire’ and get paid work doing something I enjoy. I suspect the saving hard might be the easy part and getting paid to do something you enjoy might be the tough part.
Incidentally, what did you do for a job, if I may be so bold?
Mr Z
(Blimey – I’m going to be late for work!)
LikeLike
Mr Z, I spent my whole career in sales, starting as a Road Warrior sales rep and working my way up to director level (which, by the way, is just another hierarchy level as an employee. Unless you own a company I don’t care what kind of “Director” you think you are, you’re still just basically a senior manager). Your comment about being a metal sculptor made me laugh: I did think I might get into joinery and woodworking as a hobby when I retired, but no. Or maybe “Not yet”. As TFS points out below, DIY is a way of earning money in the sense of not spending it.
LikeLike
Interesting article – again 🙂
I’m now retired on a FS pension – local gov in my case, where I spent the last few years of my working life in IT, having transferred my private and NHS pensions into it when I started there. (Interestingly, LG pensions are funded, unlike the other public sector schemes)
I’ve had similar thoughts about returning to some form of paid work, but have reached the conclusion that I’m OK money-wise, so why take a job away from someone (probably younger) who ‘needs it more than I do’. And do I really want the hassle of deadlines, targets, staff problems and performance measures any more? So I don’t really worry about it now. Instead I volunteer with Citizens Advice – enough of a mental challenge to keep me on my toes and hopefully useful to the clients who need a wee bit of help!
BTW How do they calculate a pension deficit? I seem to recall, some time ago, that these were largely theoretical, in that a deficit existed if there weren’t enough assets in the fund to cover a situation where every employee retired tomorrow – unlikely? Not terribly sure if that was, or is, the case though – hopefully it’s a more sophisticated calculation that takes into account future cash flow based on members’ projected retirement dates, as well as future investment return estimates – which surely will rise at some point in the future.
So are these alarming headline deficits just unrealistic snapshots at a time when investment returns are historically low. Or is it really much, much worse than that..?
LikeLike
Thanks for the positive feedback. I don’t much worry about my going back to work keeping someone else out of a job as I don’t see employment as a Zero Sum Game, but maybe at some macro level it actually is! How pensions are funded is a complete mystery to me. I have enough on my plate understanding my own, relatively straightforward, plans. I’m trying to face up to taking some professional advice on how best to approach both the investing and spending of my pensions, but tell myself I have the time to learn about it all myself and therefore should. Maybe I could convince myself that doing so would be almost paid work in itself versus what I’d save in fees.
LikeLike
Our Generation has to move away from what we have been taught from the Generations before. The Minimalist movement is growing quickly because things cost money. You have to spend money to own something then spend money to store it. The more you have the more room you need. The focus on quality is growing also. We are tired of spending money on things that will break next year. I want my stuff to last several years. You can be successful and have retirement. You have to chose a career that you do not want in Technology or Healthcare. We were spoon fed the idea by our teachers that if we dream, believe in ourselves, and go to a Univeristy we would be successful. Most of my friends are drowning from paying 600 dollars a month for a degree they lost interest in. We are not screwed if we move away from what we were spoon fed in school. If retirement is your goal do not invest in a huge house. Invest in a home that will work for you on a piece of property you can grow food on and be happy on.
LikeLiked by 1 person