The statistics in this article were taken from The 100 Year Life.
Money is a taboo subject for a lot of people. However wherever you turn your head money is everywhere. Furthermore whether you like it or not you need money to live. Although money might not be everything you cant deny its importance.
The reason we go to university is to give us a better chance of a good career. The reason we work is to generate money. How many of you would take a job without pay? You wouldn’t be able to live!
When we retire we want to live a fulfilled life. That why we call them the ‘golden years’. Unfortunately for a lot of people when we get to retirement age, it isnt going to be so ‘golden’
Life is currently broken down into 3 stages. The 1st portion of your life is studying at school and university, the 2ndstage is your working life and your 3rd part is retirement. Typically now people are paying into pensions so when they retire they still have an income.
Previously for the average person this has been a good method. However what the ‘pension’ doesn’t take into consideration is someone’s life expectancy. It has been reported that anyone born from 1998 onwards is likely to live until 104.
What does this mean?
The average person retires at 65, and the average life expectancy in the UK is around 80 years old. This is great for the average pension taker. It means that pensions only have to pay out on average a total of 15 years. However, if people are living until 104 this poses a huge financial problem because people will run out of money.
What are the options?
- Save 50% of your salary – To maintain an ok standard of living it has been reported people will need to save between 40-50% of their salaries to retire at 65. This would seem close to impossible considering the average person saves less than 5% of their salary each year.
- Work longer – with the current pension scheme it has been calculated that the average person will have to work into their 80’s until they can retire. This will naturally have profound negative effects on health and personal relationships
These statistics are real and these scenarios are real. If you are aged between 20-25 years you fall into this category. Maybe it’s time you focused on building wealth and not just getting a job that “pays the bills”. The first thing to look at is where you’re spending your money. If you are working 9-5 and you don’t have a business, you can still generate wealth. Set aside a portion of your salary each month and start creating an ‘investment pot’. Once you have enough money saved you can start looking at investments such as property, businesses etc.