Realize this before your 30's

Where I'm from, in France, riots take place every day as the government tries to extend retirement's age. Of course, people go to the streets because they were promised something that the government is trying to change. On the other hand, the government has very few options in regards to how demographics are laid out... I am not into any side of politics and it is very complex to emit a clear and definitive judgment on how or why poeple should or should not retire older. Truth is very relative to everybody's point of view. For some people it makes sense, for some others it does not.

From a "survival" or "good father"'s point of view: we are never better served than by ourselves. And by that I mean: do you know what will happen 50 years from now? Who will rule the country in 2070? How the economy will be when you'll get 80? I don't know. I'd love to trust national retirement plans, I think solidarity across generations is a great idea. The thing is: should I rely on it? What if pensions cannot be paid by 2055 when I'll retire?

Remember "baby boomers"? Do you know why they're labeled as "boomers"? Yeah, it's because they exploded (in numbers) and, in France, they are the biggest generation today. Now, here is a chart I made to represent the number of active workers Vs the number of retired people, in France, in the year 2000: 3,2 workers for 1 retiree.

In year 2000, there were 3.2 workers for each retiree in France.

Now here is the same chart but projected in 2055, when me and a whole "millenials" generation are supposed to retire: 1,6 workers for 1 retiree.

When I'll retire in 2055, there will be only 1.6 workers for each retiree in France.

Do you see the problem? So... there are basically 4 options here:

1. In 2055, all active workers will directly transfer their paychecks to all retirees... (Realize that 1 active worker for 1 retiree means 1 salary for 2 people.)
2. In 2055, the governement in place attracts younger folks from other countries (like Senegal where population is mostly young) to have more workers paying retirees' pensions
3. In 2055, retirement age will be 95...
4. In 2055, there will be no pensions or very low ones, so I have to build my own retirement plan.

Option 1 is not an option, it's just sarcastic. Option 2 may happen, but should I bet my health that all governments from now up to 2055 will prepare for it? Probably not. Should I comment that I probably don't want option 3 neither? So... Since we're always better served by ourselves: I'll go with option 4, and if your home country looks like France, I highly recommend you go this way too.

To see how your country's age-sex pyramid will look like when you'll retire you can check the numbers using populationpyramid.net, select your country from the list, and click the curve at your corresponding retirement age.

Just a word of caution: there is no truth in my vision, this is just my personnal point of view. Probably governments will just open the doors to younger Africans by then and everything will be ok...

That being said, I feel more secure going with option 4, though it requires quite a big shift of mindset... In fact, retirement without pension plan means you need to be prepared to cover all your expenses with your own money, without counting on other's. Remember that, at retirement age, one's health is more flimsy and subject to higher medical expenses. Another aspect of retirement in our cold age is loneliness coupled with dependency, and this comes at another expense: retirement houses. In France, living in a retirement house fully equiped with basic medical assistance costs around $3000 per month... better be prepared.

A big missing part of this equation are children. Children are as much a problem as they are a solution. More children means more love, less loneliness, more grand-children, more family, more happiness. It also means more schools to pay, more shoes to pay, more broken glasses to repay... pay, pay, pay. If you just want to blind yourself with the loving part, cool. The harsh reality is that babies are expensive if you plan to provide them a better life. Now, if you can shift your mind towards planning your own retirement, consider building a supportive family instead of an individualist one. "Together we are stronger" has never been more true.

Give your kids everything you know, feel and have, so much that they'll feel the joy to help you during your last 5 years.

I can already hear: "Oh, so you want to make children so they can pay for your retirement???"... Nope. Here is what I mean: there's more than money in life, there's also love and happiness. And this also can be planned if only one can see how much of a role kids play in a happy life. The route towards financial independance should not mean an independant and selfish life. Plus, this mindset is also a good way to treat your family so well all the time, and forces one to be wiser in a lot of aspects when you feel like being selfish. Nevertheless, you like it or not, kids are the key to happiness, but they have a cost.

Are you ready for all of these costs ? Stay tuned for my next post where we'll lay out some basic, yet important, numbers to know how much do you need to live a happy life, with kids and without pension.

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