I’ve just finished reading a blog from Natalie Tuck at Pensions Age: YOLO vs retirement, which argues that “regardless of which generation you are born in, when you are young, you have other priorities than saving for retirement.”
First up, I need to declare an interest: Alliance Trust Savings is one of my clients, so I was involved in the Investing Gender Gap research referred to in the blog. It’s interesting stuff about men and women’s attitudes to saving and investing.
But setting that to one side, I have an issue with Natalie’s thinking. Yes you only live once (YOLO), but what if that happens to be for a really long time? To quote Robbie Williams, I hope I’m old before I die. Both my grandmothers lived into their 90s and I’m counting on a royal telegram. Much as I love life at the lang cat, I don’t plan to work for another 60 years, so I’m going to have to pay for my old age somehow. Paying into a pension scheme seems a pretty sensible way to do it.
The thing with pensions is that the money you put in when you’re young ends up being worth more because it has longer to grow. If you leave it until later, you don’t get as much growing time, but more importantly, it might never happen. The problem is there will always be competing demands for your money.
When I first started working, a chunk of my income went on holidays, socialising and saving for a house deposit. Nowadays it’s more likely to be family holidays (in school holidays, the most expensive time known to man), paying for my kids’ social lives and fixing things that go wrong in my house.
But before all those things I have always paid into my pension. I joined the company pension scheme when I first started working and have never looked back. And I kept the payments up through both my maternity leaves, when for some friends, pension payments were the first thing to stop and they haven’t restarted yet.
My pension money goes out before I have a chance to spend it, just like other essential payments like the mortgage and utility bills. Then I know I can fritter away what’s left on travel and clothes (camping trips and Brownie uniform).
I get that young people have other things to do with their money apart from save for retirement, but that doesn’t stop when you hit 35. Your priorities change as you get older, but unless you consciously prioritise saving for retirement, then more exciting (or even equally mundane) things will naturally get in the way.
We’re all living longer and I think we need to understand that saving for retirement isn’t a nice to have, it’s an essential. Just like paying your electricity bills. Instead of YOLO, I prefer to think YOLOBFALTH* and prioritise my pension savings accordingly. Maybe it will catch on.
* You Only Live Once, But For A Long Time Hopefully