At Wit's End: What is Retirement Going to Be Like For Gens X and Y?

I don’t know if you (or anyone else) have been reading the papers recently, but we’re facing a bit of a retirement crisis in the U.S. at present. Pension funds continue to be decimated by poor market returns and the inability to find consistent wealth-building strategies in today’s market. Pensions themselves are rapidly becoming an endangered species, as even government institutions move away from using them as a benefit, and toward 401(k)-type vehicles for retirement savings. Social Security has written more “IOUs” to fund itself than Harry Dunn and Lloyd Christmas, and I think most people in our generations are planning for a future without Social Security entirely.

“Gee, dumbass, didn’t you used to have a high-paying job that would’ve allowed you to retire quite comfortably thirty-or-so years down the road?” I guess I have to be the lawyer on this one and say that it depends on what you mean by “comfortably.”

I was discussing this exact problem with my buddy, Dr. Dave (of podcast and Blogmogger fame; some of you may remember him as ½ Man ½ Am-Asian), and after a lot of measured debate combined with a good amount of screaming and crying, we came to a few conclusions that I thought made good fodder for a blog post.

First of all, nobody is guaranteed to make it another thirty years, months, weeks, days, hours, or even minutes. I know it’s clichéd at this point, especially among “lifestyle” blogs out there, but you are a carefully-assembled, fragile sack of bones, meat, and water. If one of your important regulatory functions screws up, that’s it for you. “Curtains,” as they’d say in the 20s. Odds are that you’ll live to at least a decently old age, especially if you live in an advanced, Westernized country, but there is a small-but-significant chance that you’ll draw the short straw on something like cancer or a brain aneurysm. That makes the current moment the most important moment in your life, and the most appropriate time to take action.

Secondly, sticking with a job that you hate and that doesn’t allow you to take care of yourself increases the chances of you experiencing a debilitating health condition. We’ve all heard the story of the guy who proudly worked eighty hour weeks to build up a mountain of cash, intending to travel the world with his loving wife once he retired, only to drop dead of a heart attack the month after he quit. High-stress, plus little time for exercise, plus lots of lunches and dinners spent eating out isn’t exactly the best recipe for health later on in life. Sure, you may be trading your time now for money and “time later,” but by failing to invest at least some of that “time now” in exercise or other activities that will benefit your health, you greatly decrease your chances for enjoying your retirement years. This extends to all of the various types of self-medication out there, ranging from smoking and booze to harder drugs—you really think that stuff is somehow going to help you in your later years?

Also, making more money often leads to lifestyle inflation instead of saving. Some of what I advocate is contrary to what a lot of personal finance blogs espouse, but I agree with them on a lot of their basic principles, namely that experiences are more important than possessions, spend less than you earn, and debt is to be avoided at all costs. For a more comprehensive look at these principles, visit The Simple Dollar or Get Rich Slowly: Trent and J.D. are probably the best I’ve encountered in that corner of cyberspace. But a lot of young professionals get caught up in the lifestyle: they buy a condo, and a fancy car, and a big TV, and a lot of other “shit,” that really doesn’t help them any more than the more utilitarian alternatives. Combined with the crushing student loan debt that most people have coming out of school, and it’s a recipe for being an indentured servant for most of the rest of your life. I think it’s far more important to live relatively simply and maintain your freedom than to be “owned” by your stuff.

So, then what’s the solution for people of our generations? Find something that you love doing, that you can make a “reasonable” amount of money doing, and that you wouldn’t mind doing every day until you die. That’s pretty much what I came up with. You never know how long people in our generation will ultimately live. It could be much shorter or much longer than anyone anticipates, as devastating world events or huge breakthroughs in modern medicine could alter the landscape dramatically. I think the whole idea of “work 30-40 years for someone else, stockpile a bunch of money, and ride out the wave until you keel over” has passed. In the new issue of Fortune, even Baby Boomers are hiring “retirement coaches” to help them figure out what they want to do after retiring from their high stress, high-paying jobs. And those are the lucky ones—even more people are having to reinvent themselves out of necessity after having been laid off after years of loyal service to a company.

I realize that this solution may seem a bit “pie-in-the-sky” to a lot of people; how are they supposed to find what they “love” to do while supporting families and making mortgage payments? That’s why it’s a good idea to start a side business, provided your company allows you to. Given enough time to develop, this side business can be extremely useful for those at least part of the way down the path, but who might not know how long they need to budget for in retirement. Think of it as going out and earning your own Social Security payment, even though we’ve been subsidizing the system for years and probably won’t ever see a dime that we’ve put in.

I’d be lying if I said that this wasn’t an impetus for my own career change. I could’ve gone the traditional, thirty years route, but again, who knows what “retirement” will even be like thirty years down the road. Especially since my job was, to be frank, flat-out boring most of the time, and it would’ve been a long, cold slog to thirty years—and that’s without taking into account the opportunity cost of not pursing what I actually wanted to be doing. Once you continue too long down a given path, you can become trapped, and pigeonholed as “that attorney that does XYZ”—I didn’t want that to be me.

So, instead, I opted to take control of my life and do something that I wanted to do, and could see myself doing until I died. If the government’s not going to be there, it’s your responsibility to act as such, and take care of yourself. You still might be able to take the traditional path, but it might take working forty more years to accumulate what you really need for retirement instead of thirty. I think the preferable alternative is to find something you really enjoy, something you always want to get out of bed to do in the morning, and find a way to make a living at it. With the right amount of hard work and persistence, you might be surprised how far you can go. At the end of the day, though, like with so many other things in life, no one will be there to help you through retirement but yourself. Plan accordingly.