I’m going to share with you 3 career truths that I’ve learnt through 20 years of working in the pensions industry. Giving career advice, or indeed any advice, to younger people is fraught with difficulty. Firstly you won’t listen. Why the hell should you? Secondly, what do we know anyway? We’re the sum of our poor choices, unrealised dreams and shocking mistakes. And thirdly, we may well be wrong. But I guess the beauty of listening to advice is that you can choose to ignore it, and you never know, in some small way, you may take away a tiny grain of truth that resonates with you and helps you to make better decisions at certain points in your life, when related options or situations present themselves.
But what we have to say here is less about homespun advice from a disillusion older generation, and more about a pragmatic forecast of the future of our working lives.
Know these three truths: you won’t be able to save enough money to retire on, you will have to work for much longer than you think, changing careers maybe two or three times, and you will not be fulfilled in your work. Statistically speaking that is.
The best chance of being extraordinary is to plan for being ordinary. Let me explain.
1. You won’t have enough money to retire when you want to retire
The three-stage life (learn, work, retire) is disappearing in the rear view mirror. (Read Lynda Gratton’s and Andrew Scott’s, ‘The 100 Year Life’).
Unless you are prepared to start putting aside 15% (Pension Policy Institute – Engagement Pathways in Workplace Pensions) of everything that you earn today, the probability of you retiring at 65 on anything approximating a comfortable income is virtually zero. You need to know this and you need to know it now, whilst you can still do something about it. But this forecast is highly unlikely to phase you in the least because, at the back of your mind you think you’ll make a lot of money at some point and you will find yourself in the top 2.5% of society that never has to worry about this sort of thing. And even here, the bar is relatively low with ‘a lot of money’ being defined as over £100K (HMRC stats tell us that in the UK 1.3% of women and 3.8% of men earn over £100K) – There’s a reason why there’s only 2.5% of them though.
The overwhelming likelihood, statistically, is that you’ll be like everyone else. Problem is that the human brain is poor at absorbing statistics and conceptualising what they tell us. Because there is a 2% chance that we may be very rich, the brain simply registers this as ‘a chance’, which is a sound enough foundation (in the brain’s estimation at least) to manifest a strategy of hope over evidence.
Plan as though you will be like the majority of other people because, paradoxically, this is what is likely to set you apart.
Assume you will have an average job, earning an average salary. Assume you will have a family and a home to maintain. That doesn’t mean that you actually have to do those things, but plan for it. Start saving early, even if it’s just a small amount. The magic of compound interest is one of the wonders of the universe. So, if retiring early (and for your generation, 65 is early) is your strategy, then start saving today. And save ALOT. Do the math as the say and work on a rule of thumb of 5%. If you want to live off £25k a year, you’ll need a pot saved of, at the very minimum, £500k. But you know and I know that you aspire to a lot more than that. So if you nail this one, the next ones may be of less importance.
But it’s unlikely you’ll nail it.
2. You are going to have to work a lot longer than you think
It’s unlikely that you’ll be super rich. That doesn’t mean that you won’t be super rich, or shouldn’t aim for it, but the reality is that you probably won’t be.
Planning for conditions that are likely to happen is a better strategy than ignoring them on the basis that there is a slim chance that they won’t happen. So saving a lot of money is one strategy but, statistically, the overwhelming probability is that you won’t do this. And probably for very good reasons, which are the same reasons that most other people don’t.
But there is a companion truth to the issue of retirement funding, and that is longevity. For every decade that passes life expectancy increases by roughly two years. (The 100 Year Life) If you are 21 now, it is very probable that you will live deep into your 80s or 90s. The state, the economy, the country, simply will not be sufficiently robust enough to support an ageing population.
When the welfare state first emerged, it was designed to support retirements of less than 5 years, for a relatively small demographic. It was never intended to support a third of the population through a 30+ year holiday.
So unless you are uncommonly wealthy, your alternative will be to work for longer culminating in expensive medical care. And if you are going to work for longer, you’ll need to start thinking about what this could mean for you. The chances that the skills, knowledge and experience you gain now will be equally relevant in 30 or 40 years’ time are slim. The chances that you will be content to do the same thing into your 50s and 60s is slim. You may even be physically unsuited to maintain the career if the job is particularly strenuous.
The value that you can bring to the labour market now may be less valuable in 20, 30 or 40 years’ time. So how do you plan for working longer? Answer, you learn to adapt and change.
The key to a longer, and fulfilling working life, is the ability to transition. You build the adaptability muscle.
And this bring me to my last point.
3. It’s OK to not know what you want to be when you grow up
I’m very grown up and I’m only just starting to get to grips properly with the question. Really, it’s ok to not know. It’s normal. Nobody knows. Except for the tiny minority who really do know and who, invariably, pursue it relentlessly. And good for them. Are they happy? Who knows. Maybe.
Most of us lurch from one job to the next not knowing. A good proportion of us don’t even know that we don’t know, and there’s genuine benefit in that naivety perhaps. But for those that do know, it can be miserable. You are beset by the constant accompaniment of the voice that reminds you that you aren’t all you could be. You know you’re not, but you don’t know what the hell to do about it.
The die is cast early in life, forged through ignorance, inexperience, weight of expectation, and ill-considered choices – and it’s incredibly difficult to break and recast.
It’s a bit like Brexit: you’re asked to make an impossibly complex choice about a subject on which you know virtually nothing and then expected to live with the consequence of that decision for the next 45 years or more (I’m assuming by that time we’ll be going back into the EU again, after a war with the French no doubt).
So don’t believe entirely the ‘follow your dreams, follow your passion’ advice. Unless you are exceptionally lucky, talented, well-furnished financially or in possession of superhuman levels of industriousness and purpose, this is a very high risk strategy. A better strategy is to try to figure out what you like (not what you’d like to like but what you actually like), what you’re good at and where your temperament will be most nurtured and nourished.
But isn’t that the same as following your passion I hear you ask? No, it isn’t – because at 20 what you think is your passion will not be the same when you are 30, or 40 or 50. You think it will be now, but it won’t. Unless you are exceptional. And you don’t know if you’re exceptional or not. Just because your mum says you are, doesn’t mean that you are.
Better to find work that utilises your strengths. Down that path lies success, fulfilment, achievement, a sense of purpose and freedom from doubt and anxiety.
If you get it right you have done far more than found work in a passion, you have found passion in your work.
And if you can do it once, you can do it again. And you will need to because a longer working life means multiple careers. This will give you the resilience to adapt to new jobs and careers, whilst maintaining that continuity of truth, which is your constant companion. So learn to find work that you are good at and utilise your strengths.
This is about knowing yourself well, understanding yourself and then telling the truth. Build the habit of telling the truth. If you know you are extroverted don’t be talked into a job that requires you to undertake hours of solitary analysis just because you’re qualified for it. If you know you are introverted, don’t take a sales job.
In summary then…
Think about these three truths:
The chances that you will save up enough money to allow you to stop work at 60 or 65 is small.
You will live longer than you expect and you will have to work for longer than you think.
You will likely have multiple careers in your lifetime and a sense of purpose will come from finding work that plays to your strengths rather than your passions.