What is Actually Up with GenZ Retirement | Millennials won't be able to afford retirement, and here's why

It's 2060, you've retired from your job since now you've made enough money to survive for the rest of your life. You're in your house, watching your kids play the latest PS30. Looking back, you see your wife chilling in the lawn, but she has a timer set for 2 minutes since the ozone layer has depleted further. You call out your Robot, Jay, to serve you a chilled beer.

Now, wake up. This won't be us.

It's not going to be possible for Millenials to afford retirement. Big statement. A little research and now I think I have some proof to back my statement. So put on your seatbelt, as this might be the worst rollercoaster of your life.

Firstly, let's talk about how dying for us has become tough. Because of modern medicine, it's literally become tough to die. Life span in the earlier days was 50-60. As of 2015, the life expectancy was as follows

And this is just going to grow from here. So, now that the fact that dying is getting harder and harder is out there. Let's come to the next point.

Earlier, the retirement theory was that, after retiring, you chill and live off of your savings

You save it, put in a bank account and live off the interest of that. That’s how people used to do it before.
And the salary of the people isn’t increasing with inflation.

Inflation is when the price of everything increases and average inflation in India is 6%

But over the last 12 years, the salary of mostly every job has just been the same.

So things are getting expensive, and your salary is remaining stagnant.

Another main concern is that we probably won’t be able to work till we're 60.
We probably have 20 years till automation takes your job, and maximum 30 years till it takes down complex jobs

And say right now, we’re all 20

After another 20-30 years, we’d have to make enough money to last till 90 because of modern medicine and how it’s able to keep people alive longer, which of course is a good thing.

But the issue is how in the world will we save enough money till then? So we'll have to find new jobs.

Let me present to you, the Retirement Calculator

https://getmoneyrich.com/retirement-planning-using-online-calculator/

Now let’s say we’re 23 right now

Because of automation, and the robots being very cheap we have maybe maximum of 30 years till we will have to quit our jobs.

Let’s take our current monthly expenditure as ₹50,000, that's roughly what everyone needs to live their life.

Assuming, right now none of us have anything in our retirement funds, and the average inflation rate is 6.5%

Assuming everything else to be the same.

So, basically in the next 30 years, we'd have to make ₹8.96 crores

₹8.96 crores worth of savings. 

And every month you’d need to be saving ₹40000. Save.

Our spending right now itself is so much, and on top of that, don't forget the tax you have to give out of your salary.

You’d have to save money for a house, for your kids, for holidays too in between all this, this calculator is expecting you to save ₹40000 per month.

So, even if you'd want to retire you won't be able to because of the lack in savings.

Now say, you invest your money in mutual funds,

An article of Economic Times read and allow me to quote this, “Year-End Special: 79% mutual funds give negative returns in 2018”

Even the money you save will decline over time??

And ₹50000 in today’s time won’t hold the same value, because of the concept of the time value of money. So, the value of it will also keep decreasing, and the salary is not keeping up with inflation. 

So, the problems of not being able to save that ₹40000 is:

• We right now are getting paid a certain amount irrespective of what value we add to a company. Nobody is negotiating for a higher salary or asking for money with respect to what value they add to the company.

• Automation.

https://www.thehindubusinessline.com/info-tech/automation-to-kill-70-of-it-jobs/article9960555.ece 

The jobs that we might have in the future will be very performance-oriented therefore

increasing the risks.

• As an employee, you don’t have the time to diversify your income. You’ll have to work in your 9-5 job after which it just is very tough to find the motivation to want to work on something else.

What I would suggest is,

Diversify what we know, so we aren’t only good at one thing but can provide the best of both worlds. Say, if you’re good with graphics, but you also know how to write code.

Skills like marketing, financial sector, etc. Focus on having more than one skill. 

If you’re amazing at one thing and another person is better at 4 other things and alright at that one skill, you’re good at. The employer will choose the latter.

Don’t be in the loss aversion mindset. Loss aversion means that we want to avoid loses. Not take risks. Take risks. Invest in companies, invest in stocks, mutual funds. If you can’t take risks you won’t succeed.

Go on a performance-based revenue model. Take an x% from your clients for all the sales you get them.

~

Bringing me to another way at looking at this,


The Millenials who could retire wouldn't want to retire. 

Some millennials who say, by working hard at their startup, or job, or say just because they were born with a silver spoon, make it and get enough money.

Most of us aren’t likely going to work towards a magic day in the future when we can golf every day and sip margaritas on different beaches

To me that actually sounds pretty boring – why would I want to “disengage” for the rest of my life? Lower stress? Sure I would definitely take lower stress, but I would still like to stay busy and have projects and keep doing something.

For me personally, after working and wanting to retire

I’d like to take mini-retirements in between and keep working on something that I was passionate about and couldn't do it because of my job.

That’d be my retirement plan. If I will be able to that is.