The post that considers whether the personal finance community is full of naïve higher earners that don’t realise that saving is only for the middle class or wealthy.
My favourite love-to frustrate publication, The Guardian, has been at it again this weekend, annoying its readers by suggesting that some people might be able to actually save money. Whereas, as every Guardian reader knows, pretty much everyone is living in penury these days. What is this “savings” nonsense? Some head-in-the-clouds Guardian journalist strikes again. The term “chamapgne socialist” gets used a lot when discussing the Guardian and its readership.
I’ve called this article “Is Saving and Investing Only for the Middle Class?” because we still like to categorise people by class in this country (albeit less so than in the past). But the title could just as easily be “Is Saving and Investing Only for the Rich?” or “Is Saving and Investing Only for High Earners?”
The Guardian article in question is what I would have thought would be a fairly innocuous look at some pension statistics. As usual, it makes for fairly sobering reading about the retirement shitstorm that’s heading our way.
People don’t like hearing this. It’s fair enough that hearing about how you need to be saving more is annoying if you simply can’t save any more. No-one wants to be lectured to by someone who has never had to struggle with money.
But I have a few thoughts on this subject that, this being my blog, I intend to share.
Not everyone is living on the bread line
The comment section of the above-mentioned Guardian article features classic Guardian whataboutery.
“Most people can’t afford to live their day to day lives, let alone set aside money for their retirement” and “Do the people who draw up these comparisons actually know how people on low incomes live?”
Guardian readers like to paint us as a nation in poverty. I don’t for one moment refuse to acknowledge poverty. According to Child Poverty Action Group, 30% of children in the UK live below the poverty line (defined as 60% below median UK household income).
This is a horrendous statistic. I’ve alternatively seen the figure 13% bandied about (presumably based on a different measure). Either way, it’s unacceptable for a developed country. The US has similarly shocking child poverty. No wonder that saving money seems like something only for the middle class.
But the point is that not everyone is in that boat.
Why is there such aggression towards finance advice for people who are capable of saving?
Median full-time earnings in the UK are around £30,000 a year. If you are a median earner you may not be able to stash away thousands a month (and maybe not even the figures we’re told we need to be savings for retirement) but you should be able to save something if your expenses aren’t unusually high.
And, of course, many people do save. I don’t single myself out as some sort of unique beacon of savings virtue. But others don’t save what they could. I see it in the people I work with and friends, who prioritise “living for today” over saving.
Yes, my experiences can’t be taken to be indicative of all experiences, but these people do exist. Prioritising living for today is fine if you’re aware of the consequences of doing so. That’s the reason articles like the one in the Guardian are important.
Ignoring something won’t make it go away
There’s no point burying our heads in the sand about the retirement/pension crisis. It’s on its way whether we ignore it or not.
One could argue that simply writing about it without offering any solutions beyond “save more” doesn’t help. Yet:
1. It may help some people
As acknowledged above, there are undoubtedly people in the country (indeed, across the developed world) that could save more.
Then there may be people who, when faced with the harsh truth, take some radical steps to address it. I’m an example of this. I did terribly paid jobs for four years before re-training as a lawyer. Don’t get me wrong, I didn’t abandon a poorly-paid job that I loved for the comparative riches of law. I was unhappy in my job anyway. But when deciding which job to do instead, one driver was that I simply wasn’t saving enough for retirement.
I know that “get a better paid job” is not a solution that everyone can adopt. In most cases it requires a certain level of educational attainment and the freedom to re-train. But it is an option for some people. And I think it would be actively negligent of personal finance commentators not to make it clear to these people the risks of not saving more for retirement.
2. It could actually effect policy changes
The more that respected personal finance commentators, especially in the mainstream media, hammer home the pension time-bomb that awaits, the more likely it is that the people with the power to actually effect change will take note.
What the solutions are, I don’t know for sure. But a better state pension would be a good start. The UK state pension is around £8,700 per year; the worst in the developed world.
The purpose of the state pension should be to cover essential living expenses and provide a modest retirement. Private pensions should only be there for people to save for additional comforts and luxuries.
Every person who works for decades of their life should look forward to enjoying a retirement before their body is weary and broken. This should be a basic right of any person, regardless of how much they have earnt in their working life and their ability to save.
But a better state pension generally requires higher taxes. And that being politically unpopular, governments are unwilling to bite the bullet. If the nation as a whole was supportive of exchanging some of their income now for a better state pension in retirement, it might become a reality.
Unfortunately, too many people are convinced that the government wants to take more taxes from them to prop up work-shy wasters.
You can’t be all things to all people
I sometimes worry that my own blog is only of any interest to a narrow group of the population, and to others comes across as preachy.
But a person can only write about what they know. There are lots of good resources on, for example, debt repayment and frugality. I do not really have much experience in these areas so it would be rather presumptions for me to write about them.
Personal finance riles people in a way that other subjects doesn’t. I don’t get annoyed at advice for marathon runners because I’m in no physical shape to benefit from it. Nor do I get irked by travel bloggers because my day job doesn’t allow that level of freedom. I’m being somewhat facetious, given those things involve voluntary hobbies, rather than something that affects us all; but you get the point.
What are your thoughts? Do you think the personal finance community can be a bit naïve about the realities of saving in today’s world? Is saving and investing only for the middle classes?