Under 35? You probably won’t need a pension.

I introduced my calculations for a UK citizen wage in https://timeguide.wordpress.com/2013/04/08/culture-tax-and-sustainable-capitalism/, and I wrote about the broader topic of changing capitalism a fair bit in my book Total Sustainability. A recent article http://t.co/lhXWFRPqhn reminded me of my thoughts on the topic and having just spoken at an International Longevity Centre event, ageing and pensions were in my mind so I joined a few dots. We won’t need pensions much longer. They would be redundant if we have a citizen wage/universal wage.

I argued that it isn’t economically feasible yet, and that only a £10k income could work today in the UK, and that isn’t enough to live on comfortably, but I also worked out that with expected economic growth, a citizen wage equal to the UK average income today (£30k) would be feasible in 45 years. That level will sooner be feasible in richer countries such as Switzerland, which has already had a referendum on it, though they decided they aren’t ready for such a change yet. Maybe in a few years they’ll vote again and accept it.

The citizen wage I’m talking about has various names around the world, such as universal income. The idea is that everyone gets it. With no restrictions, there is little running cost, unlike today’s welfare which wastes a third on admin.

Imagine if everyone got £30k each, in today’s money. You, your parents, kids, grandparents, grand-kids… Now ask why you would need to have a pension in such a system. The answer is pretty simple. You won’t.  A retired couple with £60k coming in can live pretty comfortably, with no mortgage left, and no young kids to clothe and feed. Let’s look at dates and simple arithmetic:

45 years from now is 2060, and that is when a £30k per year citizen wage will be feasible in the UK, given expected economic growth averaging around 2.5% per year. There are lots of reasons why we need it and why it is very likely to happen around then, give or take a few years – automation, AI, decline of pure capitalism, need to reduce migration pressures, to name just a few

Those due to retire in 2060 at age 70 would have been born in 1990. If you were born before that, you would either need a small pension to make up to £30k per year or just accept a lower standard of living for a few years. Anyone born in 1990 or later would be able to stop working, with no pension, and receive the citizen wage. So could anyone else stop and also receive it. That won’t cause economic collapse, since most people will welcome work that gives them a higher standard of living, but you could just not work, and just live on what today we think of as the average wage, and by then, you’ll be able to get more with it due to reducing costs via automation.

So, everyone after 2060 can choose to work or not to work, but either way they could live at least comfortably. Anyone less than 25 today does not need to worry about pensions. Anyone less than 35 really doesn’t have to worry much about them, because at worst they’ll only face a small shortfall from that comfort level and only for a few years. I’m 54, I won’t benefit from this until I am 90 or more, but my daughter will.

Summarising:

Are you under 25 and living in any developed country? Then don’t pay into a pension, you won’t need one.

Under 35, consider saving a little over your career, but only enough to last you a few years.