I was travelling to the States the past weekend. I noticed while visiting a gas station and a coffee shop in Buffalo that both of the people who served me at these places were older individuals. They were both definitely in their fifties or sixties. It seemed to me that both of these individuals were close to or over their retirement age, but unfortunately they were still working a night shift in a minimum wage job.

Obviously I do not know the situation for either of them. But something that came up in my head was that they must have been affected by the recession. Either they relied on their house values for their retirement or they relied on stocks which fell abruptly through the sub-prime crisis. In any case, they were being forced to rely on going back to work when they should have been lazing around at home with their spouses or their grandchildren.

This made me think of our own situation. Generation X as we are called, have already been two recessions. We are the generation born between 1982 and 2000. I was wondering what we have learnt about retirement from focusing on what’s been happening with the Baby Boomer generation. Something that clicked with me is that we cannot rely on either our homes or stocks to ensure that we will retire in time. It just doesn’t make any sense. I mean, looking at what’s been happening in the past, obviously both of these are prone to crashes and are completely unreliable when you wish to retire at a certain time.

Some things that I was thinking was that:

1. Either you decide you are going to give up the idea of retiring at a certain age in the future, maybe 60 or 65? Maybe retirement as a concept itself needs to change in our heads. We shouldn’t think of retirement as something that happens in the far off future. We need to start thinking of mini-retirements as more of a norm. Taking one year off every few years during our working life would ensure that we are not going to need a big chunk of money at the end of our working life.
2. The reason we are not going to need a big chunk of money at the end of our working life would be because we are going to keep on working in little bite-size pieces throughout. We are going use our hobbies to fund our lifestyle till the end of our lives. We might use our blogs as a source of income, or jewellery that we make or teaching yoga, etc.
3. I was also thinking that we need to rethink of what our homes mean to us. We should think of our home as a retirement plan not as the value of the house, but as rental property. Modifying our homes when we are older so we can have a renter staying there ensure that we have a steady source of income throughout our semi-retired years.
4. It doesn’t mean that we stop investing in RRSPs or retirement mutual funds. We just have to be careful not to put all of our eggs in one basket.

What do you guys think would be important for Gen Y to think with regards to retirement?