I never thought I would be 56. I think there’s some pithy name for the group I belong to, used by social scientists and those on social media who want to make a cheap jibe at a post with a comment like “shut up Boomer.” Apparently, I’m a Gen X, and being a Billy Idol fan (Millenials will need to Google that) then, I’ll settle for that moniker.
Some reading this will think I’m old, but then if you’re 75, then you’ll think I’m just passing through puberty.
They say that age is relative, I’m not sure about that, but one thing is sure, one minute you’re 21 and the next you’re 56! I’ve never been more nostalgic than I am these days, for the music, the movies, the halcyon days of youthful summers, and even the food. Although I’ve learnt the hard way that the food I loved in my youth doesn’t taste as good as it did, or it was awful all the time. Probably the latter.
I was on social media some months ago, and someone, I’m guessing in their early twenties, asked, “I have a spare $100 a month; what should I spend it on?” The answers ranged from plugins to hardware to mics, all the usual suspects. My answer was to invest in a pension plan. People thought I was joking, I’m not.
The problem with being a freelancer is that it offers little or no protection from the things that some people take for granted. Vacation, sickness, but most of all, retirement. A lot of freelancers are either going to have to work until they die or live their later years in poverty. Living in the UK, then I don’t have the added worry of all the age-related sicknesses; we have the NHS. If you live in a country where health care isn’t free, then you need to add this to the list of things you’ll have to deal with as you get older. You won’t need less health care as you age, but more.
The fact of the matter is, when it comes to the creative community, there is no working middle class. The only way you can guarantee income is to keep working. Even vacations put pressure on us; I’ve figured out a vacation costs me about three weeks per one week taken. A week to make the money I’ll lose when on vacation and a week to catch up on the work. We don’t get paid vacation, sick pay, maternity or paternity cover, or even time for bereavement, it really is every person for themself.
When my father was alive, he built a successful business helping people plan for their pensions. Ironically I didn’t take the pension idea seriously. I recall he would regularly ask me if I had got a good pension. I’d had sporadic ones over the years when I was employed, but since going self-employed around 15 years ago, I’d not really done anything meaningful about it. Then in my early 50s, I sat down and did the maths and worked out that if I were to retire at around 70 and have a reasonable income, hopefully after paying off my mortgage, then I’d need to pay £2000 a month into a pension! Gulp, that’s nearly as much as my mortgage payments. However, I bit the bullet and did it; after all, the problem wasn’t going away and the longer I left it, the worse it would get.
If you don’t know where to start, then there are some simple ways with apps like PensionBee in the UK, although I’m sure there are international alternatives. We are not financial advisors, so seek some advice from a professional if you are unsure.
I could say that I wish someone would have told me to prepare for this time bomb sooner - but then I had a pensions consultant for a father who gave me timely reminders. I ignored most of them over many years and now it’s costing me dearly.
When I interview artists I often ask them the question, what advice would you give to your younger self given the years of experience and hindsight. My advice would be “start a pension now, I don’t care if you’re 18 or 48, the sooner you do it then the better off you’ll be in your later years. I’m sure my generational peers reading this will agree. There are many things competing for our money; gear, studio spaces, staff, but we seldom consider a pension plan.
In 2021 Bruce Springsteen sold his entire back catalogue for an estimated $500m to Sony Music, so he’ll not have to worry about his later years. Each week someone wins the lottery and pockets tens of millions. Both of these scenarios are exceptions and not the rule. Most of us won’t ever have that kind of haul of cash, be that through hard work or luck, we need to plan.
We spend a lot of time writing about tips, tricks, and gear on the Experts, but this might be the most important article I’ll write. If you’ve not got a plan for your financial future, then start today. Some people find themselves poor through birth, location, or a series of factors beyond their control. Poverty is never good, many would give anything to escape from it. However, if some simple planning earlier on in life can help us avoid the probability of poverty in later years, then it should be actioned as soon as possible.
A Pensioner’s View On This From Mike
As someone who is now retired and starting to live off my pension, firstly, I want to endorse everything that Russ has said. Secondly, I want to share my story and pass on a key piece of advice that I was given when I went freelance.
My parents made it very clear to me the importance of making provisions for my retirement from the moment I started work aged 18 back in 1976. So after one year, I was able to join the Marconi pension scheme.
In 1981, when I moved from Marconi to Piccadilly Radio (the independent commercial radio station in Manchester, England), I transferred my pension pot to the Piccadilly Radio pension scheme and continued to pay into my pension pot.
Then when I left Piccadilly Radio to go freelance in 1990, I was advised to get an independent financial adviser. This was one of the best things I did at the time because they were able to help me in a number of areas, which, as well as a pension, also included life insurance, sickness insurance and something called ‘dreaded diseases’ cover. This may seem overkill when starting out, but these are key safeguards which provided me with a backstop throughout my working life as a freelancer from 1990 until I retired at the end of 2021. For example, when I couldn’t work for six months due to a back injury, my sickness insurance kicked in and provided me with sick pay until I could work again.
In the early years, we couldn’t afford to put too much into my pension, but we managed a couple of hundred pounds sterling per month initially, and then as my income increased, we increased the pension contributions correspondingly. The key thing about pension plans, as Russ found to his cost, is it is much better to put a small amount in every month as early in your working life as possible. The reality is that the longer you leave it, the more you will have to pay in each month to play catch up, and you won’t have as long for the pot to grow using the interest it earns.
So the key piece of advice that I pass on to you all is when you go freelance, and more and more of us are, get an independent financial adviser to help you to put in place not only a pension plan but also other schemes to protect you if like me you end up falling ill or getting injured. Trust me, you will not regret it.