10th March 2013

Retirement planning

Trevor Locke (the author of this blog) has announced that he will ‘retire’ in August 2014.

Being clear about some things,  he has begun the process of downsizing his business commitments.

He will however continue to be available to provide consultancy services up to and beyond his official retirement date.

The economics of ageing in the twenty-first century.

Over the past few months I have been following the media’s preoccupation with the “baby boomers”. Being over 60, I am facing up to the challenges of not being classed as in my ‘prime’ any more. As current policy goes, I am in fact only a few years away from retirement age. What weighs on my mind however, is that by the time I reach 65 they will have moved the goal posts. I will have to wait till I am 70 and who knows, by then, they will have probably dismantled the goal posts altogether.

I am most probably part of the work-till-you-drop generation. Retirement is just a passing phase, in the broader historic scheme of things. My grandfathers worked till they dropped and retirement was a luxury afforded to post-war generations but, as an economic concept, its looks it’s being consigned to the museum of history.

What do we do? With a labour market that is almost universally geared to people aged between 21 and 31, people in my age group are struggling to find any kind of employment. Despite the government’s blandishments about the need to employ older people, the recruitment industry just does not want to know.

This is why I am building my future around self-employment, where age does not matter. After 45 years of working life, I consider myself to have a broad range of knowledge, skills and experience. Try telling that to HR consultants. Fortunately I now include. in that work profile, over 15 years experience of running my own businesses.

Several things have got me thinking about the future of work. Notice I use the word “work”; part of my vision of the future is that “employment” is likely to follow “retirement” into the graveyard of economic history – at least for a very sizeable segment of the population. The 21st century is going to see a sea change in how people earn a living. Large sections of the population are going to have to get into self-employment and running their own businesses, for no other reason than that is the only way they can avoid destitution and poverty. We are entering the age of the “sole trader”.

We saw the rise of the Entrepreneur in the industrial revolution, the rise of the capitalist and then the rise of corporate man. All that is now waning and the age of the sole trader is upon us. Company pensions are going to be a thing of the past and indeed several people have said recently that they have given up on the idea of a pension and prefer to invest in more secure containers for their wealth.

It’s an issue that government policy analysts are wrestling with. Western capital has moored itself to the rock of the pension funds, only to find that they have secured themselves to rocks that are beginning to sink to a watery grave, where they will find themselves gathering incrustations alongside the wrecks of “banks” and “building societies”.

In the meantime, my ship of private business is sailing into the new dawn of the twenty-first century economy. Those who are 55 and over, should be thinking about their futures as working men and women. Those futures are going to be self-determining. We are exhorting our children to start paying into private pension funds as soon as they start work, planning for a life-time of saving for their retirement. Don’t. It’s basing their future on the here and now. Not a good idea. Occupational pensions will soon become a thing of the part. Whether private pensions can replace them, remains to be seen. I ask myself this question: if you are not going to retire, why do you need a pension?

I would rather see the nation’s parents exhorting their offspring to go on business courses, so that they have the basic skills to go it alone, if they find themselves bereft of “employment” (a not-unlikely scenario, in my view.)

Tax strategists will have to start thinking outside of the box. Post-war society never had it so good because the state could easily collect its revenues from bulk employers: the corporations that could maintain an army of administrators to tax the work force and send the cheques to the Treasury. Very cost-efficient for central government. It is now not where things will be in the future. PAYE’s contribution to Treasury revenues will go down. Income related taxation will increasingly be based on self-assessment tax returns.

There might well be big corporations for the rest of our life-times but they are likely to be populated with contractors rather than employees. The relationship between entrepreneurs who run businesses and their work-force is changing. The old-style PAYE employment scenario is being replaced by a hire and contract approach. This will change the way working people are recruited.

I am seriously thinking about the amount of time I spend submitting my CVs to companies. My four hours a day of laborious sifting through vacancies could be better spent raising my profile in the market place. So, if you’re the MD of a recruitment agency or a jobs web site, take my advice. Plan for the future and re-engineer what you are doing. Your business is likely to find itself resting alongside the wrecks of the pension funds and banks. Jobs are out, contract tenders are in.

The old order is waning. We just need to stand back far enough to see the bigger picture and look for enough head to see the direction in which the world is heading. Listening to a social media guru tonight, I heard her say that she stopped bothering about getting herself listed on job web sites and concentrated on making herself “be found” on the Internet. Now, people phone her up to ask her to work for them. Much better. That is where I need to be.

Recruiters now should be searching for people to hire. If you want a particular type of person, someone with a distinctive profile, you should be out there looking for them. The time when we applied for jobs that were posted on recruitment web sites is passing into the shadows of history.

Employers, in this future world, will not be advertising for staff. They will be out there searching for people who have put their offer, their CV, their profile on the Internet and are waiting to be found. Age is not important. It’s a complete red-herring (just as is, gender or race.) If you need people with the right skills for the job, go out and find them. As tonight’s speaker said: “NEVER put your real age on a profile.” I totally agree and we both understand the reasons why this principle is of prime importance.

For me, it is mainly to do with identity theft, where date of birth is the key to getting the rest (I know from my years of doing genealogy.) I have decided not to put my age on my CV and I am busily deleting information that will give a clue to my age. If they are going to judge my application using age as a factor, I don’t want their job, I will just press the next button.

Earning a living

So, what am I going to do that will earn me a living and be consistent with my knowledge, skills and experience? I am going to work (notice the lack of the work ‘job’) for companies who can make money from people like me and share the benefits with people who want to work with them rather than for them. Forget the pension, the PAYE, the office, the set hours of work, the employment contract, the annual leave package. These are already legacy . Ah! I can hear some of you whingeing already about the loss of annual leave. Well when you work for yourself you arrange your own holidays. You decide how much holiday you can afford, when you want it and where and how you want to take it.

Wave good-bye to the concept of annual leave, conditions of service, benefits (such as the company car), the corporate credit card, health plans and all the other trappings of post-industrial corporate life. If you want something, earn the money and buy it yourself.

Sole traders

I did talk about “sole traders” earlier didn’t I? Well, it’s interesting that many of the people who are on the long march into the new economy are working together. Yes, they are still sole traders but they seeing the opportunities of working alongside other sole traders, in business pods, even in project swarms. Being a sole trader can be lonely and isolating. Until you discover all the other people who are in same situation and suddenly realise that if you all work together, you can be more than the sum of your parts.

Disheartened? Frightened? Filled with foreboding? I’m not. I am excited about the possibilities and the opportunities to show what I can do with my 45 years of experience.