The Future You Are Saving For Does Not Exist

When I read personal finance blogs and news sites across the web, I often come across articles with titles like, “Why I will not pay for my children’s college” written by twenty-somethings who aren’t even pregnant yet. Others talk about diligently saving to retire early at age 50, even though they’ve barely started their careers. We talk about our futures and our finances like they are so predictable.

They’re not.

One of the most dangerous things you can do for your finances (and your happiness) is to plan your life under the assumption that everything will remain as it is. It won’t. I think we intuitively understand this, but you don’t know what you don’t know, and that makes imagining anything different extremely challenging. But these perspectives and biases can hinder us by limiting our flexibility to adapt to an ever-changing world.

Most of the resources intended to guide our futures come from the past.

This is a big cognitive bias you should make an effort to overcome: just because something has worked previously, or is “the way we’ve always done it”, doesn’t necessarily mean it’s right for you or your money.

This is a big hurdle. Most of our advice comes from our parents and mentors sharing their good-intentioned wisdom from their own experiences. They believe in what worked for them because it worked for them. They want it to work for you, too, but it’s possible it won’t. The world we live in is much different than the one our parents occupied, and it will continue to change in ways that challenge our current strategies.

If you’re diligently putting money towards yesterday’s dreams, you’re going to get left in the dust.
We are in an education bubble

The “go to college, get a good job” narrative needs to be put to rest. As post-secondary tuitions and fees continue to rise, so do student debts. Meanwhile, a stagnant job market leaves many millennials struggling to recognize any adequate ROI on the degrees they paid so much for. Accessibility to education is an important piece of an equitable and productive society, but the job market is becoming so saturated with Bachelors degrees, these credentials no longer guarantee the salary bump they did in the past — even though they cost much, much more to obtain.

The average student now graduates owing more than $35,000 in student loan debt, but many individuals are saddled with six-figure balances. Meanwhile, the average starting salary is only $45,000, if you manage to find a job. Unemployment for university graduates has been rising since 2006. We often quote the statistics that a college graduate will earn as much as $1 million more in their working lifetime than someone with only a high school diploma, but as the cost of education continues to rise and well-paying jobs continue to disappear, this statistic will not hold true forever. We shouldn’t even be using it to lure new high school grads into post-secondary right now.

I don’t write blog posts about whether or not I will pay for my children’s post-secondary educations because such a huge part of me hopes that they don’t go. I don’t think they will need to. Instead, I hope they pursue whatever is working in their present, not is what currently working in mine.

The Freelance economy is already here

By the year 2020, 50% of the US workforce will be freelancing in some capacity. We are a generation of Uber drivers and bloggers and Instagram stars. You do not have to make your way up the corporate ladder anymore because you don’t have to be corporate anything.

Initially, most jobs that have become obsolete by technology have been primarily in manufacturing and trades, but as our technology becomes more sophisticated, more jobs are at risk of disappearing. Creative work is one of the best defenses against these changes. Of course, Millennials are already on board, with as many as 60% describing themselves as entrepreneurs.

One of the best ways to approach your career is with the understanding that your job might disappear, and to work as hard as you can at ensuring you have an alternative. Creating a job for yourself might seem intimidating and difficult, but it’s easier than living without any work at all.

You might not retire at age 65, because you might not retire at all.

The current life expectancy in the US and Canada is approximately 80 years old. But with advances in science and medicine, Millennials might live to be over 100 — and there’s nothing to say that number won’t be even higher in the future. 65 became the retirement age when life expectancy was only 62. If the current age of retirement had kept pace with increases in life expectancy, no one today would be able to apply for Social Security until the age of 83.

Don’t retire. There’s no good reason to leave your career in the middle of your life, when you will likely have so many more years of value to offer. Accumulate mountains of cash so you have choices in the future, but think about more than your escape from the workforce. Find or create a job you love, and do it until the day you die.

Homeownership in many urban centres is a pipe dream

The more time passes, and the more I continue to watch the ludicrous real estate markets in cities like Toronto and Vancouver, the less I believe home ownership should have a place in everyone’s financial plan.

The idea that home ownership is a cornerstone to long-term wealth accumulation is a belief that belongs to our parent’s generation. We don’t need to subscribe to it. For many young people who bankrupt themselves to scrape together a pitiful down-payment, then forego retirement savings in order meet inflated mortgage payments, being a homeowner can do more harm than good for their finances.

For many young people living in moderate or cool real estate markets, home ownership can still be a good long-term play. But for those of you living in cities like Toronto or Vancouver, San Francisco or New York, it’s time to shed the stigma around renting and accept that home ownership might simply not be in the cards for you. Know that you can still become financially secure without it.

I don’t pretend to know what the future will look like in 20 years,

I only accept that it will likely be much different than the present I currently live in.

Imagine being asked at 10 years old what you wanted to be when you grew up and you said social media marketer or cyber security specialist. These careers didn’t exist. The platform they currently exist on wasn’t even invented yet.

That’s what the future will be like.

It is safe to assume there will be plenty of careers that we cannot imagine right now because the technology they will rely on has not yet been invented. The problems they will solve are worries we’ve haven’t yet experienced. The needs they satisfy are ones we don’t even know we have.

Your future will be marked by economic uncertainty, widespread environmental destruction, impressive technological advances, and more opportunity than you can presently imagine.
You can’t predict anything, but you can still prepare for it. Pay your debts, save cash, and be open to non-traditional paths to building wealth. The future will be much different than the present, but that doesn’t mean you can’t achieve your goals.

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