I am currently on vacation and enjoying some quiet time with my family & friends in Germany and Poland. Last week, my moms best friend came by, we had a cup of tea and overall a great time as she had the pleasure to get to know my little daughter for the first time.

My mom is 62 years old, her friend is of the same age. As usually at some point, topics diverted towards the small pains in life. Recent doctor visits, some gentle gossip about who passed away within their circle of friends and neighbors – and their expectations towards retirement.

Obviously, especially the last part caught my attention and I got to say that I was truly shocked to learn about what my parents’ generation is expecting to receive once they go the step and retire at legal age.

My parents (and their friend) had simple lives, with regular jobs and learned, studied, worked basically without any breaks since they finished universities. They hardly took vacations and are true masters in frugal living. And yet, they won’t even receive 20.000 EUR a year COMBINED after turning 65. That’s less than 10.000 EUR per person per year and even less than 850 EUR a month per person.

How far do you get with this kind of money?

Not very far. Not only do they have to pay more to cover medical expenses than in the past, but inflation also forced them to get creative and increase their frugal living efforts to a point that I think even them couldn’t imagine in the past.

A cappuccino costs 3 EUR. A pizza around 8 EUR. A pack of 1 kg of fresh strawberries is 6,50 EUR. Oh yes, and the rent for a 2-bedroom apartment is now about 1000 EUR a month in Berlin. So after paying rent, utilities and medical, they will hardly be able to afford 1 cappuccino a day for 2 persons.

That’s rough.

Is this the norm? Probably not. But it’s not an exception. And the new generation of AirBnB hosts, UBER and Lyft drivers and working vagabonds who live by blogging or social media activities need to truly understand the significance of what can and ultimately will happen if one doesn’t start early to work on his/her finances and prepare for retirement.

I hate to break the news but there is simply no way around investments!

We all get old, there is no way around. We all will get to a point that we can’t or don’t want to blog, to drive a car or to share our apartment or house with someone else. Be it for the lack of mental or physical capability or in general for security & safety reasons. We all will get wrinkles and lose our Instagram followers to a 6-packed yoga pro who is traveling the world while we may be fighting with the stairs in our house or condo.

So how are you going to push up your rent, at least to a point that this 1 cappuccino a day won’t hurt you?

  • Saving accounts? Offer not enough even to balance inflation.
  • Government bonds? That’s a zero game at this point.
  • Renting out a house or a condo? Might be an option but you still got to take care of it to ensure payments keep coming. And the older buildings get, the more issues you will have which will bring down your margins and require you to keep a constant eye on it.
  • Buying a house for your personal use? It will reduce your costs but it won’t pay any bills.

There is simply no way around it. Investing needs to be a part of your retirement strategy.

People who are not familiar with investing in the stock market, often argue that they don’t consider the stock market to be safe. They consider it to be risky. But they have to realize: We are already at a very high risk. And for some, it’s almost too late.

This is a topic that should be taught in schools, it’s significance can’t be emphasized enough. In the meantime, a retirement crisis is looming on the not too distant horizon and it may very well become what will trigger the next crash or even a major financial crisis. Let me be an oracle on this one.