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2011-12-04

Saying yes to sailing off into the sunset is saying no to a broken system

Over the years (and it has been years) since this blog and our multi-year plans to sail with a young son began, I have received the occasional opinion that it would be better if we waited until we were closer to retirement age. The logic goes that our finances would be "on a firmer footing", our son would be on his own or in college, and we could "downsize" our downtown home, recoup our investments and get a nicer boat with electric hoo-hahs and all mod cons.

Putting aside some fairly large assumptions inherent in such an opinion, such as a) there's no prospect that our house will actually show a profit in 15 years' time as the general economy may be in the dumps; and b) our son, if at a university, might be ruiniously expensive if scholarships are unobtainable; and c) our health and strength would endure to that stage at such a pitch that we could, as a sailing couple, operate a 40-45 footer safely in all weathers. This isn't even taking into account that we might have living relatives both ill and old and underfunded in our care, or that diesel could be three times its current costs. Lastly, there's d) a large reason to go is to expose our son to the rest of the world while such a fleeting opportunity, historically speaking, for non-rich people, by Western standards, to do so is still open a crack, and so on.

Basically, the "go while you still can" mantra holds for us. Working like dogs until 60 or 65 in order to have a nicer Beneteau holds little appeal if other things we can't control come into play in a deleterious manner. We know more than one cruiser couple who have either commenced cruising or are planning to cruise with largely the same outlook, although many have started from differing assumptions or adequately funded pension plans.

If you wait, the opportunity may never come. The stars may fail to align. 

Consider our boat, Alchemy: It was custom-built in the late '80s by a fellow who took a long time to finish it. I'm not convinced, having spoken only briefly to him on the phone, that he wanted to travel the world, but for whatever reason (age, interests changed), he owned it for 17 years and never took it into salt water, despite the fact it's ludicriously overbuilt for the Great Lakes. See "Why do I have eleven 5/16th inch stays?"

The second owners further fitted out the boat for a couple of years with some top-end amenities, and then received a lucrative job offer unto retirement that convinced them to give up, or at least postpone, their dream of world travel. We're therefore the third owners in 23 years of an ocean-going boat that's not been to the ocean. We might actually push off in said direction, unless the "curse" strikes our enterprise as well. Let's keep fingers crossed, and, if necessary, sacrifice a goat against that possibility.

One of the more compelling reasons, however, to sail off that I present to well-meaning interlocutors seems to have an almost universal affect on those suggesting a more protracted run-up to passagemaking.

That reason is that I believe I will never receive a pension, and I will never actually be able to retire. 

Not in the conventional, that is to say, post-1965 and pre-2008 sense. Like most humans throughout history, I will likely die in harness, which could mean a fate as ugly as the world's oldest telemarketer. My only consolation in doing so will be that I am likely to do so at an older age than the historical norm, if we can keep purifying the water and don't bugger up the air or food supply too badly.

I am also hoping that if I have to work until I snuff it, I will have no regrets and plenty of feedstock for pleasant dreams, having sailed around the world for five or so years.

Still, my outlook is not very comforting, is it? A lot of people currently cruising have pension income of some sort, and that may be well-funded, or well-funded enough that such fortunate folk may pass naturally (or simply swallow the anchor) before the piggybank runs out. Congratulations to them; I bear no grudge. But I believe, sincerely, that I will not be among their number. My 12 years' younger wife or 40 years' younger son?

Not a chance. The larder will be bare, and is already understocked.

Everything they have paid or will pay into my country's national pension scheme will be utterly gone (or will be devalued to the point of "gone") by the time they reach retirement age, which, if the entire house o' cards is to kept in a wobbly state of mostly upright, will be between 75 to 80 years old, and for the Greeks, 110 years old.

So I hear this: "Wait, you are sailing off in middle age because you think pension schemes are the devil's songbook?"

Well, yes, I intend to and I do, although there are other reasons. But having invested my own money, such as it is, for many years, and having been self-employed for only a somewhat shorter period, my belief that pensions as currently administered in my country and most, but not all, others, are a mug's game is based on two simple, and contrasting concepts. 1) Governments have treated pension funds as piggybanks at the same time as they have kept contributions artificially low to avoid alarming the peasants. Thus, the commitments far outstrip the ability to pay.

That doesn't make pensions stupid. It means that you have to have them run at total arm's length from idiot governments who can only think in four-year cycles. A pension demands the ability to count to 100 and to stick with what one learns from being able to count to 100 whether people whine and bitch or not. 2) For the same whining and bitching reasons, governments have not directly linked life expectancy to retirement age. The age of 65 was arrived at when meb (and it was mostly men who had pensions for many years) died, on average, at 67. You don't need a lot of planning or even cash to pay out two years of benefits for 40-plus years of planning, particularly as the average age of 67 implied that a lot of men kicked off years before that and got NOTHING, or just a fractional payout to a surviving spouse. My grandfather died two days before his 65th birthday in 1968, for instance. Not a penny did his widow, who lived a further 25 years, get from the pension scheme of the day. My mother died at 68; she got three years, having contributed since the age of 18: 50 years.

Now, some might say "Ah, but that's just a roll of the dice. It doesn't invalidate the pension logic." And I might agree with such a person...in principle. But pensions have long since abandoned any notion, in my view, of "principle". These days, men in Canada live until 81 and women to nearly 84, on average, and therefore collect pensions for 16 to 25 years, as they can "retire" at 60 on a partial or at 65 on a full pension. Trouble is, having built all those universities and discouraged the trades, we aren't STARTING work until 22 or 23 (or 25 if you go for a master's or a PhD) and therefore expect to pay generous pensions (in the context of maximum years of earnings) for 20 years from a working life of 35-40 years.

So the second concept is that in order for this pie-in-the-sky pension scheme to work, we would have had to kick the retirement age to 75 about 20 years ago by upping the age of retirement by one year every two years or so. The biggest bulge in the python, demographically speaking, would have been therefore "encouraged" to put away more, and earlier, themselves, because the bareness of the cupboard marked "pension benefits" would have been more apparent earlier in the process, when we had a hope of applying some fiscal probity...instead of clapping Tinker-fucking-bell back to life.

Anyone else see a problem with this? In all of the Western democracies, save perhaps Germany  (which could be sabotaged by the "Euro project" in this respect even yet) and Scandinavia, the pension-planners' "house" cannot collect enough to pay out all those winners. Those of us who work as self-employed persons actually make a double contribution to a fucking pyramid scheme that will be sucked dry from the enormous generation of "boomers" directly ahead of us in age...and who will NEVER support pension reform...because it is not remotely in their interests to do so.

Looked upon in that light, buggering off with no income (visible to my nation's government at least) in a boat for five years is actually a break from the daily wallet-sized prison rape of living in a society that wishes to print money without doing the requisite math to make said slips representative of actual wealth. While cruising, we may not make any money, but we get a brief absolution from pissing into a bottomless well from which we, as the currently middle-aged income earners and contributors, can never plausibly draw. World cruising is therefore a withdrawal of our services, and a refusenik tactic, as much as it is a nice way to see the world, while there's still a world to see.

I have mentioned before that some of our ambition to make a rather unconventional trip like this was rooted in a pessimistic view of humanity's future (we should go before piracy, adrift containers and Texas-sized patches of plastic are normal in every ocean) and of the continuing degradation of the environment (see the lovely atoll nation before it's a sandbank; sail while there's still fish to catch off the stern). Add to that the compelling rationale that long-term cruising withdraws the family finances to a significant degree from the never-ending shell game of national pension schemes, and it gets harder some days to be cheerful about the prospect of casting off at all. I only thank Neptune or whatever watery deity applies that I figured this out at 40 instead of 60. I have been planning our escape accordingly, and postings such as this are "goon-baits" in the fine old Colditz tradition.

The system will only collapse more quickly if everyone figures it out for themselves. See "Europe: now".

UPDATE Dec. 14, 2011:  

According to this story, my country cannot even fund its pension scheme to its own bureaucrats and other federal government workers.

"One of the figures Ottawa uses to determine its pension liability is a moving average of past “nominal” yields on 20-year federal bonds, while the other is an assumed return on investments of 4.2 per cent based on averages earned since 2000.

The C.D. Howe report says the “made-up” numbers are not realistic in today’s world of low interest rates and low investment returns.

“Both these interest rates are well above anything currently available on any asset that matches the plans’ obligations,” Mr. Robson said in a news release Tuesday."

Pension plans must be formulated on the payout side on the basis of everyone slightly outliving the forecasted draw-down. That is, if the average age of death is, say, 80, and the vast majority work until 65, you provision for 16 or 17 years of payouts, averaged out. This is because the average age of death will tend to move forward in time as people who would have died within that period benefit from medical advances and other life-extension methods, like a more active lifestyle and a better diet.

Pensions were so much easier when people retired and dropped dead three years later from too much smoke and gravy, frankly. Now, all that time at the gym followed by salad means a lot of wiry oldsters are working stacking shelves and greeting at Walmart. It's a glimpse into the future.

Pension plans must be contributed into on the basis of the most conservative outcomes; in a low-interest, low-inflationary period, one cannot "bank" on even a pension fund's considerable buying power to outdo the market, which, as we've learned, is substantially rigged in favour of the already-rich.  So if one's assumptions are too rosy (and "too rosy" is a real problem in this area of management), the pension will inevitably have less money to address an ever-expanding set of entitlements and obligations.

In sum, when the bureaucrats, who are generally assumed to have gold-plated retirement funding, start to question the imperial habit of coin clipping and currency debasement (to cite what in part did in the Roman Empire), it's time to review what we, the better washed but nonetheless vast plebian population can expect, if anything, to keep us out of the garbage bins, food banks and future auditions for "Bum Fights, 2030".


20 comments:

222 said...

I don't think it's so complicated really, not for people like me, who have no responsibility for another ie: no kids. All folks have to do is save, make some investments, and then cash in what they need to set off, and use the rest of their empire, as and when they need to.
Having lived in Water World for two years, whilst not going further than the bay, I got to realise that we spend a lot less money on boats (beyond fixing them) than when living on land, plus it's far more fun than most land-based antics.
I have never, every considered paying into or waiting for pension-age to roll around. When I figured out how to make the system work for me, by thinking outside of my country and investing elsewhere - and I've doubled my investment in SA, and the price hasn't fallen, even with the global recession - and realising that I will never be a big spender, that I can totally live on what I have made for myself so far, and that there's always ways to make a hundred bucks here or there with teaching gigs - if in Turkey, or picking backpackers up on the boat - then well, it just seemed like a no-brainer to sail off into the sunset, which would happen if I was alone, but then I went and fell in love, and if that works out, well, great, but if not, I have back up, but you know all of this, just wanted to leave a comment for whoever might pop in here.

Rhys said...

Well, no, it isn't complicated, but it does seem rare and there's entire service industries devoted to making it complicated (and taking a fat commission for advice).

I read recently that our species has had so little time to actually *have* "retirements" that we aren't really equipped to plan more than one season ahead in time...it's too abstract. Might be something in that, actually.

Anonymous said...

That struck a chord. I’ve sailed all my life, but never did the big one. I’m now 60 and I realise I’ve waited too long to go on my dream sailing journey. Last summer I cruised extensively on Georgian Bay and found I did not have the endurance to cope with rough weather and long passages. My physical and moral strength has diminished too. Leaving aside any children, pension or financial issues, I say, go, don’t wait. You can’t go back in time.

Anonymous said...

What would happen though if all and sundry decided to 'live the dream' and sail off around the world? I wouldn't shout about it too much if I were you!

Rhys said...

Sorry to have inadvertently highlighted your situation by my "pension rant", but it's true: People carry an image of themselves that doesn't quite match their age or abilities, and that includes people who keep reasonably fit. On passage is an endurance test in staying observant, awake and only lastly physically strong, although that plays into it.

Sixty years old is about average at my club, by the way. Cruising's a fairly "grey" pursuit these days. Still, you can bring aboard younger crew in return for salty wisdom and a well-made sundowner. Or even just pace yourself.

And I wouldn't rule out that "dream sail". The commandore of our club is 70, and is going to crew on a tall ship doing Tierra del Fuego and the Falklands next spring. It's a matter of staying mentally prepared as much as physically. Chichester soloed around the world at 66, after all.

Anonymous said...

There are two issue here. One relates to age and another to money. Cruising is grey-haired because it’s expensive. Few young people (i.e. under 40) can afford to buy and maintain a boat.

I’m also an NYC member, a recent one. I paid about $45k for the C&C 35 I’ll be keeping there. I’ll pay first year membership fees and dock fees amounting to almost $15k, including a debenture. These fees become lower the following years as you know but they are nevertheless significant. When I was 40, I was struggling financially and would never dream of doing that, I kept my boat on a swing mooring for a small annual fee. That’s why most YC members are grey-haired and I think most other Y C members are of the same age group, unless they are part of a junior racing team, but that’s a different kettle of fish, it’s not cruising.

There is also a generation issue. When I was younger, I would give my eye teeth for a crew job on a good boat, particularly if she was successful. I’m surprised to note that none of my three children has a real interest in sailing. It seems they prefer (depending on their individual characteristics) very active pastimes such as running, mountain climbing, skiing, boarding or for some, Facebook-time. We’ll be spending Christmas in the BVI and bareboating a Cookin’ Fat, but they see it more as a floating hotel and a convenient platform for scuba and beach bars.

On money, I picked the wrong plan. On the positives, I ignored all form of pensions, never believed in them, and agree with your views on them. My miscalculation was to work like hell to accumulate enough to live independently when I decided to retire. But as I said earlier, I somehow forgot about the fact that, physically, I can’t stay 40 years old forever. Doh!

I hope many younger sailors will share your views, and mine, they converge. If I were in their boots, I would ask myself, how much will this cost me? I know the question is similar to “How long is a piece of string?”, it can be anything. When cruising, going from a luxury marina to another, eating out at fine restaurants will cost more than anchoring and cooking your catch of the day...

But, to be specific, what do you think will be the running costs of your lovely S/V Alchemy when she’s back in the water and starting her long blue water journey? In my case, it’s more of a vicarious living question than a practical one, obviously.

Anonymous said...

J-L Marc...the crew of Silverheels III thinks that you've lost it. Quit analyzing pensions. Rent the house and get going. Kids thrive on home schooling on a boat. Costs of living is less in West Indies with no heavy clothing or heat necessary. Cruising need not be long hard passages at sea. Toronto to Grenada West Indies has only 5 overnight passages. Longest one is Luperon DR to Peurto Rico (45 hours.) We did this with only a crew of two, a $300 chartplotter at the helm, no radar and an untrustworthy autopilot. Less navel gazing and more KISS boat/mental prep will get you to sea soonest. Get to work!

Rhys said...

I know you guys think I'm taking too long to get out there, but there's more to it than that. You sold up. We don't intend to.

Ken presumably has a pension from working at the same place for decades. I don't and won't.

You don't have kids. We have one and he's not having the easiest time in school. That's part of why Becky's becoming a teacher: to deal with that in the context of "boat-schooling" and to have a hope of earning something "after cruising", when, after all, she'll be only 45 or so.

If my sick sister drops dead, I'm her executor for her remaining underaged son's interests. There's all sorts of complications, and if I was working to a schedule, I'd be a wreck.

If I thought about pensions, I'd be a wreck, too, so assuming it won't exist is actually liberating.

Rhys said...

Anon from NYC: Thanks for the thoughtful comments. Having just passed a "milestone" birthday with just-in-time creaking and aches, I know to a certain extent what you're talking about.

I concur about convergence. There's (I very much hope) a happy place where age, skill, ability, energy and enough bucks to do the thing converge...and I hope it's soon.

After we splash and away from dock fees, I estimate that S/V Alchemy will cost about $25K/year at present exchange rates to run. That's assuming only rare tie-ups and not much in the way of restaurant dining, which is fine by me. If I want authentic ethnic cuisine, I go for a short walk.

The $25K figure includes an emergency fund relating to about 20% of our total five-year kitty. Emergency would include in this context unplanned trips home, a hull-piercing stranding, or a 100% loss on the engine.

My thinking here was shaped by the helpful "Voyager's Handbook" by Beth Leonard, who seems to handle the Excel file budget aboard her boat.

Rhys said...

All and sundry anon: It would never happen that way. Sailing off is for a miniscule amount of people. All the people currently doing a circ wouldn't fill a stateroom on a modern cruise ship. Not really my worry.

If enough people learn to count, however, and the Ponzi logic of pensions is more generally known, we might have trouble here in our workers' paradise.

Me, I hope to learn how to fish better...assuming the global fishing factories haven't swept the seas barren in the next decade.

Anonymous said...

I'm quite sure the masses will not rise and suddenly buy a sailboat to cruise 'round the world. The reason is clear: Time, money, sailing competence, physical strength, endurance and a strong mindset are required. Most people have some of these enviable characteristics, but few have all of them. John at NYC

John C said...

Sitting in my armchair, I wonder, what route would a circumnavigator take these days? From Canada, the usual journey would be the Caribbean, then Panama Canal and the Pacific, ending up in NZ, Australia or Singapore, whatever, But from then onwards, I wonder.

What about Somalia? It seems the pirate ranges extend to the Seychelles and even western India. The Noonsite website is full of info about these risks. Plan B would go eastward, heading from the Caribbean to the Cape in SA? And then directly to Oz and NZ? Roaring forties? I know, questions, questions...

Anonymous said...

OK OK maybe I was a little abrupt Marc. Why not try this. Get the boat ready enuff for a 1 year cruise somewhere in warm waters. No ocean crossing...gotta bring all my welding tech with me...just what regular boats equip themselves for a one year cruise in...say...Bahamas. See how you, and more importantly, your wife and kid like it. You'll be able to get parts and services as you go. Don't go for the biggie plan...try a shakedown cruise to see how you folks (and the boat) make out. Ken @ Silverheels III

John C said...

Your comment on overfishing is close to my heart. I am very concerned about this and, although I love to eat fish, I thought of no longer eating any, in order to preserve stocks. Upon reflection, I'm just one fish-eater out of many billions and my abstinence would not make a difference. The issue is a worldwide political one and it has to be dealt at that level. As a realist, I think no one will ever deal with it. As an idealist, I hope they will.

I'm also upset at the billions of tons of non-biodegradable garbage, mostly plastic trash, slowly circling in the middle of the Pacific Ocean, an impenetrable barrier of rubbish, that no one will ever get rid of. I can only presume there is the same amount of garbage floating in the middle of the Atlantic.

Sailors are usually ecologically-minded and active preservationists. I'm part of that group, in a moderate sub-group, whereby I'm not advocating putting a stop to the use of internal combustion engines or banning the production of meat. But we need to do something about it.

What's your view on that?

Rhys said...

Well, having eaten a nice chunk of mahi-mahi on my last delivery that died happy with a mouthful of rum (gill-full?), I would hate to avoid taking advantage of the bounty of the sea. For one thing, certain precautions observed, it's very healthy not to eat from tins all the time, and secondly, fishing's fun.

I am putting a lot of money and effort into enough solar and wind power to pretty well cover our foreseeable energy budget. Nonetheless, I'm installing a new diesel, a Tier 4 emissions model that will push the boat with a minimum of fumes. I keep the house cool in winter and don't own a car. I'm not worried about my effect on the planet. I am worried about 500 foot factory ships resorting to increasingly obscure species for the beloved frozen fish stick market because fish we actually recognized are becoming endangered.

As for the trash, we have sufficient room to compress the plastic (and to reduce its use in the first place) between landfalls. Bottles and cans (cleaned out) are actually "habitat" (not in a lagoon, mind you) and will eventually break down.

I am trying to think of an engine cooling water intake setup that will be fine enough to stop plastic spherules from getting in the circuit, but won't easily clog. I actually had my 33 footer's engine start to overheat when a plastic bag was sucked over the intake vent. When I switched off, I saw the bag float lazily off the stern. The engine temp dropped 30F in about a minute after restart.

Rhys said...

Ken, the "shakedown" you envision for us would likely be to Halifax to overwinter after a half-summer and a fall cruising Cape Breton and maybe up to NF. Yep, not very warm, but we have friends there, and we are (in the broader sense) still in home waters with a way to tend to business in Toronto if needed, and a place to put the kid in school for a few months.

We are thinking we'd go for an earlyish (late May/early June) trans-Atlantic to Ireland and then GB before crossing the Bay of Biscay in year 2, and then to the Azores, back across the Atlantic and then to the Canal via the south Caribbean.

But our plans could change. We agree that a few months "at sea, but not that far at sea" are going to reveal potential issues before they become dangerous shortcomings. It's always been part of the plan. We ourselves have to acclimatize to Alchemy's "little ways" and to watchstanding, weather forecasting, provisioning and fixin' stuff.

Rhys said...

John C: At this point, it's up in the air, because it could be four years from leaving Toronto to being in the Torres Strait and wondering "hmm, Thailand and Borneo, or straight to Sri Lanka?"

Right now, there is no way I would go into the Red Sea or even as far south as Kenya. I would likely go Sri Lanka, Kerala coast (I like what I know of that southern part of India), Maldives, Maritius, Madagascar for the lemurs, and then eastern South Africa to gingerly beat our way around to Cape Town and then into the Southern Atlantic.

Now, if a thousand pirates dangle from 500 yardarms in the next few years, we'll see. The family wish to cruise the Levant, Turkey and Greece (as well as to see Egypt, despite the rampant corruption) is not currently compatible with the danger level of the western Indian Ocean.

If we decide in Portugal to run into the Med, it's a different, if more expensive, story. But Europe could get surprisingly cheap quite soon now, and that, too, would change the plans. Thanks for asking.

Rhys said...

John C at NYC: While I'm not one to judge whether I and my family have those particular (and necessary) qualities, I hope we do, and I agree that this sort of adventure is understandably not for all. "Boat repair in exotic places" or "The most expensive way to travel at the slowest speed" both have a grain of truth in them, and you have to be a fan of process over product, otherwise you'd just hop on a plane and go to these places in a few hours instead of months.

You do get, however, a human-level view of people and places. Everyone has said "it's the people you meet" both in the cruising and the local populations, that really make all the effort and outlay worthwhile.

sabredancing said...

Great viewpoint Marc, It matches mine pretty much to a tee. Pity I didn't finger it out until recently. I was caught up in the "business as usual" ponzi scheme that is our pension and retirement system. I recently found myself awakening to the brutal reality that I couldn't afford to live on land once I retired, and as for living on a boat, then all my prized possessions, 35 years worth of books and such would have to go. Pity.

However, having come to that conclusion, and having a close friend of mine pass away on December 01, I have decided to hell with it and will make all efforts to get the old tub up and running, and then skedaddle for points east and south.

Do it now. For I suspect that it may not be possible for very much longer unless you have a lot of silver or gold. Money soon won't be worth anything other than crinkly toilet paper.

Rhys said...

Since I posted this, a guy I went to school with dropped dead at 50 years old, arguably the most successful graduate of our year. (http://en.wikipedia.org/wiki/Doug_Sellars).

So I am very much on the same page. My knees are starting to confirm my birth certificate. If I fall off a boat in the South Pacific, I can only hope my last thought is "oh, well, at least I got HALFWAY around".