Live young, die hard

You think we’ve committed ourselves to “Live young, die hard!”? Not if you take a closer look at the future of most tattoo artists and piercers. Because only very few, very few, make it to retirement and beyond. The rest fall by the wayside:

• Age (parents’ generation, uncool)
• Trends and fashion
• Technical developments
  (coil/pin, Procreate, Insta, TicToc, AI, tattoo robot, …)
• Health (back, neck, heart, eyes)

But at 25, of course, that’s just old-fashioned gossip. Most hipsters in the industry live by the motto: “What’s it to me? Live hard, die young!”. Well, but the old farts were also 25 once, sang the same song and either woke up in time or landed hard – and then still had many, many years of hardship until they died: “Live young, die hard!”

We already published a series of interviews on this topic a few years ago (“And then the revolver at 70”), so we can’t emphasize enough how important this topic is – for everyone!

Because we know the following with absolute certainty:

1. We are all getting older.
2. Everyone in the industry has already been and will be affected by the above-mentioned issues – to a greater or lesser extent.
3. The 6 in the lottery is not something you can rely on.

The hard facts

“Do I even need a pension plan? I’ll inherit something…”, “I’ll take care of that when the time comes.”, “It’ll be fine…”

Of course, a lot of panic is being caused here – especially by representatives of pension schemes. It is therefore certainly wise to look at the simple, hard facts.

Let’s assume that as a single self-employed tattooist/piercer you need around €2,500 a month for everything (rent, food, travel, health, phone, clothes, etc.). Yes, we know, there’s not much partying involved. Let’s also assume that there has always been and always will be inflation. Then we know that the €80 jeans or the €1.20 sandwiches will cost a little more in 30 years’ time than they do today.

But how much is a little bit?

It’s nice that spreadsheets have been invented. Let’s enter the hard facts and get a perhaps quite frightening result:

With inflation of just 2.5%, the average cost of living doubles after around 27 years. With an inflation rate of 3.5%, it takes around 19 years. This means that the cost of living triples or quadruples by the time you retire (depending on inflation) and continues to rise even after you retire!

OK, and how is that possible?

Faced with these figures, many people are inclined to bury their heads in the sand. The problem is: it’s the perfect posture for life to kick you in the ass. And that’s exactly what will happen – sooner or later. I promise!

But there is another way. You just have to be honest with yourself: for every euro you earn, a third (33 cents) is not for your present self, but for your future self. We think that’s fair.

So let’s take the example from earlier:

Our self-employed tattoo artist/piercer needs €2,500 a month to live on. Then he/she needs a further €1,250 per month for his/her own retirement provision. If you include the additional taxes and possibly additional health insurance, someone like this needs around €5,000 per month in pre-tax profit.

If you can’t do that, for heaven’s sake, find another job! This is meant seriously.

And now let’s be a little optimistic and firmly believe that we can invest this money so well for retirement that it won’t simply be eaten up by inflation. And of course we also know that when you’re 25, you really don’t want to hear about shit like that, you want to have fun. So we don’t start saving for retirement until we’re 30, and we throw that back into our beloved spreadsheet:

So our single and self-employed tattooist/piercer has to put aside €1,250 a month for 35 years in order to maintain his standard of living in old age, with an effective interest rate that is at least as high as inflation so that he/she can live to be 82 without going hungry.

And yes, you’re right: by the time he/she is 65, he/she will have set aside a total of almost €1.3 million. And that’s just to be able to live modestly in old age.

If the €2,500 is not enough for your lifestyle today, then your monthly retirement savings will inevitably have to increase. You can use this as a rule of thumb:

• I put 1/3 of my net income (after tax) into retirement provision.
  2/3 of my net income (after tax) is available to me today.

It’s not so easy to earn interest on retirement provisions.

If you ask anyone to make you an offer for a pension plan, please always ask about the effective interest rate, i.e. what is really left for you after all fees, discounts, commissions, brokerage fees and whatever else there is. 😉

A typical endowment life insurance policy currently has an effective interest rate of < 0.5%. A property does not retain its value either, as it requires ongoing maintenance (annual reserves/investments: approx. 2% of the purchase value) and has ongoing costs (property tax, insurance, …). Fixed-term deposits at 2.5% generally do not offer this interest rate in the long term. You also have to pay tax on the interest (capital gains tax).

So what to do?

Possible solutions

ETF funds, for example, or a property are more interesting here if you are able to do a lot of the work yourself. An owner-occupied property also has the advantage, financed in the long term, that the monthly rent does not continue to rise (interest is equivalent to a basic rent) and the monthly installments thus contribute to retirement provision.

Take advantage of tax benefits

If you rent out part or all of a property, you also have the advantage of being able to deduct (almost) all running costs, interest and building depreciation (Afa) from your own tax. Together with the depreciation (2% of the property value per year), the depreciation is usually higher than the rental income, so it pays off.

Much-vaunted Riester pensions or pension savings plans are only worthwhile for their providers, never for you!

Do not disregard the statutory pension

Yes yes, everyone complains about it. The pension was already written off when I was still at school and that was almost 40 years ago. So there are two things to bear in mind here:

1. The statutory pension is also an occupational disability insurance
   and one of the few that really takes effect in the event of a claim: all you need is a general practitioner’s assessment and perhaps a little insistence from a lawyer, which you can get cheaply from social associations such as the VdK.
2. The interest rate is right
   In the last 10 (turbulent) years, pension adjustments have on average been higher than the inflation rate. As politicians are closer to the target group of pensioners than to young voters, this can also be assumed in the future.

Invest where you will get better in old age!

There is still one catch with our beautiful graphics: who actually manages to work at full capacity as a tattoo artist/piercer when they are over 60 so that their pension provision doesn’t come to an early halt?

At a certain point, i.e. when you are no longer hip, it is therefore advisable to shift the focus of your work to topics in which you get better with age rather than worse:

• You will inevitably get worse at tattooing/piercing.
• When it comes to topics such as organization, training and consulting, your age and experience will stand you in good stead.

And that in a market with a lot of artists but only a few good store managers. Have you ever thought about it? 😉

Yours