The old-age pension, or retirement as it is usually known, is a right of employees, self-employed persons, beneficiaries of Voluntary Social Security or members of Statutory Bodies. It is one of the pillars of the national social security system.
The effort of monthly contributions to Social Security, throughout the working life, through a percentage of salary or professional and business income, gives you access to this pension (monthly monies), which can be requested from the legal age reform.
Europe is trying to take care of its pensioners, but the truth is that it is getting worse and worse: the sustainability of pension systems is one of the biggest challenges facing the countries of the old continent.
If we look at the value of our parents' pensions and account for what we are going to receive, we quickly realize that the matter requires an action plan.
To calculate the amount of your retirement pension you can use the simulator that social security has provided (you can see our article on the simulator here).
What do the new generations think and do about this topic? Do Millennials already worry about planning their lives for the long term?
While they recognize that their future pension will be insufficient and that they will not be able to maintain their current standard of living, only an almost insignificant minority saves or plans to save for this purpose. In fact, they are generally unaware of how much they would have to save for the retirement they want.
The Schroders Global Investor Study (GIS) 2017, which questioned more than 22,000 people who invest, also identified a change in the approach to reform among the younger generation.
According to the study, Millennials will still depend on state pensions, corporate pensions and other savings to contribute to most of their retirement, but to a much lesser extent than their predecessors. They said they expect the state pension to provide 14% of retirement income, compared to 21% for older generations.
Lesley-Ann Morgan, Reform Director at Schroders, said: “The financial situation of Millennials is daunting. We hear about it too many times. So it is encouraging to see young investors, in many ways, showing a pre-defined mentality towards retirement that is very different from that of their parents ”.
Are Millennials saving enough for retirement?
“Young investors in our study are saving 11.2% of their income, which is only slightly below the average for all generations, 11.6%. It is a remarkable fact since this generation faces so much pressure on their finances ”, commented Lesley-Ann Morgan.
Millennials have a big advantage: they have more time on their side.
Lesley-Ann Morgan also mentioned that “the most powerful tool available to those who save is time. Start saving early and it makes an incredible difference in the extent of your retirement savings. The miracle of composition, where you earn returns on your returns, increases over 30 or 40 years of savings. ”
Therefore, we can conclude that the younger generations are already beginning to realize that the pensions that await them will not be enough to maintain their lifestyle and that the sooner they start financial planning with this objective, the more benefits they will have.
- Schroders Global Investor Study 2017