Fear of poverty in old age: Gen Z demands more financial education in schools!

Fear of poverty in old age: Gen Z demands more financial education in schools!

A current study entitled “Youth, Provision, Finance” shows that 75% of 17 to 27 year olds in Germany are afraid of poverty in old age. This survey, based on representative data, revealed further interesting findings. More than half of the so-called Generation Z are already actively saving for old age, but only a third of those surveyed have basic knowledge of the pension system, especially the statutory pension. Professor Camela Aprea warns that the lack of knowledge about the pension system is a problem across society that needs to be urgently addressed. “Many young people overestimate the proportion of poverty in old age compared to those who are actually affected,” she explains.

The pay-as-you-go pension system in Germany is facing significant challenges. Fewer and fewer employed people have to finance the pensions of a growing number of pensioners. The current ratio is around 2.1 contributors per pensioner; Originally there were six employees in the 1960s. Projections suggest this ratio could fall to 1.5 by 2030 and 1.3 by 2050. These developments arouse fears and insecurities among the population, as Professor Christian Traxler also states: “The pessimism regarding pensions is exaggerated.” Nevertheless, the current discussion about the pension situation shows how urgently reforms are needed to secure the system financially in the long term.

Retirement provision is changing

The relationship between working people and pensioners is a central issue. By 2030, at least 14.5 million baby boomers will retire, putting additional pressure on the pension system. Many young people pay into a system from which they may get little in return later. Despite these uncertainties, there are also advantages: young people have the time to build wealth. But to do this they need concrete recommendations to avoid poverty in old age.

It is recommended to invest in broadly diversified ETFs or stocks at an early stage and to expand your private pension provision, as the statutory pension only offers a basic provision. Financial experts also recommend aiming for a savings rate of ideally 10 to 20% of your income and maintaining career flexibility to create additional sources of income. At the same time, however, young people face challenges such as rising costs of living and stagnating wages, which limit their financial flexibility.

Need for more education

One of the key findings of the study is the increasing need for financial education. 87% of those surveyed would like financial and economic knowledge to be integrated into school lessons. There is a huge lack of information, which means that many young people do not know how to make sensible provisions for their old age. Given this situation, it is essential that political measures are taken to improve the framework conditions for funded pension provision and to strengthen financial education.

In summary, it can be said that Generation Z is faced with the challenge of actively looking into their retirement planning in order to counteract the dangers of poverty in old age. Politicians are called upon to set the course for a future-proof pension regulation and to give young people the necessary knowledge to make informed decisions. As current developments show, pessimism about one's own financial future in old age could be exaggerated if timely action is taken.

Overall, we are facing a pension crisis of historic proportions that requires smart and sustainable measures. The time for reform and enlightenment is running out.