When i was 18, i was interested in exactly four things: chilling out and enjoying life, partying until dawn, and finally earning my own money.
So much in advance, I have all my interests with great will pursued and of course successfully implemented. When I look back on this time 10 years later, I think: that was the right thing to do! I would do it again today or in other words: better at 18 in the full instead of at 30 years still in the clubs and the weekends with alcohol excesses to celebrate.
The thing with age
One word was definitely not part of my youth language: provisioning. Pff… What am I supposed to do with that? That can wait. I am in the prime of my life and in order to enjoy the wild 20's all the money has to go into it.
This is roughly how I could have retroactively argued my pension waiver. Maybe this would have convinced my parents. Well, as we all know, hindsight is always the wiser guide.
Of course I answered the question "have you already made provisions for old age??" Only answered: pfff, that's going to take half an eternity.
It's just stupid that "half eternity" is over sooner than you think.
Provisioning is something for "old people
The question arises, when is a man/woman actually "old"?? I have always wondered if there really is someone who is interested in retirement planning at the tender age of 18 out of their own initiative.
Yes, maybe, but who thinks about how to spend the rest of his life at the age of 18?? That simply does not interest anyone at this age.
Either way, I am very grateful to my parents for motivating me in my 20s to put some money aside. One experience has particularly supported me in saving. When i got my first pension card at the age of 18, i saw the date of my expected retirement there: 1.8.2054. It was a little funny at first, and admittedly a little funny, but in retrospect it motivated me even more, because it gave me an official target date for my savings strategy.
But let's rewind to the moment when I was firmly convinced that I don't have to worry about my pension when I'm young. Is it acceptable to say "I am not interested in it"?? I find – at 18 years – absolutely!
Who is to blame? Well I certainly don't.
Let's be clear. The topic of retirement planning is boring. Point. But there are a lot of other topics besides retirement planning that are also boring, but simply belong to life. Let me give you an example with young mothers. Freshly baked mamas also try to feed their babies fruits and vegetables, even if the mass ends up spit out on the plate 2 seconds later.
Exactly the same should be the proceeding also with the precaution. I don't think anyone should be penalized for not having a retirement savings account at the age of 25. Rather, their parents should be punished. Heard correctly. The parents are to blame.
"You are making it easy for yourself corinne with that statement", a friend recently said to me. And yes, I agree. It is easy to put the blame on the parents.
But the thing is that sooner or later – hopefully – I will find myself in this role, or rather, I would like to find myself in this role. And that's where I address my blame: to my 40- or 50-year-old self in the role of mother. I would never forgive myself if my children hadn't made proper provisions for old age, like you did?
Scenario in the year 2050: there you have the shit
To come back to the example of the young mother, the little ones simply can't help it if their mothers don't give them vegetables. The consequence? Malnutrition! The situation is exactly the same with pension provision. To the extent that parents do not make an effort to teach children about preparedness, a lack of education results! And lack of education – like lack of nutrition – can become a real burden later in life.
Imagine the following 😉 -scenario:
Year 2050: you are starting to notice something is wrong with you. Health strikes back! At that moment you realize: your parents never really gave you vegetables consistently. And that's why you have to do something now, so go to the supermarket. The thing is, you can't even buy vegetables now because:
- The land has become scarce and farmers are charging horrendous prices
- Inflation has reached unprecedented levels
- The value added tax is 20% (dear neighbors, for us swiss that's a lot 😉 )
- You have to work until 70
- You have not been told by your parents that you have to provide for your old age!
Yes, there you have the shit!
The biggest mistake you can make
So not eating your vegetables is a mistake you shouldn't make. But that is not what this is about. In case you haven't heard it from your parents yet, i'm happy to tell you here and now what the biggest mistake you can make in your 20s is: not providing for your old age. Tataaaaa!
But honestly, it's easier said than done. I didn't make it easy for myself in this respect, but I put myself out there for you and did a lot of research to find out exactly why it pays to make provisions for old age at an early age. Here we go!
5 reasons why it pays to start saving for retirement in your 20s:
1. Materialism does not survive
The small amount you set aside each month for your retirement may prevent you from buying a new pair of jeans in the short term, but you will gain in quality of life as you get older.
Health care costs rise massively with age. So a new pair of jeans seems vital to you in your 20s. In old age, new clothes will be the least of your problems.
2. Long investment horizon
You will never again benefit from such a long investment horizon as when you pay your pension assets into a fund now.
There will always be stock market crashes, but if you start now to invest your money sustainably and with an investment horizon of 30-40 years, then you can only gain. I'm not saying you'll be rich, but you'll definitely have more than anyone else who has never invested in private pensions.
3. Making dreams come true
My generation is often skeptical about private pensions, because the assets are blocked for a while. "What if I need the money then nevertheless urgently?" I am asked again and again. No panic.
Your retirement savings are not automatically locked in for decades. In switzerland, retirement savings can be triggered early under the following circumstances:
-you want to start your own business and need startup capital
-you want to buy a house and need liquid funds for the mortgage
-you move abroad and want to start over (deregistration in switzerland necessary).
Who knows, maybe you want to emigrate to spain at 60 and buy a finca there, doesn't that sound like a great plan?
The fact is, retirement savings can make real dreams come true. What dreams do you have?
4. Save taxes
In switzerland, contributions to pillar 3a and pension funds can be deducted in full from taxes. So you save money twice with this.
In addition, there are some tips and tricks on how to cash out your assets shortly before retirement so that the tax burden is not too high. A tip would be for example the staggered withdrawal of the funds. Click here if you'd like to learn more about tiered retirement savings.
5. Looking to the future without worries
We spend an incredible amount of life working. But even if you have worked all your life, no one guarantees that the contributions from the 1. Pillar (AHV) and the 2. Pillar (BVG) will also be sufficient for your future living expenses. You are responsible for continuing your own standard of living.
The demands are constantly increasing, we want to have a nice apartment, go on vacation, buy a car and of course also treat ourselves to a nice restaurant visit. If you would like to continue to live as you have in your old age and pursue your needs without worries, then I would like to give you a small task right here and now: open a pillar 3a account and from now on take care of your dreams, goals and desires independently.
Now that I've motivated you not to make the biggest mistake of your 20s, it's just up to you.
Take your life in your own hands and do everything you can so that when you get older you won't have to say: I didn't know anything about all this. You know it now and that is a good thing. This way, you don't have to blame politicians, your parents, or your loved ones for not telling you that retirement planning is important. Whining is a common disease and i won't let you catch it.
At this point, I'd like to give you my personal motto for life:
My short translation in german: do it better! Set a good example and open your retirement account today.
You decide whether you meet for a champagne breakfast by the lake in the year 2050 or whine to your friends over a tasteless cup of filter coffee.
So, keep eating your vegetables and paying into your pension plan. 🙂
Here's to a wonderful and money-rich future free of deficiencies!
If you want to know more about retirement planning, be sure to check back on my website this fall for the start of my first online course, "retirement planning made easy.
In the meantime, I'll be happy to give you some exciting reads along the way:
Important for all money luck letter subscribers: the second ingredient for my success formula is: provisioning