That’s because children as young as 6 could start saving for retirement, under new plans.
Unlike your regular pension pot, which requires putting aside a portion of your salary for your future self, the country’s government would pay out 10 euros ($11) a month to children in education under this new plan.
Over 12 years of eligibility, this could accumulate to more than 1,440 euros per child, not counting the potential investment gains from compounding interest over the decade.
Then, from the age of 18 onwards, they can add personal funds to the accounts and enjoy tax-free profits. However, that cash will only become accessible to account holders when they reach retirement age—which is currently set at 67 in Germany.
“The government plans to strengthen the state pension as well as reforming company pension schemes and private pensions,” A spokesperson confirmed the plans to Fortune. “As one project, the so-called “early start pension” aims at offering young people perspectives for fund-based private pensions.”
Now, almost 20% of Americans 65 and older are employed. That’s around 11 million people and nearly double the share of those who were working 35 years ago. In the U.K., nearly 20% of baby boomers and late Gen Xers are similarly “unretiring”—or planning to, because the retirement desires don’t match up to the nest egg they’ve built.
It’s why it’s never too soon to start retirement planning.
She used just $100 to highlight how powerful compound growth is.
By investing $100 every month from the ages of 25 to 65 into an account with a 12% yield, Gen Z could retire with around $1,188,342. A millennial who started their investment journey just five years later, at age 30, would accumulate around $649,626 by age 65, she warned.
“With a 12% annual average rate of return—the markets can do that for you—you’d have a million dollars,” she explained. “If there’s anything the younger generation needs to understand, it’s that the key ingredient to any financial freedom recipe is compounding.”
So, you can only imagine what the numbers could look like for someone who started saving at 6, not 26. By the time they reach their golden years, they could be living the retirement dreams their parents had to return to work to chase.
