The best time to think about retirement is when it is still in the distant future. So distant that pondering over how best to approach it is often postponed until much later. Because so much can still change. Yes, that's true.
But there are certain fundamentals that do not change very much. These include human needs, our aspirations and the demands we make on our lives. Which contribute to us being happy. For most people, one elementary piece of this personal happiness puzzle is financial security and the reassurance it provides.
So the answer as to whether I, as a young person of Generation Y, or so-called Millennial, should already start planning for my retirement, is a resounding "yes". This will alleviate the concern that I could be left with an uncomfortable pension shortfall later in life and will have to cut back on my personal standard of living.
Responsibilities fundamentally change at the latest when the first self-earned salary is deposited in the account. This is when the parents, who had been watching over their offspring until then, leave their children to fend for themselves. This includes being responsible for the finances.
The consequences of decisions made today will only come to bear many years down the line when it comes to provision for old age. That goes for the positive as well as, unfortunately, for the negative. Therefore, it is of great importance to make them after careful consideration as well as at a sufficiently early stage.
Your personal life situation, your dreams - both on the professional and personal level - your current situation and all your aspirations for the future should be taken into account. And since these are very individual and varied, there can be no award-winning, one-size-fits-all super savings plan waiting in the wings. The best advice can only be: Inform yourself as comprehensively as possible. Seek competent, trustworthy, independent advice. Take your time and then decide according to what you think and feel is most suitable.
Investing money does not mean waiting until you are wealthy. On the contrary, whether you are a student, trainee or young professional, investing even the smallest amounts can be done in many different ways. What is more important is continuity and a strategy for wealth accumulation.
As with most plans for the future, the first step is to look at your current situation. What can be expected from the statutory insurance in old age? Salaried employees are covered by statutory pension insurance and occupational pension funds. The same applies for occupational groups entitled to pensions. All of them can supplement their pensions through private provision.
Self-employed professionals can make their provisions with the classic Rürup pension (by the way, so can everyone else). All these basic pension models are tax-subsidised, as are Riester contracts and occupational pension schemes.
Other options include private provision through traditional or unit-linked life or pension insurance. Savings plans based on exchange-traded equity index funds offer the greatest possible flexibility.
If a larger sum is already available at the start of your savings and investment planning, real estate is always a recommendable investment. This is especially true if you are going to use or live in the property yourself.
After assessing your current situation at the outset, the next step is to answer the questions about the possible forms of provision for your own occupational group and which ones are most likely to suit your individual needs. And then - very importantly - consider your own investor profile.
The goal is to find one's own way in the labyrinth of possibilities that feels right. The more diverse the chosen model, the more flexibly it can be readjusted if there are fundamental changes in the living and income situation. If this flexibility is not an option for you because of its risky approach, you can also choose a classic, more conservative pension plan.
Millennials are characterised by their aspiration and willingness to actively shape their own future. And it is precisely this that can be the motivation for addressing old-age provision in good time. And knowing that you have taken the necessary action will bring you peace of mind in the here and now.
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