As boomers are forced to ‘unretire' because they've not saved enough, 6-year-olds in Germany could soon have retirement accounts
After having a brief taste of retirement, a sizable chunk of Gen X and baby boomer retirees are dusting off their suits and returning to work instead, having not saved up enough to kick up their feet in the current climate. It's a fate that Gen Alpha in Germany may never have to face.
That's because children as young as 6 could start saving for retirement, under new plans.
As per a report from CNBC, Germany's coalition government has proposed an 'early start pension'—a retirement program designed for children between 6 and 18 years old.
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 onward, they can add personal funds to the accounts and enjoy tax-free profits. However, that cash will become accessible to account holders only 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.'
People are working well beyond retirement age globally. They're living longer than expected, caring for both their elderly parents and Gen Zers, and wanting to enjoy the fruits of their labor with lavish vacations instead of pottering around.
It's why the number of those who have continued to work past 65 in the U.S. has quadrupled since the 1980s, according to the Pew Research Center.
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 their 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.
The renowned financial expert Suze Orman previously highlighted that Gen Z and millennials could indeed retire as millionaires if they make the most of compound growth while they're young.
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.
Have you set up a pension for your child? Fortune wants to hear from you. Get in touch: orianna.royle@fortune.com
This story was originally featured on Fortune.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
Ask an Economist: Between Inflation and Tariffs, Is America Headed for an Economic Downturn?
Since Trump's 'Liberation Day' back on April 2, when he announced sweeping tariffs, inflation has remained in check. But the recent release of the consumer price index (CPI) for June showed a rise of 2.9% year over year. Read More: Learn More: That has people wondering whether Trump's tariff policy is finally showing itself in the form of higher prices and inflation. And if so, does all this mean a recession is in our near future? Here are three decisive factors and what economists think they show. Also see key indicators of a recession and what it means for you. Tariffs There have been many machinations in the past several months of threatened tariffs, imposed tariffs, deadlines and extended deadlines. But, as of August 7, per CNBC, there is a blanket tariff on all countries of 10%; a 30% tariff on Chinese goods; a 25% tariff on all Mexican imports, with some exceptions; and a 35% tariff on Canadian imports, again with some exceptions. There's also a 25% tariff on all automobiles, except U.S.-made ones, as well as many other tariffs. But are tariffs inflationary? The simple answer is yes. They are a tax a business must pay to import a good, said Raymond Sfeir, Ph.D., economics professor and director of the Anderson Center for Economic Research at Chapman University. And while it might not be the full amount, usually companies pass a significant portion of that tax onto the consumer in the form of higher prices, he said. In addition, similar goods produced in America will also increase due to the laws of markets. And our current situation has an added wrinkle, according to Rebecca Homkes, Ph.D., economist and lecturer at London Business School. It's the way the tariff policy has been executed. 'The bigger impact on economic activity is not the tariff level, it is the tariff uncertainty. Markets hate bad news, but they hate uncertainty more,' she said. When businesses can't plan, she said, often they slow spending, curtail hiring and pull back on investing. This can lead to a 'doom loop' — one that consumers can fall victim to as well. When this happens, it can spiral into a slowdown. Check Out: Inflation There were many factors that led to Trump's victory last November, but it's inarguable that high inflation during the Biden era was one of the top ones. However, one of his signature policies could be inflationary. So, many say, where are the higher prices? Just wait, say many economists. They argue that it takes time for tariffs to filter through the system and be passed onto consumers. In the past months, many businesses have been selling goods they imported before tariffs kicked in. But many economists say inflation will be seen in the July and August numbers, Reuters reported. That could spell trouble, according to Sfeir. 'As prices increase, consumers' income is stretched thin, that is, consumers will purchase fewer goods as each dollar buys less. This decrease in consumption may lead to a slowdown,' he said. Further, if other countries impose retaliatory tariffs on the U.S., exports could decrease and unemployment could rise. That would worsen any slowdown. The Fed Federal Reserve Chair Jerome Powell has been clear in his assessment of the current economic situation, which he sees as one of uncertainty over whether Trump's economic policy will be inflationary. He and his peers are taking a wait-and-see approach when it comes to any action, despite Trump's continued pressure on them to lower rates. Both Homkes and Sfeir believe Powell is doing the right thing here. If inflation kicked in and the Fed slashed rates, it would only add fuel to the fire, as rate cuts are used to stimulate the economy and can be inflationary. Homkes anticipates more 'wait and see' from the Fed, with one or two cuts possible later in the year if inflation stays in check. 'That said, if any level of tariffs go through at their extreme, and inflation becomes a reality versus a threat, we may be back in a rate-hiking scenario later this year,' she added. Bottom line: The chances of a recession are real, but because of the chaotic tariff policy, no one knows how real. That's reflected in J.P. Morgan's fluctuating assessment. Shortly after the Liberation Day tariff announcement, it set the chance of a recession at 60%; in late May, it lowered the chance to 40%. Only one thing is 100% certain: We are in a time of economic uncertainty. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 5 Ways Trump Signing the GENIUS Act Could Impact Retirees6 Big Shakeups Coming to Social Security in 2025 This article originally appeared on Ask an Economist: Between Inflation and Tariffs, Is America Headed for an Economic Downturn?
Yahoo
2 hours ago
- Yahoo
Here's How Much Upper Class Retirees Get in Social Security at Age 75
Social Security is a vital source of income for many retired Americans. More than 57 million Americans over age 65 received benefits as of May 2025, according to the Social Security Administration (SSA). Many depend on the income, with 63% of recipients claiming it makes up at least half of their income, per a 2024 Pew Research Center survey. Check Out: Trending Now: Not all recipients must rely heavily on benefits, though. Each situation is different, so it's advantageous to get an idea of what's possible to aid in retirement planning. How Much the Average Upper Class Retiree Receives in Benefits at Age 75 The average monthly benefit for a 75-year-old was $2,064 as of December 2024, according to the SSA. Men received slightly more, receiving $2,277, and women less at $1,856. That is merely the average. For those in the 90th percentile, the amount increases to $3,105 across genders, according to the SSA. Upper class individuals can reasonably expect to be within that range. The maximum someone aged 70 and over can receive is $5,108 in 2025. For You: How Social Security Calculates Your Monthly Benefit Amount The SSA uses two key variables when calculating your monthly benefits: lifetime earnings and when you claim benefits. Basically, the longer you work, the more Social Security payroll taxes you pay. This directly influences the amount you can receive, as the SSA uses the best 35 earning years of your work history. When you claim impacts the amount, too. Full retirement age (FRA) is currently 67 years of age, although retirees can claim benefits beginning at 62. According to the SSA, delaying claiming benefits adds 8% to your annual benefits once you begin receiving benefits, or you reach 70 years old. Claiming benefits early can be costly, however, reducing payouts by up to 30%. Social Security Is Just One Part of Retirement While many retirees depend on Social Security, it's only one piece of retirement. Knowing the average amount an upper class individual receives can help Americans make a more informed decision with their retirement resources. Americans with investments and other savings can use Social Security to augment the lifestyle they want in retirement. Upper class retirees who are 75 can expect to receive roughly $3,100 in monthly benefits at the end of 2024. With cost-of-living adjustments, that amount will continue to increase year over year. More From GOBankingRates 5 Ways Trump Signing the GENIUS Act Could Impact Retirees10 Cars That Outlast the Average Vehicle This article originally appeared on Here's How Much Upper Class Retirees Get in Social Security at Age 75
Newsweek
3 hours ago
- Newsweek
Gen Z's Summer Isn't Just a Vibe—It's a Whole Crafted Persona
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Are you a coastal cowgirl or a tomato girl? This year women are embracing "summer personas" that influence everything from wardrobe choices to food preferences. According to a new poll of 2,000 U.S. women aged 18-42, 74 percent said they are actively channeling a specific "summer vibe" this year. The study, conducted by Talker Research and commissioned by smoothie brand Jamba, highlights a growing cultural phenomenon. Among those who embrace a summer persona, a striking 91 percent say it reflects their truest self—a sign that what started as TikTok trends are becoming genuine expressions of identity. File photos of women with some of the popular "summer personas." File photos of women with some of the popular "summer personas." zamrznutitonovi, Jacob Wackerhausen, OKrasyuk/Getty Images What Are Summer Personas? The concept of summer personas has evolved from a blend of internet micro-trends, nostalgic aesthetics, and the seasonal rhythm of content creation. While people have long dressed for the seasons or planned summer "eras." Starting in 2021-2022, influencers coined catchy titles often representing moods, aspirations and aesthetics. From the "vanilla girl" to the "clean girl" and of course "brat summer," Gen Z and millennials have been the driving force behind the curated persona. Jo Hayes, etiquette expert and social trends commentator, told Newsweek: "It's the universal human desire for identity, and personal life meaning, that drives this 'persona' phenomena." From Grandmacore to Pilates Princess The survey asked respondents, all either Gen Z or millennial, to choose their top persona from a list of popular seasonal aesthetics. The top choices were: Grandmacore Gals (22 percent) : Drawn to cozy, vintage-inspired simplicity. They favor comforting meals like barbecue, seafood boils, and iced tea. : Drawn to cozy, vintage-inspired simplicity. They favor comforting meals like barbecue, seafood boils, and iced tea. Coastal Cowgirls (20 percent) : Embrace rustic-meets-beachy style, enjoying frequent pool days, summer drinks, and themed gatherings. : Embrace rustic-meets-beachy style, enjoying frequent pool days, summer drinks, and themed gatherings. Pilates Princesses (17 percent) : Focused on wellness, they're the most likely to match outfits to their aesthetic, read books, and sip green smoothies. : Focused on wellness, they're the most likely to match outfits to their aesthetic, read books, and sip green smoothies. Tomato Girls (14 percent): Inspired by Mediterranean romance, this group is known for colorful food, frozen cocktails, and plenty of Instagram-worthy meals. Each persona also came with distinctive habits. For example, coastal cowgirls average 10 summery drinks per week, while Pilates princesses exercise four days weekly and read an average of seven books over the summer. "Every human craves a strong sense of identity. In previous generations, individuals would launch from these families into careers and vocations that further enforced these identities. For example, teachers, nurses, doctors, lawyers, and most definitely the role of husband or wife, mother or father," Hayes explained. When it comes to inspiration, TikTok leads the way, with 44 percent of women citing it as their primary source for developing their aesthetic. This digital influence is translating to offline choices. A third of respondents (33 percent) said they planned their vacations around their chosen summer identity, and more than half (59 percent) matched their outfits to the look they're curating. "Many young women do find themselves in the 20-something drift," Hayes said. "They may not yet be in 'getting married' or 'having babies' territory, so they can't take on the 'wife/mom' identity... So they seek out another 'persona' to give their life some sense of identity." But is it a good idea to choose a summer persona? Hayes explained: "A sense of identity is a good thing, and if the 'persona' is a healthy one, like doing Pilates and drinking green smoothies, as long as it doesn't turn into a 'full identity' thing, where one gets completely absorbed, with blinkers on, avoiding other life-giving activities that might align with other personas."
