- Millions of baby boomers are being forced out of retirement, having realized their nest eggs don’t quite make ends meet. With people living longer than ever, the issue will only get worse. So Germany is considering preparing Gen Alphas for the decades they’ll one day be retired, with an “early start pension” plan.
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.