Investment-savvy young adults are staking their retirement funds on Exchange-Traded Funds (ETFs) and Bitcoin.
The COVID-19 pandemic has undeniably impacted various aspects of our lives, and retirement planning is no exception. A recent study commissioned by digital insurance manager Clark sheds light on how the pandemic has influenced people's attitudes towards retirement provision.
In the midst of the pandemic, many employees found themselves on short-time work, resulting in decreased gross income and, consequently, less contribution to the statutory pension scheme. This situation has raised concerns about potential pension gaps for these individuals. However, the study found that every fourth respondent claims to have no pension gap that needs to be closed.
Interestingly, the younger generation, specifically those under 35 years, have expressed increased concern about their financial security in case of illness and in old age. This finding surprises the researchers, as at the beginning of the pandemic, 18- to 24-year-olds were least concerned about their financial situation in old age.
Marco Adelt, co-founder and co-CEO of Clark, reports that consumers who have planned their pension exclusively with stocks and fund-based pension products experienced a significant shock at the beginning of the pandemic. Adelt comments that Corona should be seen as an incentive to engage more intensively with the topic of retirement provision.
In response to the pandemic, 13% of respondents have dealt more intensively with retirement and their insurance. Among the younger generation, 34% prefer ETF savings plans to close the pension gap, while 20% of all respondents rely on stocks and funds to avoid financial shortages in old age.
Buying bitcoins is an option for almost every fifth participant (18%) in the 18-24 age group. Adelt, however, recommends investing in a combination of pension products to spread the risk and keep losses low.
The study also found that 68% of respondents reported no influence of Covid-19 on their retirement provision. Only 8% of all respondents say that Corona has an influence on how they provide for their old age. Additionally, 22% of all respondents rely on buying or renting real estate to avoid financial shortages in old age.
Despite the increased concern among the younger generation, the study does not provide specific information about which age group engaged most intensively with their pension planning and insurance during the COVID-19 pandemic or which group was least worried about financial security compared to the start of the pandemic.
In conclusion, the pandemic has sparked a renewed interest in retirement planning among the younger generation, with many opting for ETF savings plans and a combination of pension products. However, the full impact of the pandemic on retirement provision remains to be seen, and it is crucial for individuals to continue engaging with this topic to ensure financial security in their golden years.
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