How to save for old age?

Young people at the age from 22 to 35 years old, or in modern language, millenials, less often than other age groups, think about old age and about the funds they will live at this time. This conclusion was made by the authors of a study conducted by American Bank Wells Fargo in the summer of this year.

Experts based on data from the US Bureau of Labor Statistics, the results of several opinion polls, and using information on 904,000 brokerage accounts of American households in which the head of the family was born between 1928 and 2000, determined how the representatives of different generations relate to pension savings.

It turned out that the largest percentage of people who are saving some part of their income on pension savings among representatives of generation X (born in 1965-1981). The share of such respondents was 73%. In second place - representatives of the baby boomers generation, born in 1946-1964. Of these, 72.6% reported that they are saving money for retirement. But the proportion of millenials, which monthly send part of the earnings to pension savings, is 61.4%.

The report, the representatives of generation X postpone the pension more - on average 14% of earnings. On the second place - milleniales, which direct for this purpose 10.7% of income. Baby boomers take only the third place - on average, they put off on retirement 8.2% of earnings.

Wells Fargo experts attribute this to the fact that representatives of the oldest age group have already accumulated the bulk of pension capital and now they do not need to transfer a large sum for these purposes. At the same time, people not only put off money for their old age, but invest in stocks - this tool accounts for more than half of their assets: 59.88% for baby boomers, 67.94% for generation X and 67.78% for millennials.

The differences in the distribution of assets in the portfolio among different generations of investors may be due to the fact that the older a person is, the more reliable he chooses financial instruments - that is why baby boomers are more invested in bonds, and the popularity of keeping money among millennials can be determined the fact that these investors still have a lot of time in reserve and they are not completely determined with investment tools.

The study of financial experts Wells Fargo is of interest to Azerbaijan in terms of changing people's behavior, creating conditions for raising incomes, new economic realities and development of entrepreneurship. Moreover, recently the problem of the culture of ensuring a comfortable old age, the use of various means to increase pension savings against the background of "modernization" of the system of social protection of pensioners has acquired a particular urgency.

"Unlike the USA, in our country the picture in this area is quite different due to objective circumstances. People of the older generation who worked during the Soviet years, did not particularly think about old age, relying on the support of the state, which "will not let die of hunger." In addition, in those years, even a minimum pension of 60 rubles provided them with a relatively familiar standard of living. The people of the middle generation who survived the bankruptcy of the Soviet system, and the inability of an independent state to provide a comfortable pension, faced a difficult choice: either save money for old age or invest in their children in the future so that those in old age will support their parents. They do not trust the state and chose the second option. In fact, they have no other way. Savings in bank deposits can depreciate, for the business needs large investments; it is very difficult to save money if you are not an official and if you do not take bribes. And exchange instruments are not so popular among us,"said independent expert Samir Aliyev.

As for young people, they grew up in a completely different reality, when there are great opportunities for making money and recreation. Therefore, for them, finance is first and foremost access to travel, education and personal foreign cars, rather than pension savings.

Meanwhile, the chairman of the Center for Assistance to Economic Initiatives Azer Mehtiyev draws attention to such an important point. According to him, in the conditions of a high proportion of workers with low salaries (teachers, doctors, middle and low personnel of ministries, etc.), there simply is not enough money to save money for old age. The government does not have a balanced policy in the sphere of wages, providing citizens with work with a decent pay, although such a program in Azerbaijan was and it failed. Therefore, in order for the population to save up for old age, it is necessary to give it such an opportunity, to really develop the economy.

Mehdiyev notes, the attitude of Azerbaijani Millenials to pension savings is affected not only by frivolity and carelessness. They are not pragmatic about their old age, they do not have financial farsightedness, there is no reasonable financial behavior in general. In this context, the problem of financial literacy of young people is becoming topical. Such classes should be conducted not only in high school classes, but also in universities. Upon leaving the university, a young person should understand that successful career growth, high incomes can directly affect his financial position in old age. It is not necessary to be limited only by fixed deductions to their accounts in the SSPF. You can voluntarily save up for old age through banks or private pension funds, which are planned to open in Azerbaijan.

According to experts, the future pension should be considered when a person has a stable income and satisfied with his basic housing needs. You can use two variants of accumulation tactics in two stages. The first stage - accumulation in foreign currency, investments in business and real estate, the second stage - income from capital, bonds, property, land, pension programs.

Ellada ALEKPEROVA