Loreta Načajienė, manager of Luminor investment management, explains why this is so.
Believes that inflation will reduce the value of money
Even 35 percent of Lithuanian residents who do not save for retirement are convinced that inflation will reduce the value of their savings by the time they reach retirement age.
“For the past couple of years, part of Lithuania and a large part of Europe have experienced inflation and its negative consequences. However, temporary jumps in inflation are normal in economic cycles, and the average annual inflation, even following including the mentioned jumps in the calculation, fluctuates between 2.5-3 percent”, says the expert.
However, according to the expert, the average return on shares during all previous financial market downturns in the last 30 years was around 7%. Therefore, on average, pension and other long-term investment funds not only follow inflation, but also outpace it.
They claim that they have not reached retirement age
Another 26 percent residents of Lithuania who are not saving additionally for pension are convinced that they will not reach retirement age.
“It is worth noting that, from this point of view, the inhabitants of our country are very different from their neighbors in Latvia and Estonia. In these countries, 8 percent each think so. people. But, of course, there are no such big differences in life expectancy and quality between us and our neighbors, so probably the inhabitants of our country are simply surprisingly pessimistic,” says the expert.
In Lithuania in 2022, the average expected life expectancy reached 76 years, in Latvia – 74.8 years, in Estonia – 78.2 years, according to the latest data of the State Data Agency and statistics portal “Statista”.
“Women in Lithuania live an average of 80 years, and men – 71.3 years. Male life expectancy has not only returned to pre-pandemic levels, it has surpassed it and is gradually rising once more. In addition, it is likely that as health care improves and the general quality of life improves, we will live longer and longer,” adds L. Načajienė.
It is hoped that the state will ensure a sufficient pension
9 percent Lithuanian residents do not save for pensions because they believe that the state pension will ensure enough income to live on in old age.
“So far, the reality is different – currently the average pension is 43 percent. average salary. State pensions are growing, but rather slowly, so it is not worth expecting them to suddenly rise sharply,” says the expert.
Also, according to L. Načajienė, it should be remembered that the society in Lithuania is aging – in the future there will be more pensioners, while the number of people of working age will decrease, so it will be more and more difficult for the state to support the growing number of pensioners from the taxes paid by working people. Therefore, it is likely that the state pension of “Sodra” alone may not ensure a dignified life in old age.
Another 27 percent respondents answered that they never thought regarding why they do not save for old-age pension. 11 percent gave other reasons. Therefore, although many Lithuanians invest in pension funds, some of the country’s residents are not in a hurry to take care of their pension.
It is predicted that the “Sodra” pension will possibly provide 30-40 percent. former income, and those saving in the second tier can expect to receive approximately 50 percent. former income-seeking pension. Also, 70-80 percent can be predicted for those who accumulate and in the third stage. a pension equal to the former salary. That’s as much as personal finance professionals recommend.
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2024-07-19 02:26:56