As life expectancy is rising and people live longer, they need to secure, early on, sufficient income for the third phase of their life through systematic, long-term savings and appropriate investments.
Current and future pensioners are experiencing an era of significant demographic, institutional and economic changes where traditional pension schemes and state benefits are falling dramatically. In the future, the social security system will offer less protection and security to citizens, and therefore they will have to receive some of the decisions about the quality of their future lives today.
It is imperative that all citizens from the pre – retirement age of their lives are adequately informed and trained on the social security system in order to take appropriate care in a timely manner and create additional supplementary sources of protection in the fields of pension and health.
As life expectancy has doubled since the beginning of the 20th century from 42 to 84 years, financial literacy is now an essential skill in people’s lives, especially for people in pre-retirement and retirement age. Pensioners and retirees deal with unique financial and other challenges as they leave their work life.
How will I maintain my quality of life during the retirement age, when my income is falling dramatically?
How will my savings-investments in past cover a part of my expected decline in income?
Which are my potential benefits that I am entitled to?
In what percentage of my total income during the retirement years will my state pension, from the insurance fund, be attributable to a constantly changing and more difficult financial environment?
When and how should I plan for my retirement?
How will taxes affect my income after my full or partial retirement?
How can I manage my financial affairs effectively and with reduced risk?
The lack of financial knowledge has made retirees particularly vulnerable during the third age. All citizens should have a secure life in dignity during either pre-retirement or retirement. Thus, strengthening their financial literacy should be an extremely important priority.
Financial Literacy can help people make the right decisions to manage and protect their financial affairs so they can live a happy retirement.
The most serious challenges for retired people include the following:
As people live longer, they should be able to maintain and secure sufficient income and savings for much longer than they would 20 or 30 years ago.
From a financial point of view, this means that a larger percentage of people are in a position to take a higher risk, usually through investment.
The long-term decline in the quality of service provided by the public insurance institution due to drastic cuts and related fiscal measures objectively increases retirees’ participation in the various costs of care, medicines, and so on, aggravating the conditions of their everyday life.
Continuous fiscal “reforms” and adjustments, as well as the complexity of the Greek pension system, create additional challenges and risks for retirees.
The phenomenon of boomerang, which means that many parents, at the age of 50 or 60, still sustain financially (partially or in full) their adult children aggravating the financial position of their households. This burden results in people being less able to save and unprepared for the various problems that are likely to occur during their retirement.
The increased complexity of financial markets, as well as the lack of competent financial advisors, poses increased risks for the efficient use of pensioners’ savings and investments.
Digital illiteracy and the high cost of physical transactions that have been used for decades affects elderly people who rely mainly on cash transactions and trust more the physical than the digital methods.
Age discrimination, or a general aggravation of the social status of the elderly, referred to as ageism, is another important parameter. While older people were previously considered to be a source of wisdom and stability, technology shifts the emphasis on youth. Knowledge accumulated through experience is devalued, while financial institutions might discriminate over an older individual, which makes retirees a particularly vulnerable social group.
There is also a number of skills that pensioners should develop, such as:
Determining their desired goals based on their income constraints and the value system of their lives that change through time
Lifelong learning on financial and digital knowledge
The recent experience of the global financial crisis has highlighted the dangers and serious consequences of undue debt, making relevant knowledge indispensable for the well-being of pensioners and citizens, in general.
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