All kinds of benefits. People over 50/55 already struggle to find new positions and those that are working longer than 65 also occupy younger people‘s jobs keeping them unemployed. I know a guy who hit retirement age this month and has to continue to work as he can‘t live on his 1st and 2nd pillar (due to poor financial choices)
Or, in other words, inability/lack of desire to calculate?
Nowadays it would be so easy to make sure that you can keep the living standard once retired. Just contribute the max. to 3a for 40 years and keep it invested at the highest possible stock allocation. You’ll end up with 680-880k (assuming 4-5%/year inflation adjusted returns). That’s enough to compensate 2.3-2.9k/month income.
No early retirement, plently to live on (with 1st/2nd pillar).
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I believe it would be helpful for kids to be taught real world budgeting and basics of saving and compounding as a life skill.
For example:
-How much money does a family of 4 need to live
-Typical earnings from different career choices
-likely impact in 30 years time of spending 50k on a new car versus investing it
-cost of further education
This was never covered in my UK state school. It is a sensitive topic but since it is not taught in school the kids from wealthy and financially savvy families have an even bigger advantage. I was lucky I stumbled on the knowledge
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Basic concepts might be explained in a simple way. I’m thinking about books like “rich dad, poor dad” (which my wife enjoyed even without any kind of understanding of personal finance) or “your money or your life”.
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Agree that bit of financial lessons are needed in the school, but please don’t give more importance to it than Latin or History
“The numerical superstition in which we live, which includes separating the sciences from the humanities and pitting them against each other, is the worm that gnaws at the cultural foundations of our civilization. A Spanish student can go through his academic life without knowing who Homer and Virgilio are - and neither, for that matter, Noe, Judith, Moses or Jesus - and what is even sadder, without giving a damn. He can be a phenomenon -a word of Greek origin- in mathematics without knowing that this subject is so called because it comes from the Greek mathema, which means knowledge, just as technology, physics, megas or gigas come from the Greek. You can be a fan (from the Latin fanaticus) of The Lord of the Rings without knowing that Herodotus and Platon already told about the ring that makes you invisible and powerful. You can be a portent (Latin, portentus) playing Fortnite or knowing Game of Thrones by heart, unaware that it was Homer who established the roots of that fascinating world.
Any young person facing the reality of life in its worst and best aspects, especially when hard times comes, needs a Newton and a Darwin; but also a Virgilio, a Sophocles, an Ovid, a Cervantes to protect him. Without them, he will be unable to fully interpret the hostile landscape in which human beings move. In them he will find solutions or, at least, explanations and consolation. And that is no small thing. If the Humanities die, we will condemn this young person to be more lost, more defenseless and more alone in the battles that life will make him fight. That is why it is so important that despite the dastardly and illiterate politicians, the apathetic parents, the stupid society that abandons and ignores them, the professors (Latin, professor), the teachers, do not give up in their particular and current Thermopylae. Let those who still believe in the heroic struggle, even if it is obscure, misunderstood, remain willing to die killing Persians, even if later the fame is taken by the 300 Spartan hoplites, and they are only the 700 Thespians, the 400 Thebans or the hundreds of Ilothians who, having been able to flee that day, decided to fall with Leonidas, and of whom no one remembers.”
Arturo Perez-Reverte - Más latín y menos imbéciles (More Latin and less morons)
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To be honest, the Latin (which is anyway only a subject in Gymnasium) and history lessons we had in school were crap.
Our history teacher spent a whole year on the culture of Papua New Guinea, I don’t know but I still can’t see how one can profit in life from knowing that Papua New Guineans wore a phallus to cover their genitals??
I recently read the book Sapiens and learned more about history and culture than in my whole school career.
Same here. At school, we didn’t read one single line of Goethe. I guess our German literature teacher just didn’t like him, so she skipped him altogether. And our history teacher obviously thought that the Cold War was insignificant and boring. The Soviet Union had collapsed just a few years before I sat in his lessons, but no: Let’s spend a year talking about Charles the Great, who to us teenagers meant nothing.
My parents however hardly taught me a thing about finance, either. The only vehicles they knew were buying real estate and putting money in savings accounts. I’m not sure they understand the pension system even now that they’re part of it…
It would be interesting to know how people here in the forum first got into personal finance. For me it was when I opened my very first bank account and was sold a terribly expensive, actively managed strategy fund at the same time. I left the bank feeling like the spirit of Gordon Gekko had touched my shoulder. Years later I figured out how expensive that fund was, and that’s also when I discovered the FIRE movement, including this forum.
The easy availability of information surely made things a lot easier for all of us here. It was certainly different for my parents. Maybe if 20 Minuten ran a line like “you won’t retire comfortably and you’re fucked” that would wake up many of the young people?
I agree with you. What is needed is a balanced and high-quality education.
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Sounds like you visited the same school as I did. It’s ridiculous. For me it felt like the history teacher only taught us stuff he found interesting and unfortunately he was only interested in Papua New Guinea…
Same here. But to be fair, at their times there were savings accounts with interest rates of 6-7%.
For me it was when I earned my first “real” money and started wondering why there’s so little money left at the end of the month and more so when my first tax bill arrived.
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I mean I vaguely remember how our secondary school teacher made us calculate compounding interest, but as outlined without your own income it’s somewhat meaningless. I did a „berufsmatura“ and we never had the „allgemeinbildung“ classes where others learned about politics and taxes. But I‘m glad I learnt about history, french and german authors 
Shall we turn this thread in something productive and brainstorm what content would be needed to be covered in a let‘s say slidedeck which then could be turned into education material (e.g. YouTube videos or some online course)? I feel like we could try to make an effort to atleast make young people aware of the knowledge gaps.
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Brilliant idea.
I’d include:
- 3rd pillar: bank vs. life insurance
- 3rd pillar: tax savings/implications
- 3rd pillar: saving account vs. investing
- compound interest
- basics about bonds, stocks and index funds
- busting the myth that buying a house is always better than renting and that rent is wasted money
I think the maths behind it and complex formulas can be kept for an “advanced” version. In my opinion it would be better to just show some examples with some “mind blowing” figures, to make a more lasting impression and keep it interesting.
E.g. if you invest 15’000 in a broad, low-cost index fund, when a child is born until the age of 65, you’ll get more than 660’000 with an average, estimated return of 6%.
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Opportunity costs should also be discussed. 40k invested in a car, education, stocks etc.
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Just had a discussion last night with some people over FIRE (without explaining the whole concept): Basically the feedback was it‘s not possible to reach the amount of money or you‘d still be limited if you reach your FIRE-number as you must not withdraw more than a certain percentage yearly. I didn‘t seem to be able to bring across (at least not to all) how the stock market return is (historically), that risks are rather low if invested long term and so on.
Also brought up the term wage slave to what they said if you don‘t like your job (I do) you should change it. They didn‘t seem to grasp the concept of freedom of not having to work if you don‘t want to. „What would you do all day?“ As I love travelling and there is so many places to see I could just travel forever.
Buying vs. renting also came up, most would opt to buy as they‘d feel great about owning and raising their kids there. Not really financially sound arguments came across.
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Did you already FIRE? If not, I think that’s part of the “problem”, as most people only believe what they see.
Also in my opinion FIRE will always be something for a small minority, as it is something that is extremly hard/impossible to achieve with an average salary.
No.
is it though? I think that‘s another myth. Just depends on the savings rate.
We can afford to miss a few people, they’ll likely get caught by social programs and could get more personal coaching then. It could be done during apprenticeship/college (or similar (professional) schools at that age). 15-17 sounds like a good age to learn about finance and the last stage before setting up on your own in the wide wild world.
That’s pretty bold assumptions. It assumes consistent long term returns with no interference from time-related variables like loosing a job or getting divorced. Pension funds have a conservative allocation because they have to be able to provide pensions when they’re needed, I doubt 100% stocks would be the correct allocation for all, and probably not for most as they are nearing retirement (so there’d need to be a glide path).
It’s a pretty good idea, though, if it could become part of the “normal” retirement system, that is, that people would plan with it from the start instead of thinking that’s optional.
That seems to be the standard vehicle in Switzerland: the 3 pillars + real estate (for own use). It’s been sturdy enough for those who could afford it so far and may be all that people not wanting to think about their retirement plan really need.
Spreadsheets, for me. Personal finance has a lot of data that can be plotted in a lot of varying ways. You don’t need to try hard to have me gather the data around me and put them into a spreadsheet.
Investing came by reading Mr. Money Mustache, which I have found because I was going through difficult financial times, during my studies. In a way, putting a focus on my finances has helped keeping my mind away from some of the hardship it was going through and has helped me go through this difficult part of my life (being a student with no money and “abusive” professors).
(Emphasis mine) Yes for all and, oh, man, that last point, yes! I’d add knowledge about the SNB, central banks in general, the history of Swiss Franks (what it’s been backed with during time and where those assets are held).
It’s definitely harder on a lower salary but putting money aside and investing it should be possible except on the very lowest wages. Frugality is an integral part of the FIRE movement, I’d define it more as buying things that add to our long term happiness over things that don’t add to it or can even work against it.
It’s one of these situations where the journey matters. Even if not reaching 100% FIRE, having money on the side and trust in our ability to build more gives confidance that is very useful in the professional life.
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The last part is of course very true.
As for the first part, these people just seem to lack imagination.
I would try to explain it like this: Gross median wage in Switzerland is approximately 6500 CHF/month. Even after social security deductions and post-tax it should be possible to achieve a savings rate of about 50% - e.g. to live (modestly) on half of your monthly net wage. If you do this from, say, the age of 25 years to 45, you would have saved half of your wages over 20 years - and have another 20 years remaining before retirement age. Saving half of your wage over about half of an adult’s (post-tertiary education) working life should make it quite obvious that early retirement is possible after about half of your working life - even without making assumptions for stock market investment returns.
Then again, many people would counter that they don’t want to save half of their wage/income.
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I think in this example a few important things are missing:
- Inflation
- You still need to pay first pillar based on net worth
- Your 1st/2nd pillar won‘t provide enough money after official retirement age
But in general it‘s an easy example to start explaining with. That‘s where investing that money comes in to solve problems above
I think something like the following would be interesting and motivating for most 18 year olds - as it seems kids want to become bloggers or influencers and get rich with the minimum amount of effort!
Summary: it Discusses how long it might take to save 1M in different jobs under different assumptions
How Long Does it Realistically Take To Save a Million Dollars?
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Oh, I though about two of them. I doubt that the intended audience for such kind of explanation is very concerned or even aware of inflation 
As for pension from 1st and 2nd pillar, you can refer to Ergänzungsleistungen (though beware, there seem to be cases and court rulings where they’ve been denied where the applicant deliberately or recklessly lost wealth) or emigration to countries with lower cost of living (e.g. Thailand).
As for the AHV/AHVs contributions, they don’t seem that high.