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"Hurrah, hurrah, I've been paid my first wage! And now?"

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You've at last completed your studies, written job applications, attended interviews, and now, the result: that long-awaited first job. And with it, the joy of your first wage.

Until now, it was side jobs – in order to finance your studies. That's why getting your first fixed income often feels a bit like winning the lottery for many career starters. Well, maybe not the jackpot, but in comparison to a student job pay packet, the first regular salary makes a big impression.

As a career starter, how do you plan for old age?

You hear it often: right now, you shouldn’t get too exuberant. Because it's precisely now that you should be saving money and thinking about private pension provision – even if words like pensions and retirement provision sound ridiculously far into the future. Theoretically, everyone knows as a child that they should begin planning their finances early, and that they can never start saving early enough. Which is all very well. In theory.

But in practice? What do young people spend their first wage on? First of all, I asked myself this question. And not surprisingly: In retrospect, I had of course planned to save right from my first salary, to think about retirement, to find out about Pillar 3 so as to avoid any gaps in provision, and of course also not to forget the taxes that would become due sometime in the future. In short: to be sensible and not wasteful with my wonderful wage. Of course. In theory.

This all sounds very similar to how we proceed with our new year's resolutions: basically all merely grandiose intentions, of which in the end maybe only a quarter will be carried out. If any. Do other people also experience it this way? It becomes entertaining – and to a certain extent also touching – if you look at how celebrities respond to this topic.

The right retirement provision for career starters?

A horse ranch... But that's Johnny Depp's idea, and he can afford it. And what about people in a different league? Career starters and millennials? What did these young people do with their first salary? Did they think of retirement provision, Pillar 1, Pillar 2, Pillar 3 right from day one? Hardly.

Survey among young people

In an in-house survey conducted in the editorial office of the Swiss news platform Watson in the summer of 2018, some employees revealed how they had spent their first wage. A few excerpts: 

  1. A Nokia 3310 mobile phone
  2. A pair of Nike Airmax
  3. A long weekend in Berlin including shopping
  4. A visit to Europa Park
  5. One employee went to Migros and bought everything that was forbidden at home with his parents: candy, pastries, Cola, biscuits.

"I spent too much money on unnecessary things"

Marta, age 76

Somehow a relief to hear. Especially as none of the answers included something "serious" like retirement provision, pension fund, Pillar 3, real estate purchase, or mortgage. However, it is much less of a relief when you hear the statements of people aged 65 and over. Top answer to the question of what seniors most regret financially (source: focus.de and The Motley Fool, 2018): "I didn't save enough money for my retirement." (21.4%). Answers two and three were: "I spent too much money on unnecessary things." (17%) and "I didn't invest my money." (12.3%).

If I think back, I know what I did with my second wage. I called my insurer on their toll-free number and got myself some advice without obligation on the topic of retirement provision, and from then on, I paid in more. And I've been more than happy about this ever since. I have still been able to travel – a great deal, in fact!

When do I have to start paying into the pension fund?

Clearly, traveling and shopping are fun, and you should of course treat yourself to these as a career starter. After all, you work hard for your money. But everything should be done in moderation and with a goal in mind. Because it is often forgotten that, at some point in the distant future, perhaps you too might want a nice life, and maybe even want to acquire your own home instead of having to pay rent all your life. It doesn't have to be a horse ranch in Kentucky. By saving toward a private pension, you can also start small. What matters most is: to make a start. And here, the principle "the sooner, the better" also applies. Because then you can travel for a long time, go shopping and celebrate, or – depending on your personal preferences and ambitions – enjoy the sunset on the horse ranch.

It doesn't have to be a horse ranch in Kentucky. By saving toward a private pension, you can also start small.

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