Millions of baby boomers are being forced out of retirement, having realized their nest eggs don’t quite make ends meet. With people living longer than ever, the issue will only get worse. It’s a fate that Gen Alpha in Germany may never have to face.
That’s because under the German government’s new plans, children as young as 6 will start saving for retirement.
Enter the “early start pension”—a retirement program designed for children between 6 and 18 years old.
Unlike your regular pension pot, which requires putting aside a portion of your salary for your future self, the country’s government would pay out €10 ($11) a month to children in education under this new plan.
Over 12 years of eligibility, this could accumulate to more than €1,440 ($1,700) per child, not counting the potential investment gains from compounding interest over the decade.
Then, from the age of 18 onward, they can add personal funds to the accounts and enjoy tax-free profits. However, that cash will become accessible to account holders only when they reach retirement age—which is currently set at 67 in Germany.
A government spokesperson confirmed to Fortune that while the program’s official start date was Jan. 1, 2026, the actual payments to beneficiaries won’t happen until the law comes into force, which is expected to be Jan. 1, 2027.
“Strengthening pension schemes is high priority for the German government,” the spokesperson said, adding that it’s part of a wider overhaul. “To complement the state pension system, the government will also reform the private pension system.”
Early planning: The solution to unaffordable retirement
People are working well beyond retirement age globally. They’re living longer than expected, caring for both their elderly parents and Gen Zers, and wanting to enjoy the fruits of their labor with lavish vacations instead of pottering around.
It’s why the number of those who have continued to work past 65 in the U.S. has quadrupled since the 1980s, according to the Pew Research Center.
Now, almost 20% of Americans who are 65 and older are employed. That’s around 11 million people and nearly double the share of those who were working 35 years ago. In the U.K., nearly 20% of baby boomers and late Gen Xers are similarly “unretiring”—or planning to, because their retirement desires don’t match up to the nest egg they’ve built.
It’s why it’s never too soon to start retirement planning.
The renowned financial expert Suze Orman previously highlighted that Gen Z and millennials could indeed retire as millionaires if they make the most of compound growth while they’re young.
She used just $100 to highlight how powerful compound growth is.
By investing $100 every month from the ages of 25 to 65 into an account with a 12% yield, Gen Z could retire with around $1,188,342. A millennial who started their investment journey just five years later, at age 30, would accumulate around $649,626 by age 65, she warned.
“With a 12% annual average rate of return—the markets can do that for you—you’d have a million dollars,” she explained. “If there’s anything the younger generation needs to understand, it’s that the key ingredient to any financial freedom recipe is compounding.”
So you can only imagine what the numbers could look like for someone who started saving at 6, not 26. By the time they reach their golden years, they could be living the retirement dreams their parents had to return to work to chase.
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