Experts classify Why Generation Z doesn't want to save money

Young people don't really know what they should be saving for. Buying a house is far too expensive anyway and by the time they are old, their pension fund will already be empty. Is this pessimism justified?

As a young person, there are certain phrases that you hear particularly often. Phrases that express the hopelessness of today's youth. One of them is:

So what's the point of saving money?

According to sociologist Sandro Cattacin, this pessimism is not new or a typical characteristic of Generation Z. He explains to blue News that young people are often not yet very future-oriented and tend to live in the here and now.

"Saving money is a rational matter, while young people are often still driven by strong emotions," explains the sociologist. A pattern that has been repeated for decades. "If you're lucky, parents or grandparents take over saving for their children during this time."

Climate change, war and crises offer little hope

War, climate change and major inequalities play a major role in young people's view of the future today. "This makes it difficult to project oneself into the future," explains Cattacin. Who knows what will happen in a few days, let alone a year? In addition, there are social dynamics in which many things are constantly changing, especially in terms of work and education.

According to Cattacin, the trend of young people thinking less far into the future can be traced back to the 1970s. "Previously, it was assumed that the next generation would always be better off, which allowed for long-term planning: study, a job, start a family, buy a car and maybe buy a house," says Cattacin.

But then came the upheaval: economic growth slowed down, new social movements emerged and society became increasingly complex and unpredictable. These changes brought both advantages and disadvantages. On the one hand, people gained more freedom and individualism. On the other hand, insecurity increased and social inequality grew. The middle class lost purchasing power, while the gap between rich and poor widened.

A complex pension system

Another factor is the complexity of the pension system. "When I talk to young people, I don't talk to them about AHV. Many don't even know what the deductions on their salary statement mean." Those who do know are probably a small, homogeneous group.

Cattacin also believes that there is not enough legal support for saving. People have also lost touch with money: "It seems to me that digitalization has changed our relationship with money. People no longer see money disappearing into their wallets."

The sociologist proposes making the pension system comprehensible for everyone and reducing the coordination deduction so that young people on low wages can start saving earlier. He also calls for state support in the form of tax relief for young adults.

The second sentence you hear again and again:

Tashi Gumbatshang is Head of the Competence Center for Wealth and Pension Advice at Raiffeisen Bank. He tells blue News that many young people still have the dream of owning their own home: "Our annual population survey on the topic of retirement planning shows that 20 percent of 18 to 30-year-olds are still saving for their own property." This savings goal is often linked to paying into the third pillar.

"Property prices have risen sharply in recent years, particularly in urban centers. Whether this trend will continue in a linear fashion is uncertain," says Gumbatshang. Factors such as immigration and economic development will influence the real estate market in the future.

"90 billion francs are inherited in Switzerland every year"

According to the pension expert, one aspect that is often overlooked in this discussion is inheritance: "Around CHF 90 billion is inherited in Switzerland every year. Many people can only afford to buy a property through an inheritance or an advance withdrawal." This was not uncommon in previous generations either.

But isn't this a privilege that only a few people enjoy? "Yes, it is," says Gumbatshang. "If a person grows up in poorer circumstances where their parents don't own a house either, it becomes difficult to get their own home."

Saving is linked to optimism about the future

Nevertheless, Gumbatshang understands the savings pessimism of young people. "The future is far too far away. And saving is often associated with optimism about the future." Current crises are contributing to the fact that the future seems increasingly uncertain for many young people.

What is striking, however, is that "the older young adults get, the more interested they are in saving money," says Gumbatshang. 78% of 18 to 30-year-olds save primarily to be able to maintain their standard of living later on, as the Raiffeisen Pension Barometer 2024 shows. The second most frequently cited reason is to save taxes. If you pay into the third pillar, you can deduct the amount from your taxes.

Saving money is also simply important because: "People who are young today will also be old one day. And then they will probably be faced with the same problems as old people today. Namely, they will have to make sure they have enough of a financial cushion to make ends meet in old age without a regular income." In addition, life expectancy is higher for young people today: "The money saved must therefore last longer than for people who are old today," says Gumbatshang.