76% of residents interviewed by Swedbank would gladly continue working after retiring. Approximately half would agree to part-time employment. One-fifth of interviewed people admit – work after retirement will be necessary for them to survive.
The opinion of representatives of the younger generation is generally more positive in regards to continuing to work after retiring, which means a desire to remain in the loop and be with people (47%). Respondents of pre-pension age are cautiously optimistic and pessimistic about their ability to work in the near future (31%). At the same time, those who are actively creating savings for retirement are also more optimistic about the future. These people see themselves having fun later in life, according to results of the study.
One-third of interviewed residents plan to remain socially active and enjoy what they had no time for in life (32% when compared to 22% last year), as well as work (31% when compared to 27% last year). Every fourth respondent plans to return to work in order to make ends meet (26%). Those who do not plan to work say they will live modestly because their income will be very low (24%).
When asked about the ideal retirement age, 36% said 56 to 61 years is perfect. When compared to 2017, this is a major change, because three years ago residents would have been happy to retire at 50 to 55 years (34%), researchers admit. However, retirement age in Latvia was 63 years last year. On top of that, it is planned to increase it to 65 in the next six years.
When asked about their pension size, 45% said they expect their pension to be at least 75% or 100% of their current wage. One-third expect their pension to exceed their current income. In absolute digits this is EUR 1,000 on average. As a comparison – currently the average pension in Latvia is EUR 320. It should be said that the most optimistic residents live in Riga – they wish to receive a pension worth EUR 1,113. When compared to 2018, this is a 16% increase.
«Different generations have different views on retirement. Residents aged 21 to 34 believe they will remain active in retirement (38%). Those who are closer to retirement (aged 50 to 64) are more pessimistic and allow having to live more modestly because of lower income (37%).
Generally speaking, expectations for pension amounts are rather optimistic, especially in the context of residents making savings for retirement in advance, as provided by the country’s three-level pension system, remaining insufficient. Currently, only 30% of economically active residents use private pension funds to make savings for retirement. This is especially critical, considering that Latvia’s society keeps ageing and the ability of working people to sustain pensioners is gradually becoming weaker, whereas the time residents have to spend living as pensioners is becoming longer. However, state guaranteed pension amount is no more than half of pre-retirement income,» says Kristaps Kopštāls, Swedbank Insurance and Investment Office manager.
Residents’ overall interest for their pension is considered low. 62% of Latvia’s residents have yet to look up their potential pension amount. Every tenth resident is not informed of the option to look up their predicted state pension amount (11%), some are not even interested in doing so (16%), whereas 9% say they do not expect to live long enough to retire, Swedbank reports.
Year after year more and more residents ‘wake up’ and consider the importance of making savings for retirement. 24% of residents make savings on 3rd level pension plan (which is 10 percentage points more than last year), 18% make other kinds of savings, whereas for 10% of residents payments to 3rd level pension plan is performed by their employer. However, 27% of residents depend solely on state pension programme (27%) and believe children and real estate represent their pension savings (24%).
«Survey data also reveals – the closer a person is to retirement, the more they rely on the state and real estate, as well as support from their children. Those far away from retirement, however, understand the importance of making savings on their own. Swedbank data detailing savings for 3rd level pension programmes shows that savings are most often made by residents who are the closest to their retirement. Currently and average private pension savings maker is around 47 years old. The time for making savings plays the decisive role. The sooner resident start making savings, the more money they are able to add to their pension before retiring,» Kopštāls adds.