Editorial: inclination and ability

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The population is aging and thus the influence of the elderly increases accordingly. Tellingly, a bank has ordered a study into their saving habits. 

Politicians, probably, would think it almost indecent to write words like «pensioner» and «saving money» in the same sentence. The pension being so small.

Indeed, Statistical Office says first quarter average old age pension was €370.60. Some twenty euros more year-on-year, but the sum is tiny. Even so, the amounts set aside may be small, but – as the investors like to say – what matters is regularity and time.

Meanwhile, companies are conspicuously targeting the elderly with discounts and special offers etc. They must have a reason to do that.

«Average financial savings value of the elderly including pensioners is even above Estonian average, pointing to the longer period of accumulation and lower costs i.e. greater inclination to save,» says Eesti Pank economist Taavi Raudsaar in Postimees today. Permit us the irony: the inclination may be there, but what about the ability? And we are not talking about pensioners alone.

To the charts-loving politicians, it must be plain that by savings Estonians trail among the last in EU. By recent Eurostat data: with average EU private consumption set to 100 percent, Estonia’s would be at 69 percent. Let us therewith be slightly comforted by a slight improvement these past few years.

The pensioners may have lower income but they know how to handle their money. In other words, for them every cent is money as prescribed, on the one hand, by the smallness of the pension, and on the other the experience of life. For these same reasons, lion’s share (two thirds) of the elderly makes their personal budgets as the study at hand shows.

What will the future bring? Only recently, most of pensioners got their money in cash from postal workers coming to their doors. Increasingly, they now communicate with banks and one would expect to hear future studies showing a slowly yet steadily rising interest towards the various savings options like securities and investment funds.

The savings prevalent today to cover daily costs (54 percent of those elderly who do save) is not the real saving yet. Though the pension pillars have been severely criticised, the picture will probably change regarding savings as those get older who have collected their own pension money.