According to the Ministry of Finance, Czech citizens save on average 802 crowns per month in pension funds, which is sixteen crowns more than at the end of last year. On the other hand, employers contribute more than a thousand crowns to their retirement savings on average. However, this may not cover at least part of the income shortfall when they retire.
Experts suggest that people make five basic mistakes when saving. The first is starting to save too late. It is commonly said that one should ideally retire with two million crowns held to maintain their current standard of living. But gathering such a sum takes time. Suppose the saver has no other sources, such as property rental or regular investing. This amount will take thirty years to accumulate, even with higher regular contributions in supplementary pension savings.
The second mistake is saving too low amounts. This was also confirmed by a recent analysis by Cyrrus. If you are a current twenty-year-old, you can tolerate a higher degree of risk in dynamic investing and want to have roughly the same retirement as current pensioners. It is enough to invest 982 crowns per month for an economically active life of about 45 years.
The third factor is that people do not have a suitable investment strategy. Too many young savers stick to a very conservative plan, where inflation will likely swallow their low returns. They have a higher certainty that they will not lose money but will not appreciate much.
The fourth mistake is that people predominantly choose a one-time withdrawal of funds. With small savings, this is understandable. However, regular monthly payments can supplement meager pensions in the long term.
According to UNIQA insurance, the last mistake is that people do not take care of their contracts during the duration. For example, they set a regular monthly contribution. Still, they no longer consider that its value changes gradually during their lifetime—for instance, two hundred crowns in 2010 buy less now than they did then.