Hello learners. It is Fenrir. We are entering the final and perhaps most important chapter of your financial journey. The Long Game. In the European Union life expectancy is rising. This is wonderful news but it means our money must last longer than ever before. Human beings are not naturally good at long term planning. We are wired to care about today. We want the coffee now. We want the shoes now. But financial well being requires us to have an eye on the longer term even when short term needs are pressing. Long term planning is different from saving for an emergency. Emergency savings are for next week or next month and need to be liquid. Long term planning is for twenty or thirty years from now and may require different types of financial products from those used for emergency savings. You might use stocks or property instead of a cash account. The biggest enemy here is procrastination. We always think we can start tomorrow. But you must identify strategies to take action and overcome procrastination. The best strategy is automation. Do not rely on your willpower. Set up an automatic transfer that moves money into your long term investments the moment you get paid. You also need to identify strategies to balance immediate needs and wants with longer term plans. Think of your future self as a real person who is depending on you to achieve those longer term financial goals. You need to monitor the changing value of investments assets and liabilities regularly. Inflation in the Eurozone might eat away at your savings or your house might go up in value. You must take into account predictable fluctuations in income and expenditure. Maybe you will earn more as you get older or maybe you will spend more when you have kids. Confident to make changes to longer term financial plans if necessary you must adjust over time. It is not set and forget. It is set and monitor. Takes into account all personal and household assets and liabilities when considering longer term needs. Look at the whole picture. Values long term financial planning as a way of maintaining or increasing financial well being. Confident to put long term financial plans into action today not tomorrow.Planning is not just about numbers Fenrir. It is about life events. We must plan for the positive events like buying a home or having children but also for the negative events like illness or even death. Makes financial plans for future positive and negative life events that are likely to have financial consequences. I know it is uncomfortable to talk about but it is an act of love for your family. You need to understand the importance of making plans for the end of life. This includes considering the financial requirements of dependents. Who will look after your children or partner if you are not there? Takes into account the possibility that family or community members will need financial support in the longer term. You must put plans in place to cover current living expenses for dependents. This involves making decisions about how outstanding costs debts and assets should be distributed. Writing a will where relevant is essential. This is especially true in the EU where you might live in one Member State but own assets in another. A will helps clarify which laws apply to your estate. If you do not have a plan your family might be left with a legal mess and financial stress during a time of grief. Checks these plans from time to time. As your life changes your will should change too. Motivated to consider the longer term financial needs of dependents you are building a legacy of care. It is about responsibility.Protection is the goal Aoede. And for your own future that protection comes from a Pension. A pension is simply a long term savings plan that provides you with income when you are older and stop working. Understands why it is important to consider ways of ensuring financial security beyond working age. Ideally you start saving for retirement from a young age to let the money grow. In most European countries we think of pensions as having three pillars. Imagine a building held up by three columns. The first pillar is the State Pension. Knows who is entitled to a state pension and how much it is. This is the money the government pays you when you reach retirement age funded by your taxes. However for most people the state pension is not enough to maintain a comfortable lifestyle. It is a safety net. The second pillar is the Occupational Pension. Knows the difference between optional and compulsory retirement savings and the difference between occupational and individual schemes. An occupational scheme is set up by your employer. Often your employer will contribute money to it and you contribute a part of your salary too. This is very powerful because it is essentially free money from your boss. The third pillar is the Personal Pension. This is money you choose to save privately. Chooses among pension products or creates combinations of pension schemes to build an adequate retirement income. In the EU we now have the Pan European Personal Pension Product or PEPP which allows you to save in a standardized way across borders. Has a good understanding of the main types of public and private pensions available nationally. You need to understand these three types to build a stable future. Appreciates the importance of balancing current standard of living and spending choices with the goal of achieving improved financial choices later in life. It is a trade off. Spend a little less now to live a lot better later.That structure is vital Charon. And governments across the EU know that people forget to save. That is why many Member States use something called automatic enrollment. Knows that in some jurisdictions people may be automatically enrolled into a pension. This means when you start a new job you are automatically put into a pension scheme. Knows whether opt out is possible. You usually have to actively choose to leave if you do not want to be in it. Considers the impact of nudges such as opt out pensions or compulsory minimum contributions on retirement saving. My advice is to stay in. Do not opt out unless you absolutely have to. Now let us talk about the phases of a pension. Understands that it is important to plan the pay out phases of retirement as well as the accumulation phase. Accumulation is when you are filling the bucket. Pay out is when you drink from it. Seeks to benefit from incentive schemes to encourage retirement saving such as employer matching and tax advantages when possible. Most EU countries let you pay less tax today if you put money into a pension. Aware of the main options for drawing an income from a pension product at retirement. You cannot just withdraw all the money on day one. You need to make it last for twenty or thirty years. Aware of the risks of drawing money from retirement savings or borrowing against them before retirement. If you take money out early you will likely face heavy penalties and taxes. Follows retirement plan and makes adjustments as necessary in order to achieve required income in old age. Aware of reliable digital tools developed by impartial providers designed to make retirement related calculations and manage pensions on a regular basis. Use these tools to see if you are on track. Makes active decisions to manage savings for and during retirement. Do not sleep walk into old age.Exactly Leda. You have to manage the flow. And while you are managing that money you must also think about where it is living. Sustainability is a huge part of modern pension planning in Europe. Your pension pot is likely the largest amount of money you will ever own. Understands the extent to which a given pension product meets ones sustainability criteria. Is it funding companies that pollute the earth or companies that build a clean future? Under EU regulations like the SFDR providers must disclose how sustainable they are. You have the right to ask these questions. Chooses one’s pension product in line with ones risk and sustainability preferences. If you are young your pension will be invested for decades. It makes sense to invest in the economy of the future not the past. Confident to ask questions about the extent to which pension products meet sustainability criteria and to make demands for more or better options if necessary. If you are not happy with their answer demand better options. You are the customer. Your money should build the world you want to retire in. It is not just about the return on investment it is about the return on the environment.That is a powerful thought Fenrir. The decisions we make today shape the reality of tomorrow.It is about responsibility. Responsibility to your future self and to your loved ones.So check your pillars. Automate your savings. And let compound interest do the heavy lifting.Thank you for joining us on this journey through finance. You now have the knowledge.Be confident. Be disciplined. And keep planning.Your future is bright. Goodbye and good luck!
