Demographic change What generation are you?

Baby boomers, generations X and Y: every age faces new challenges when it comes to pensions. What needs to be considered?

by Nils Aggett 24 Feb 2016
Applies for every generation: the sooner you start saving, the more peace of mind you have in old age. Image: iStock

Baby Boomers. Generation X. Millennials. MTV Generation. The list goes on and on. While the term “generation” was coined back in the 19th century, it did not gain widespread currency until the 20th and 21st century. Socio-culturally, a generation is an age group in a society that is marked by then-prevailing economic, social and demographic conditions.

Conditions have certainly changed over the decades, and so has the structure of the Swiss population. The age structure has changed from a pyramid (in 1900) to a bell (1950) to an urn (2010). Today, 40- to 64-year-olds make up the largest age group at 35.3 percent of the total population. “Switzerland’s age structure is characterized by a dominant baby boomer generation, along with a smaller young generation and a growing number of seniors,” according to the Swiss Federal Statistical Office.

In Switzerland, baby boomers are those people born between 1946 and 1968. The last baby boomers will turn 50 in 2018 and retire in 2033, assuming the retirement age stays at 65. Demographic change alters the ratio between working-age people and seniors aged 65 and up. According to an Allianz International Pensions study, Switzerland will see a 47 percent increase in its old-age dependency ratio (i.e. the number of people aged 65 and up for every 100 residents between 20 and 64) by 2033. As the age structure changes, so does public pension spending. According to the study, Switzerland’s expenses will go up around 37 percent. Clearly, our public pension system is in dire need of reform.

Baby boomers: Rational and reasonable

Baby boomers grew up during the post-war period. Years of deprivation were followed by an economic boom. Still, this generation is used to economizing and protecting their possessions carefully. They generally base financial decisions on rational criteria. Most of their money is thus invested in savings accounts and real estate. Equities take third place. Bonds are less popular among baby boomers. According to a UBS study on retirement planning behavior in Switzerland, 76 percent of working-age respondents had one or more pillar 3a accounts. The percentage was slightly higher in German-speaking Switzerland, while people in French-speaking Switzerland were more likely to own life insurance policies.

Since baby boomers accumulated pension assets during an economically prosperous period (normal interest rate environment, equity bull market), they will have more assets than future generations likely will.

Generation X: Skeptical but well-educated

Generation Xers were born between the late 1960s and the late 1970s. They witnessed the rise of commercial TV channels, computers, the internet and mobile telephony. Communication and the speed of communication have changed dramatically. Generation X lived between many cultural milestones: the Cold War, the fall of the Berlin Wall, economic prosperity. Some sources call them the “lost generation”. They tend to be extremely skeptical and highly educated at the same time. Their preferred savings vehicles are savings accounts, followed by pillar 3a solutions. Safekeeping accounts, fund accounts and fund custody accounts are less popular.

Millennials: Emotional and individual

Millennials were born after 1980. Also known as Generation Y or digital natives, this generation is all about constant availability, internationalization, extreme individualism and extensive choices. Emotions play a major role in their decisions. They strive to balance work and fun, family and career. Instead of thinking “either/or”, they tend to think “both/and”. Studies show that they care more about current consumption than future consumption. Consequently, their favorite savings vehicle is a savings account. Their financial resources frequently determine whether they have a pillar 3a account.


Every generation plans for retirement. Private retirement savings are clearly important. But the stronger each generation is financially, the greater their investment opportunities will be. Urgency is a matter of age and savings goals. The older people are, the more urgently they need to save for retirement. The sooner they start, the more pension assets they will have in the future.



  • Start saving on your own as soon as possible: the earlier you start, the more assets you will have on retirement.
  • Diversify: use different asset classes – savings accounts, equities, bonds, real estate – as much as possible. In any case, you should also invest in growth markets.
  • Review your portfolio regularly: keep an eye on your investment strategy and align it with your life situation early on.