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Why do elderly Germans save? Mainly to bequeath and to hedge longevity risk
Heike MaiOrçun Kaya
Saving money is near and dear to Germans.
Saving money is near and dear to Germans. Remarkably, Germans increase their saving rate in the second half of retirement. Those aged 75 and older save for a potential emergency situation and in order to bequeath and thereby improve their heirs’ living conditions. High intergenerational transfers might affect wealth distribution in a society in the long run. In 2018, banks in Germany benefited from record volumes of new retail loans (EUR 48.9 bn) and net flows into household deposits (EUR 108.7 bn). Mortgages accounted for the lion’s share of new loans. Consumer lending was above average in 2018, but lost momentum in the last quarter. [more]
We identify the impact of negative rates on household portfolios in Germany. Real returns on cash and deposits stood at -1.2% in Q1 2019. Due to that, Germans lost around EUR 150 in real terms in 2019 per person, compared to the 1991-2014 average. [more]
German retail clients have shown relatively little interest in passive investment alternatives, compared to traditional mutual funds. Robo-advisors, which primarily invest in ETFs, have seen the number of their clients and AuM grow. [more]
The number of bank branches in Germany has declined sharply, to 28,000 in 2018 from around 40,000 in 2007. With 33 bank branches per 100,000 inhabitants, branch density in Germany is still relatively high. [more]
Germans are known as heavy cash users. In 2017, they paid cash for most of their purchase transactions. If they do not use cash, they prefer to pay by direct debit or card. Credit transfers and e-money payments are used less often. [more]
German households hold a higher share of their savings in bank deposits than their French or British peers. But their portfolios are more diversified than perception suggests if all low-risk/low-return investments are taken into account. [more]