A dual reality comes to the fore with the release of the 2025 Financial Well-Being Index for Cyprus, as it rose to 54.6 points, an increase of approximately four points compared to 2024.
In practical terms, this means that, on the one hand, there is a trend of improvement in the country’s economy; on the other hand, however, nearly 4 in 10 Cypriots (38.4%) remain financially vulnerable or in difficulty.
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Analyzing this apparent contradiction, Ioanna Evangelou, a member of the Board of Directors of the Financial Wellbeing Institute, Ioanna Evangelou, explains to Alphanews.live that the data reflect the different paces of society.
“This picture is not contradictory. On the contrary, it highlights an important aspect of financial well-being. The rise in the Index indicates that, on average, citizens’ financial situation has improved—across all 14 individual questions in the Index. “However, an average does not reflect the distribution of well-being,” Ms. Evangelou emphasizes.
According to data from the IMR/University of Nicosia survey, 15.4% of the population is classified as “Economically Vulnerable” and 23% as “Economically Struggling.”
“Despite the overall improvement, a significant portion of the population has not yet attained the level of financial security that would allow them to face challenges with confidence. The improvement in financial well-being has not yet translated into meaningful security for everyone,” he notes.
Why the numbers differ from what people actually feel
How does the pressure experienced by the 45.1% of Cypriots who say they are struggling to make ends meet align with the country’s positive growth rates and fiscal stability?
“Macroeconomic indicators and financial well-being are linked, but they are not the same thing,” Ms. Evangelou clarifies. “Macroeconomic indicators reflect the overall picture of the economy. The Financial Well-Being Index measures something more deeply human. It looks at how citizens themselves experience their situation, whether they feel secure, and whether they can cover an unexpected expense,” she adds.
As he explains, the transmission of positive developments from the “big numbers” to the real economy takes time and is influenced by purchasing power, private debt, and households’ ability to save.
The importance of this aspect was also recognized by the Ministry of Finance, which noted in a statement that “it monitors and analyzes every significant report in order to pursue sound economic and social policy.” Ms. Evangelou emphasizes that “This is precisely our goal: to help improve the daily lives of our fellow citizens. We stand ready to work together with the Ministry and all relevant agencies.”
The Paradox
“Financial Resilience” is the strongest pillar of the survey, scoring 57.4 points. At the same time, however, nearly one in two Cypriots (49.5%) say their finances cause them stress (Stress pillar score: 48.8).
As Ms. Evangelou explains, this is not a contradiction.
“Resilience shows that citizens have developed coping mechanisms to meet their obligations. However, this comes at a heavy psychological cost. Someone may be getting by, but at the same time be deeply concerned about the rising cost of living or an unforeseen event. Resilience does not mean the absence of anxiety.”
This constant stress has a corrosive effect on decision-making. International research shows that under pressure, people focus exclusively on the present and on survival, neglecting long-term planning (such as saving and retirement planning).
“Stress reduces the sense of control, leading to the postponement of important decisions or to hasty choices with negative long-term consequences. Financial well-being isn’t just about how much someone earns, but how they feel about managing their present and future,” he emphasizes.
The Threat of Rising Costs
The cost of living remains the biggest threat for 48.8% of respondents. But why does the perception of high prices persist, despite inflation stabilizing?
“The slowdown in inflation does not mean that prices are falling, but that they are rising at a slower pace,” Ms. Evangelou clarifies. “Households continue to face the extremely high price levels that have taken hold in recent years for housing, energy, and food, while their disposable income has not increased proportionally.”
The pension gap
One of the most concerning findings relates to retirement. On average, Cypriots estimate that the state pension will replace 52.3% of their final salary, while the actual replacement rate from the Social Insurance Fund (TKA) is estimated to be close to 42%.
At the same time, 45.1% doubt that they will be able to maintain their standard of living after retirement.
“There is a significant gap between expectations and reality, which points to a knowledge gap,” comments Ms. Evangelou.
So when should retirement planning begin?
“Ideally, from the very beginning of one’s working life. Time is your greatest ally. Even small, systematic savings started early can grow into a significantly larger nest egg due to compound interest, compared to larger amounts saved later on. Planning requires a realistic understanding of the system and timely decisions regarding supplemental coverage.”
Three Recommendations for the Ministries
When asked about the immediate actions the Financial Wellbeing Institute would propose to the relevant ministers, Ms. Evangelou focuses on three key areas:
- Financial education in schools: Financial literacy should be incorporated as a core life skills course starting in school (budgeting, loans, saving, protection against fraud), alongside lifelong learning programs for adults.
- Digital retirement tools: Develop government tools to help citizens realistically estimate their future pensions so they can plan for their future in a timely manner.
- Data-Driven Policy Making: Utilizing the Financial Well-Being Index as a policy monitoring tool for evaluating and designing targeted social measures.
“What isn’t measured is hard to improve. Strengthening citizens’ financial resilience requires a broad alliance between the government, the educational community, and the financial sector,” he emphasizes.
The Financial Wellbeing Institute plans to put the survey’s findings into practice by focusing on the annual measurement of the Index to track trends, promoting public dialogue on pension reform, and conducting targeted awareness campaigns on budget management and reducing financial stress.
“The true value of a survey lies not in the mere collection of data, but in its ability to help improve citizens’ daily lives,” concludes Ms. Evangelou.
