Retirement planning in Germany: What you need to know

Retirement planning in Germany: What you need to know


Retirement planning as an expat can be a headache. You want to make sure your financial future will be secure; but you might not even be sure about what country – or countries – you’ll be living in when you retire. 

Take charge of your pension planning and book a consultation with Getsafe

The drawbacks of the public pension system in Germany

If you’re in Germany, there are a few different types of pension planning. You might already be familiar with Rentenversicherung - the German public pension system into which you automatically pay as a full-time employee, and can opt into as a freelancer. It’s an easy default option, but is it safe to rely on it?

Unfortunately, no. Rising life expectancies and decreasing birth rates mean that the contributions that are meant to carry you when you reach retirement age won’t be enough. Under the public system, you can expect to receive less than 50 percent of your post-tax income from your most recent job when you retire. 

The so-called Rentenniveau (which expresses the size of the average monthly pension benefit in relation to the average monthly salary) was already at 49,4 percent in 2021 - where will it be in another 40 to 50 years?

Why are German public pensions shrinking?

In a nutshell, there are two reasons why public pensions in Germany are sinking: demographic change and inflation.

In the public pension system, each generation subsidises the next. Declining birth rates and a massive generation of baby boomers hitting retirement age mean there aren’t enough young people to make up the difference. In 2050, every third person in Germany will be over 60, but only every sixth person will be under 20. Fewer workers paying into the system will be financing the pensions of more and more retirees. 

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Then, there's inflation. You might have already felt the pinch on your budget. Prices will be even higher in the future, but monthly retirement payouts will remain almost the same as they are today.

What can you do to make sure your retirement is secure?

For years, the German government has been advising people to set up a private retirement plan as early as possible. The good news is, there are a number of different options depending on your professional situation.

Private pension insurance is a good option for most people because it can be adapted to your needs. You can choose what your money is invested in, when you want to start receiving payouts, whether you want a one-time payment or a monthly pension, and even find a plan to take with you anywhere you move. 

You also benefit from tax advantages while saving, and can pause contributions at any time for any reason. Plus, you can increase monthly contributions whenever you want - like after a salary increase. 

How do you find the best pension solution for you? 

When it comes to pension planning, it’s important to make an informed decision. There are two major steps you should take to help you find the best pension solution for you:

1. Educate yourself

There are lots of options, providers and plans on the market. As an expat, it’s especially important to know if you can continue contributing to a German private pension from abroad, or to understand what happens if you move away from Germany before or during retirement.

2. Talk to a professional

Save yourself the headache and use an expert’s know-how to understand how it works. Their familiarity with Germany’s private insurance system will help you find the plan that best suits you. 

With Getsafe, consultations are easy to book via the app, and connect you with knowledgeable English-speaking consultants ready to expertly advise you on options tailored to your living situation. Once you’ve had a chance to review your options and even ask additional questions, your consultant will take over the paperwork for you.

It’s never too late to protect your retirement

Those in the know are always going to say the best time to start saving for retirement is yesterday. But, the second best time is right now! Don’t wait - book an appointment with one of Getsafe’s experts today and future you will thank you.

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