Retiring in Germany and abroad: What you need to know

Retiring in Germany

Germany continues to attract many retirees. It's no surprise that this is a popular destination for those looking to retire abroad. If you’re thinking of moving to Germany but aren’t sure which areas are right for you, we’ve listed some of the best areas to retire in, all over Germany: 

• Berlin: The German capital has plenty of housing options and more suburbs than other German cities. However, the downside is that the cost of living is higher than in some other smaller cities in Germany. 
• Leipzig: Based in the state of Saxony, Leipzig is a major economic hub and popular area with a bustling environment of bars, shops and restaurants. It also offers a lower cost of living compared to other large cities.
• Munich: The capital of Bavaria has world class healthcare. A contemporary city with great transportation links for those looking to connect to other major cities within Germany and Austria. 

Retiring abroad

Thinking of retiring abroad? We have some tips for you! Regardless of what you may decide on, research is key and an essential part of the process because there are many factors to take into account before you can make a final decision. You may gravitate towards some specific destinations, but it’s important to make sure they suit you. 

For instance, will you need a residence permit? Some countries, including Germany, require you to have savings - to prove you have the financial means to support yourself - before letting you move there, if you are over retirement age. 

Planning will mean you can relocate safely, knowing your new life will be just as secure and fulfilling as you envisioned. Whether you’re thinking of retiring in Germany or somewhere else, you should consider the following factors when making your decision: 

Health insurance

Healthcare is an important consideration if you are retiring abroad. Depending on where you would like to retire, you may need to take out medical insurance. Germany offers state health insurance to all people who have contributed to the social security system as working residents, but new retired residents must sort their own (private) cover. If you are coming from another EU country, you may still be covered by the state health insurance system. 

The same applies in other countries around the world - as an expat retiree, you will probably need to sort your own health insurance before you make the move. This is especially the case in countries in America and South Africa. 

Research what the situation is like for retired people in your destination country, and make sure you can budget for health coverage - it is, after all, essential. 

Financial arrangements

Exchange rates and inflation will affect your pension income and any other benefits you are entitled to after retiring abroad. Before moving, you should do some research to ensure that you understand what your financial situation will look like. 

For instance, if you are drawing your pension overseas, you should be aware that some providers might only pay into a local bank account, or charge you fees to pay your pension into an overseas bank account. Bear in mind as well that your pension will be paid in the currency it was earned in (so, if you receive a German pension, you will get your pension benefits in euros). This means that it will be affected by fluctuations in exchange rates when you convert it into the local currency abroad - so you need to be prepared for your income to rise and fall. 

You’ll need to consider how your pension is taxed as well. As it is treated as income in the country it is issued from, it might be taxed at the source - however, the country you have retired in might also tax it as income. If the two countries have a double-taxation agreement, you might be able to avoid your income being taxed twice by applying for an exemption or tax relief. 

This will give you an idea of what your take-home income will look like. You can then bear this in mind while you do some research on the cost of living in your destination country. Will you be better or worse off after relocating? It is also a good idea to contact the International Pension Centre as they can advise you on how your pension could be affected. It's essential to ensure you are in the best financial position to relocate and live overseas comfortably.

Don't rush!

Take the time to research the perfect new home for you. Visit a few times to see if you can picture yourself living in a particular neighbourhood. You will discover what local activities are available and decide if this is how you envision your retirement. Visiting a country for a holiday is very different to living there permanently. Take your time to make sure you choose the right time and location for yourself.