"Retirement at 63": Many want to retire earlier - deductions in the amount of the pension are not always the case

Created: 12/20/2022, 4:00 p.m

By: Anne Hund

Many leave the labor market at the age of 63 or 64 – well before the standard retirement age.

People in Germany are increasingly retiring early.

This is shown by calculations by the Federal Institute for Population Research (BiB).

According to this, many leave the labor market at the age of 63 or 64, i.e. well before the standard retirement age.

One reason for this is the possibility that has existed since 2014 of drawing a pension early without deductions for those who have been insured for particularly long years, the so-called “pension at 63”.

In 2021, almost every third person would access an old-age pension in this way.

Early retirement: Some accept deductions from the pension amount

"In addition, current figures from the German pension insurance show that in recent years more and more people are retiring before the standard retirement age and are accepting reductions in the amount of their pension," says the BiB statement of December 10th.

This group makes up about a quarter of all those who will draw an old-age pension for the first time in 2021.

On average, they retired almost 28 months before the standard retirement age.

The Federal Institute for Population Research (BiB) has presented figures according to which people in Germany are increasingly retiring early.

© Lino Mirgeler/dpa

Up to what age do you have to work to receive the regular old-age pension?

According to the experts, the development of the younger “baby boomers” born after 1960, who are about to retire, is still open.

On the one hand, the age limits also increased for long-term insured persons.

On the other hand, it is difficult to assess the extent to which they will accept deductions for early retirement.

In Germany, the age for starting retirement will gradually increase from 65 to 67 by 2029, the German Press Agency (dpa) explains.

For those who were born in 1964 or later, a standard retirement age of 67 will apply in future.

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Early retirement with deductions - special payments to compensate?

If you want to retire earlier, you may have to accept deductions – which in turn can be offset.

Whether it's worth it or whether it works out for you personally is the question that every individual has to ask themselves.

Basically, anyone who meets the conditions for an early retirement pension can retire before reaching the regular retirement age.

However, there is a deduction of 0.3 percent for each month that insured persons receive their pension earlier, according to an earlier report by the dpa.

The good news is that these deductions can be fully or partially offset with special payments.

From the age of 50, the payments could be made in the form of a one-off payment or as partial payments,

the report said more about the background.

Those who do not retire early afterwards will receive a correspondingly higher pension for the additional contributions.

A refund of the special contributions is not possible.

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More additional income for early retirees possible without reducing their pension

An important innovation is also in sight: early retirees with a part-time job can earn as much as they like from 2023 without their pension being reduced.

At the beginning of December, the Bundestag decided to abolish the additional earnings limit for early retirement pensions without replacement.

For recipients of disability pensions, the additional income limits increase from the current 6,300 euros per year to up to 34,500 euros, depending on the individual case.