Pension at the age of 58: We tell you what you need to consider when retiring - and how you can get out of your working life early.
- If you want to retire at the age of 58 , you can expect a significant discount on pension payments
- Therefore, you should think carefully about whether you can afford early retirement
- For normal earners , it should be very tight financially when you retire at 58
Instead of working until the age of 65 or even 67, many people want to retire much earlier. The first thing to do is to carefully examine two factors: First, do I even meet the formal requirements to retire before the intended retirement age? Second, can I afford to stop working early? Because earlier retirement can almost only be obtained with a significant discount on pension payments.
Early retirement with full pension at 58: formal requirements
The formal prerequisites for retiring earlier and still receiving the full pension amounts are clear: the normal age usually starts at 65 to 67 years , depending on when you were born. Anyone who wants to receive a pension (even if it is tiny) must have paid into the pension fund for at least five years.
Anyone who has paid in for at least 45 years is considered a "particularly long-term insured person" by the pension fund. He can retire at the age of 63 - and receive his pension without cuts. Because the retirement age is gradually being raised, this rule only applies to people born before 1953.
A special regulation applies to people with disabilities. If you have paid in for at least 35 years, you can retire (at the earliest) at the age of 60.
Early retirement means financial losses
If the conditions described above are met, you can retire earlier and still receive the full standard old-age pension. However, you can retire at the age of 63 if you have only paid into the pension insurance for 35 years. However, retirees who want to stop working before their actual retirement date have to live with losses.
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For every month someone stops working earlier, the pension is reduced by 0.3 percent . This results in a minus of 3.6 percent per year. Example: If you want to stop at 63 instead of 67, you can expect a 14.4 percent lower pension. The reduction is then of course lifelong, not only for the period between the 63rd and 67th year of life.
There is actually no "pension at 58"
So if you are considering whether you might throw your job at 58 years old, although you should actually be working until you were 67, you should consider two things:
This leads to another crucial question:
How much is my pension?
The amount of the pension is calculated using the so-called pension formula. Mathematically it looks like this:
Pension = pension points x access factor x pension type factor x current pension value
The earnings points reflect the status of the individual pension account. Every employee who earns exactly the average income of the Germans in one year receives exactly one wage point for his contributions. If someone earns more, he will be credited with more earnings points. So if you have more pension points, you paid in more or longer and later get a higher pension. The current status of earnings points can be found in the annual pension notice.
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There are additional pension points for the care of relatives. To do this, the needy must have at least care level two and the care effort must be at least ten hours per week. There may also be pay points for training. Finally, trainees also pay contributions to the pension fund.
The current pension value is the amount that corresponds to a pension point. In the old federal states it is 31.03 euros. In the new federal states it is 29.69 euros.
The pension type factor is used to calculate which pension it is. The normal old-age pension, the full disability pension and child-raising pensions are calculated with a factor of one. For a partial disability pension, on the other hand, the factor is set to 0.5, for widow's pensions the factor is 0.55 or 0.6. Finally, there is the full orphan's pension with a factor of 0.2 and the half-orphan's pension with a factor of 0.1.
The access factor is about discounts or surcharges when calculating the pension. If someone retires earlier than the official retirement age, this is taken into account as an entry factor. After all, he has fewer contribution years and pays less into the pension fund.
For ordinary earners, it is financially very tight at 58
These factors can be used to fairly accurately calculate how early retirement would impact financially. To anticipate it: Those who have earned very well will probably find it much easier to get out of work at the age of 58. He then "only" has to pay the years until the start of the pension from his own resources - and later has to make do with a significantly lower pension.
For most ordinary earners, early retirement can only be achieved with sensitive restrictions. According to statistics, the amount of the pension is around 48 percent of average earnings. However, wealthy people in retirement distort the picture. Many pensioners have to make do with a pension of between 700 and 800 euros. Whether that is enough for life is more than questionable. If around 33 percent of this amount is cut, for example, it will be very, very tight. The retirement pension at 58 years remains only an unattainable dream for most people.
Pensions are taxable
Because every pensioner is obliged to submit a tax return if his income exceeds the annual allowance. In 2019, for example, the basic allowance is € 9168 for single people and € 18,336 for married people.
Contributions to statutory health and long-term care insurance are then also made from the pension. The contribution rate for the statutory health insurance is currently 14.6 percent. Of these, pensioners pay 7.3 percent. There is also the monthly amount for long-term care insurance. For this, parents currently pay 2.55 percent, childless people even 2.8 percent.
Possible alternatives for a pension from 58
And apart from that, the formal requirements - such as the necessary contribution years - must also be fulfilled. But maybe there are other ways for you to retire early? You might consider one of these regulations:
- Disability pension
- Partial retirement
- early retirement
The time of retirement from work should be carefully considered. We go through three scenarios: the regular old-age pension, the pension at 63 and a later retirement with supplements.
Disability pension helps with illness or disability
If you can only work three hours a day, you have a full disability . Those who still work between three and six hours a day can receive a pension for partial disability. This is not automatic, but must be requested. In addition, the pension is limited due to reduced earning capacity. However, it can be extended if necessary.
Even if the health conditions for a disability pension are met: the amounts are unfortunately relatively small.
Partial retirement from 55 years is sometimes possible
In many industries it is possible to talk to the employer about a part-time model . However, this agreement is a voluntary service of the company. The employer reduces his working hours to half of the original amount. A so-called block model is often used: the employee initially continues to work in full, but only receives half of his wages. In the second phase, he no longer has to work, but still receives half of his wages.
A good solution: the early retirement scheme
If you want to stop working at the age of 58, you may be able to benefit from an early retirement scheme . Such regulations are not enshrined in law. However, there are numerous employers who offer a suitable solution. In many tariff areas, unions have negotiated early retirement with employers.
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Employers then provide for income from the age of 58, usually through a company pension or a so-called early retirement benefit. There is no money or even subsidies from the statutory pension fund.
Individual consultation appointment with the pension insurance
It is best to make an appointment for individual pension advice. There you will find all the important details for your specific situation - such as:
- When can I retire?
- What is my pension likely to be?
- What options do I have to increase my pension?
In Hesse you can reach the Deutsche Rentenversicherung under the free service number. 0800 1000 4800. You can arrange a personal consultation in your area.
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