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Five ways to early retirement - how to make the jump before 63

2022-06-23T03:06:54.463Z

Five ways to early retirement - how to make the jump before 63 Created: 06/23/2022, 04:58 am By: Wolfgang DePonte If you want to retire earlier, you should consider a few important factors. © Sascha Steinach/Imago Images As an employed person, how can you get out of the job before the age of 63? Five ways that can also lead to early retirement for you. Munich - More than half of those in empl



Five ways to early retirement - how to make the jump before 63

Created: 06/23/2022, 04:58 am

By: Wolfgang DePonte

If you want to retire earlier, you should consider a few important factors.

© Sascha Steinach/Imago Images

As an employed person, how can you get out of the job before the age of 63?

Five ways that can also lead to early retirement for you.

Munich - More than half of those in employment want to get out of the job before the age of 63 - to enjoy life or to try something new in a completely different area.

The experts from "Finanztest" (issue 7/2022) show five ways in which early retirement can be implemented.

According to the Civey survey, it is primarily younger people who want to retire earlier, with 60 percent of 18 to 29 year olds.

They even aim to retire at 61.

But can that be implemented?

According to “Finanztest”, almost anything is conceivable if you realize that you not only have to deal with a lower pension, but also need a cash cushion to bridge the time until regular retirement.

But one after anonther.

Five examples of early retirement: Retire at 63


The earliest many can claim an old-age pension is when they turn 63.

This is well before the regular start of retirement, which is 67 years for those born in 1964.

The hurdle that has to be overcome is manageable for most employees: you have to have 35 years of contributions.

The catch is that many simply cannot afford the deductions associated with earlier retirement: 0.3 percent is deducted from the pension for every month that one goes before regular retirement.

The examples (see below) show that the benefits are usually more than 20 percent lower than the standard old-age pension.

Examples: Skilled worker Maria S. (58) and engineer Corinna H. (58)

Maria S. (born January 1, 1964) always worked full-time after her school and vocational training (until August 1989) and always earned an average wage.

This year her salary is 38,901 euros.

Assuming that she will continue to earn an average of 1,786 euros a month until she retires, if she retires regularly in January 2031, according to the financial test.

Maria S. would also have the option of retiring after 45 years without deductions, which would be possible from January 2029.

Your gross monthly pension would then be 1714 euros.

In the case of early retirement with deductions (after 35 years of insurance), Maria S. could enjoy her retirement from January 1, 2027, but her gross pension would then only be 1405 euros per month.

Corinna H. (born January 1, 1964) began studying mechanical engineering in June 1983 after graduating from high school and graduated in September 1988.

Since January 1989 she has worked full-time and earned 1.5 times the average salary.

This year her salary is 58,352 euros.

Assuming that she will continue to earn 1.5 times the average until she retires, her gross pension when she retires on January 1, 2023 is 2269 euros according to the finanztest.

She is denied the possibility of early retirement without deductions because she does not have 45 insurance years.

If she opts for early retirement with deductions, then she can enjoy her retirement from January 1, 2027 – but with a gross pension of EUR 1,757 per month, she has to accept substantial cuts.

Five examples of early retirement: From 65 without a deduction

It is therefore better, according to the "Finanztest" experts, to retire earlier without deductions.

However, this can only be done by insured persons who have at least 45 insurance years.

However, it should be noted that this is not yet possible at 63, but at the earliest two years before the regular start of retirement.

For those born in 1958, for example, this would be 64, for those born in 1960 at 64 and four months, and for those born in 1964 and later at 65.

Also important: Despite the fact that there are no deductions, the "pension for particularly long-term insured persons", as it is officially called, is lower than the standard old-age pension (in the example given above by skilled worker Maria S. it would be 72 euros less).

The reason: the claims are paid out without deductions, but they are lower,

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Nevertheless, the experts say: working longer is not worth it.

Because the additional pension points can hardly compensate for the pension paid out two years earlier.

According to the current pension values, the skilled worker from the example would have to be 114 years old before the higher pension would have compensated for the two years of pension (EUR 41,136).


Incidentally, the 45 years of insurance bring more people together than you might think.

According to the German pension insurance, 31 percent of new pensioners will use this form of early retirement in 2021.

However, those who have studied have little chance of taking advantage of this opportunity, because periods of school and study are not counted towards early retirement without deductions.

In the case of early retirement with deductions (requirement 35 years of insurance), on the other hand, it is.


Five examples of early retirement: When the company helps


For anyone who wants to retire before the age of 63 - for example at 60 - there are three options according to the financial test: partial retirement, early retirement or building up a capital balance.

Not only can all three models be combined with early retirement, employees can also take them out at regular retirement age or at a point in time somewhere in between.

The catch with all three models: Nothing works without an employer.

Anyone who is interested should therefore first clarify whether their own company offers one of these options.


Five examples of early retirement: partial retirement


Partial retirement is often regulated in collective agreements or company agreements.

The big advantage here compared to a "normal" part-time agreement: 50 percent less work does not mean 50 percent less salary.

In partial retirement, the employer must increase wages by at least 20 percent.

Some collective agreements provide for even higher subsidies.

Nevertheless, the experts recommend calculating the model well (“Finanztest” offers a calculator at test.de/altersteilzeit), because the bottom line is that during the semi-retirement phase you earn significantly less than before.


This has hardly any effect on the amount of the future pension.

Because the employer has to pay 90 percent of the pension contributions of the full-time salary during partial retirement, even if you only work 50 percent.


Five examples of early retirement: early retirement


In many cases, when companies cut jobs, employees are also offered early retirement schemes.

For example, you stop at 60 and still get a reduced salary.

That sounds tempting, but it should also be calculated well, since the pension will also be significantly lower afterwards.

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Five examples of early retirement: Value credit


The third way to enable an earlier retirement through the company is to build up a value credit (also long-term account or lifetime work account).

The principle: You work full-time for five years, for example, receive 80 percent of your salary and save 20 percent so that you can leave the job a year earlier with the same salary.

Since the construction often takes years, you should clarify all the details with your boss at an early stage.

BY WOLFGANG DE PONTE

Source: merkur

All news articles on 2022-06-23

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