Anyone who wants to retire before the standard retirement age must have saved a lot of money.
But how much should you plan for it?
An overview.
Berlin – In Germany, most people can only receive their statutory pension at the age of 67.
For many it is too late – most Germans state that they are aiming for an earlier retirement.
In order to do that and continue to receive a pension without deductions at 67, you have to live on your savings until you reach normal retirement age.
There are different formulas and rules of thumb for calculating how much money you should have on the high side in order to retire with peace of mind.
Rule of thumb: Set aside 10 to 15 percent of your salary for retirement
Regardless of when you retire, you shouldn't rely entirely on the statutory pension.
On average, men who retire now get around 1,200 euros, women get less, on average less than 1,000 euros.
That alone is usually not enough to live on - so private provision has to be made anyway.
So that should be the first step for everyone: calculate how much additional money you will need in old age.
A common rule of thumb is that you should set aside 10 to 15 percent of your salary each month for retirement.
So anyone who has worked for 40 years and earned EUR 50,000 a year should have accumulated reserves of at least EUR 200,000 over the years, and at best even EUR 300,000.
At least that would be the ideal situation.
How far you can get with the money depends largely on life expectancy.
This should always be included in the calculations: the average life expectancy of a man is almost 79 years, women live on average up to 83.6 years.
So that can give a clue as to how long it takes money.
If you retire at 60 with reserves of 200,000 euros, you will have around 10,000 euros per year available for the next 20 years – much less than you might initially think.
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Retire earlier: How much money do you need?
© Emma Innocenti/Imago
Three examples show that personal circumstances are decisive
So, to calculate when you can stop working, three main factors count: the expected lifespan, the expected monthly or annual living expenses and the retirement age.
These three factors are of course extremely individual, which is why we can only make sample calculations here.
In addition, there are personal circumstances, for example if you have additional income or may be dependent on care.
For many seniors, caregiving is a key reason why they are at risk of poverty, so that's something to think about as well.
For living expenses, you should have saved about twice what you will need.
At least if you can't count on other income.
It is also important to remember that most seniors have a lower cost of living than employees.
Retire at 50
Maria Musterfrau wants to stop working at the age of 50.
She lives in a paid-for condo, so she doesn't have to pay rent.
She assumes that she can make ends meet with 1500 euros a month.
She expects to live to be around 90 years old, so she needs savings for 40 years.
Her pension will be around 600 euros a month, which she will receive when she is 67 years old.
For the 17 years that she does not receive a statutory pension, she needs reserves of 306,000 euros.
Once she retires, she will have less to draw on from her savings and will only need €248,400 for the rest of her life.
So that's a total of 554,400 euros that Maria Musterfrau must have saved in order to retire at 50.
To be on the safe side, she could double the amount, which would come to 1.1 million euros.
Retire at 55
Max Mustermann plans to quit his job for good at the age of 55.
There are no rental costs for him either, since he owns a house.
His monthly costs amount to around 1200 euros a month, he estimates.
However, he only assumes a lifespan of 85 years.
With his expected statutory pension of 900 euros a month from the age of 67, he will have to use his savings book a little less for the last 18 years.
So he will need at least 172,800 euros before the statutory pension payment.
After he starts drawing his state pension, he should only need 64,800 euros.
So, John Doe should have $250,000 in savings before he retires at age 55.
Ideally, he can double the amount to 475,200 euros.
Retire at 60
Maja Muster wants to retire at 60.
She has paid off her condominium, she lives an upscale lifestyle, so that her living expenses amount to about 2000 euros a month.
Her pension will be paid from the age of 67, she expects monthly payments of 700 euros.
However, for the first seven years of her retirement, she will have to rely entirely on her savings.
That should be at least 168,000 euros.
She assumes that she will be 90 years old and therefore wants to make provisions for a longer period of time.
For the 23 years that remain after the age of 67, she needs at least 358,800 euros.
Maja Muster should therefore have saved at least 526,800 euros before she retires.
A doubling of the amount would even require 1.05 million euros.
However, only very few are likely to be able to do this.
The above examples are just that – examples.
But they make one thing clear: If you want to retire early, you have to take care of it in good time.
And they also show that a lot depends on what lifestyle you aspire to.
If you want to spend less money and still have a higher standard of living, you can also retire abroad, where the cost of living is often lower.
List of rubrics: © Emma Innocenti/Imago
