As of: February 8, 2024, 5:14 a.m
By: Amy Walker
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If you're retiring this year, there are a few things you should prepare for.
Because only then will retirement really be what it promises.
Berlin – Congratulations on your retirement: Anyone who wants to finally turn their back on working life in 2024 is probably already looking forward to all the plans that are just waiting to finally be implemented.
But before we can get started, there are still a few points on the checklist.
Find out what pensioners can expect here.
Retire without any deductions: these vintages are allowed to do that
First of all, first things first: everyone who is 66 years old will be able to retire without any deductions in 2024.
This year this applies to those born in 1958. Exactly in which month these people can retire depends on the month of birth.
All those born in 1958 reached retirement age this year.
Things get a little more complicated for subsequent years, as the entry age is raised in two-month increments.
Every insured person can find out exactly when they will retire here on the German Pension Insurance website.
But these are not the only ones who can retire this year.
As in every year, in 2024 those who have been insured for a particularly long time (45 years of contributions) will be able to start their retirement a little earlier.
Here too, the starting age for early retirement will be gradually raised; in 2024, those born in 1960 will be able to take early retirement at 64 years and four months.
Other groups are also likely to retire early, such as people with a severely disabled certificate (also 64 + 4 months).
Anyone who was born later than 1958 and cannot benefit from the pension for those who have been insured for a particularly long time can still retire from the age of 63.
However, you have to accept a reduction in your pension.
0.3 percent of the subsequent money will be deducted for each additional month, up to a maximum of 14.4 percent.
So you should always take this into account carefully.
An application for the pension must be submitted
If you want to retire in 2024, you should know that the pension will not automatically end up in your account.
You must first apply for it from the German pension insurance company.
The pension insurance recommends submitting this application approximately three months before retirement.
If you apply too late, you don't need to panic.
The pension insurance also pays the pension retroactively, but only for a maximum of three months.
Ideally, prospective retirees didn't just start thinking about retirement planning yesterday.
Anyone who has taken out a private or company pension (or even both) should look into these contracts in the months before retirement and, if necessary, contact the insurer.
This is where the details matter: Do you receive a one-off payment or an installment payment?
How much are these payments?
If questions arise here, now is the time to clarify everything with the respective insurance companies.
Before you retire, there are a few things you should be clear about.
(Symbolic photo) © Pond5 Images/Imago
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Of course, you should also be clear about how high the statutory pension will be.
This is the only way to do a complete breakdown of your cash register, i.e. compare expenses and income.
The latest pension information, which is sent once a year, helps here.
It tells you how much pension you can expect.
However, experts from Finanztest
magazine
recommend starting with the topic much earlier: “Go to retirement planning advice from the statutory pension insurance company in your early 50s.” This will give you an idea of what your future pension will be like.
Taxes must be paid on the pension
Taxes must be paid on private pensions.
Here, too, it depends on which model you have chosen: With a lifelong pension, tax only has to be paid on a portion (income share, depending on age).
With a one-off payment, significantly more is paid, up to 25 percent.
This tax rate can be reduced if certain conditions are met.
These include: The contract has existed for at least 12 years and the pensioner is at least 62 years old.
But it's not just private pensions that are taxed; retirees also have to pay their taxes on statutory pensions.
According to the DRV, this is a common mistake made by insured people: they forget about the taxes on their pension.
In the case of the statutory pension, the proportion that is to be taxed is gradually increased.
Since 2005, the same payments into pension insurance have been tax deductible - the taxes are only due retrospectively, i.e. when the payment is made.
You can see the concrete effect of this in the following table:
So anyone who retires in 2024 will pay taxes on 84 percent of their gross pension.
In the end, exactly how much tax you have to pay depends on what other sources of income you have and what tax bracket you are in.
Health insurance contributions are paid on all income
Anyone who wants to continue working despite reaching the standard retirement age (whether full-time or part-time) can do so without fear of any disadvantages to their statutory pension.
Since 2023, there has been no additional income limit for pensioners.
However, in many cases working pensioners then have to pay double health insurance contributions.
The statutory health insurance company pays the same contributions on all income - up to a certain upper limit, which will be 62,100 euros in 2024.
This double contribution has long been criticized in politics, but it persists.
In 2024, pensioners should also expect that they will have to pay contributions on multiple sources of income.