As of: February 27, 2024, 9:47 a.m
By: Markus Hofstetter
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The pension gap is a reality for many Germans.
However, with the right strategy and early planning, this can be closed.
Berlin – In Germany, seven million of the current 22 million full-time employees have to get by on less than 1,100 euros per month after four decades of work.
This emerges from a response from the Bundestag to a request from Sahra Wagenknecht, as the
Augsburger Allgemeine
reports.
It is therefore advisable to start making private pension plans early.
The earlier you start, the more you benefit from the effect of compound interest.
If you reinvest your savings regularly, you will earn interest on the profits.
You can figure this out using tools like
Zins-Berechner.de
.
Anyone who has 10,000 euros in their account and receives four percent interest will have saved 14,802 euros after ten years and 21,911 euros after 20 years.
Anyone who invests 10,000 euros at the age of 30 will have around 42,681 euros available when they retire at the age of 67.
Calculate your pension gap to save properly
The stock market is even more attractive, as the MSCI World stock index shows.
According to Finanztip,
from 1975 to the end of 2022 he achieved
an average annual return of 9.2 percent.
So if you invest 10,000 euros at the age of 30, you will have 259,559 euros available after 37 years.
However, capital gains tax must still be taken into account.
But how much should you save each month in order to be wealthy or at least financially secure in old age?
A good approximation is to calculate the pension gap, i.e. the difference between the last net income before retirement and the amount of the statutory pension.
When calculating the final net income, future wage increases must be taken into account.
According to the Federal Agency for Civic Education, real wages in Germany rose by a nominal 60.7 percent between 1991 and 2019, an average of around 2.2 percent per year.
If a 30-year-old person earns 2,500 euros a month today, a wage increase of 2.2 percent per year would result in a final salary of 5,592 euros.
Example: Pension gap of 2000 euros per month
The amount of the expected statutory pension can be found in the annual pension information from the German Pension Insurance.
The difference between the last salary and the expected pension results in the pension gap.
In our example we assume a pension gap of 2000 euros per month.
This gap can be closed, for example, through company pension schemes, Riester pensions, Rürup pensions for the self-employed or securities.
Everyone has to decide for themselves which form of savings is right for them.
Stay independent – these everyday heroes can help.
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The next step is to consider how long the pension should last.
According to the Federal Statistical Office, women born in the early 1990s live to an average age of 79 and men to around 73 years.
The savings should therefore last for at least six or twelve years.
To be on the safe side, in our example we assume twice that amount; for a woman that would be 24 years.
With a monthly gap of 2,000 euros, this results in a sum of 576,000 euros that you should have available when you retire.
However, in order to be able to afford the same things in 37 years as you can today, you will need more money.
Assuming an average inflation rate of two percent annually, a 30-year-old would have to save almost 1.2 million euros.
A savings calculator can help calculate the monthly savings rate.
The requirements are: no starting capital, savings period of 37 years, average monthly return of 7.5 percent.
This means that the woman in our example would have to invest around 530 euros per month in order to close the expected pension gap.
If you want to live completely worry-free in old age, you can save a few more euros every month.