Can I retire when I am 54?
When can i retire?
Although the age limit for entering retirement has increased in recent years, Germans are retiring earlier and earlier. It seems that hardly anyone should work until the statutory retirement age. But how is the age for regular retirement calculated? What are the pension discounts and how are they calculated? If you know which models are effective for retirement and what they mean financially, you can plan your retirement sensibly at an early stage.
What is the retirement age in Germany?
The retirement models have changed several times in recent years. The following regulation applies in 2018. Since 2012, the age limit for regular retirement has been increased step by step from 65 increased to 67 years. Starting with those born in 1947, it is about increases in one-month increments. From 2024 this period will be extended to two-month steps. This means that insured persons born in 1964 or later can retire at the age of 67. If you do not want to accept discounts, you must have paid into the statutory pension insurance for 45 years. In order to reach these 45 years, not only contribution payments from the years of employment are taken into account. Contribution payments are also taken into account for periods in which unemployment benefits I, insolvency benefits or short-time work benefits were received. Although many employees between the ages of 50 and 60 are now healthier and more productive than previous generations, many Germans are aiming for earlier retirement. They want to enjoy their old age and not work until the standard retirement age begins. But when is the earliest time you can retire, and what discounts should you expect?
When is the earliest retirement age?
Only a few years ago was the Retirement age introduced at the age of 63. To take advantage of them, you have to for at least 35 years have paid into the statutory pension insurance in Germany. Then there is an entitlement to an old-age pension for long-term insured persons. Those who retire at this age, however, have to accept discounts. These haircuts are in 2018 with 0.3 percent for each month the early start of retirement. So anyone who retires one year before statutory retirement has to accept a discount of 3.6 percent per year.
For these retirees, however, there are options to supplement their pension payments a little. The so-called Flexi pension. Those who take early retirement are allowed an amount of 6,300 euros earn additional income without pension deductions. Even those who are entering the regular old-age pension can take advantage of the Flexi pension. If you accept the regular old-age pension with a delay this year, the pension benefit increases. Just shifting the retirement age by one year leads to an increase in statutory pension payments of around six percent without having to pay additional pension contributions.
If you want to know from what age you can retire and how high the discounts are, you can use an online calculator. It is published on the website of the Deutsche Rentenversicherung and is intended for prospective pensioners who want to obtain information on the important topic of old-age provision at an early stage.
How great is the risk of old-age poverty?
Anyone who deals with the question of early retirement will probably inevitably also ask the question of what poverty in old age is all about. Again and again one reads reports in the media according to which pensioners in Germany are increasingly having to claim social benefits because their pension payments are insufficient to survive. Women in particular are said to be affected. The question of early retirement then often does not even arise. If you would like to have precise information on the amount of your anticipated pension payments, the discounts and tax payments, it is best to contact Deutsche Rentenversicherung by email or telephone. There you can arrange an individual consultation and clarify all questions about this important topic.
Insurance experts now assume that you should get around 80 percent of your last net salary as a pension if you want to maintain your previous standard of living. A large proportion of this will continue to be covered by the statutory old-age pension. Nonetheless, there is a gap in provision that should be supplemented by private old-age provision. Incidentally, the amount of the pension payment depends on your gross income and the number of years in which you have paid contributions to the pension insurance. So if you only have a low income, you have to expect that the pension amount will be correspondingly low in old age. The risk of old-age poverty should not be underestimated, so that one should basically assume that everyone should take out private pension provision in order to be well looked after in old age.
What are the most common pension mistakes?
1. Everyone has to work until the age of 67?
There are a number of common misconceptions surrounding the statutory pension. Very often one hears the statement that everyone has to work up to the age of 67. That is not correct. Only for those born in 1964 is the age for regular retirement 67 years. For those born between 1947 and 1964, the standard retirement age will be gradually increased.
2. Does the pension payment flow automatically?
Equally wrong is the statement that the pension payment flows automatically. A pension payment is a social benefit. This must be requested from the insurance company. All you need to do is send brief written information to the Deutsche Rentenversicherung or the relevant insurance company. In order to ensure that the pension benefit is paid on time, the application should be submitted at least three months before the planned start of the pension.
3. The pension is not taxed?
There are also many errors surrounding the question of pension taxation. Pension payments have been taxed since 2005. Those who retired in 2005 only had to pay tax on 50 percent of their pension payments. Anyone who retired in 2016 has to pay tax on 72 percent of the payment. This percentage is increasing, but the statutory pension payments will not be fully taxable for a few years.
4. When one is retired, is it not allowed to earn extra money?
The additional earnings limits are also interesting because they are not transparent for many retirees. Anyone who draws their regular old-age pension can earn an unlimited amount in addition to paying the pension. The payment will then not be reduced. However, anyone who receives an early retirement pension and has not yet reached the standard retirement age should know the limits for additional earnings. Since July 2017, pensioners in early retirement have been able to earn up to 6,300 euros. If the additional earnings are higher, the excess amount of 40 percent will be offset against the pension payment.
Conclusion: The variety of variants requires careful examination
The regular retirement age will rise step by step in Germany over the next few years 67 years increased. Those who want to retire earlier must meet certain requirements. This includes a duration of Contribution payment of 45 yearsif you don't want to accept any discounts on pension benefits. Anyone who has paid pension contributions for less than 45 years and still wants to retire must have one for each month of early retirement Discount of 0.3 percent accept. Stopping work a year earlier is then accompanied by a discount of 3.6 percent. However, there are options for retirees to get something To earn extra money. If certain limits are not exceeded, there will be no credit towards the pension amount. Notwithstanding this, finance and insurance experts regularly recommend taking out one private retirement provision, because the benefits of the statutory pension insurance are lower than the usual net income. If you want to know when you can retire at the earliest and how much your pension will then be paid, you should get one Consultation appointment with the German pension insurance agree and get all the important information there.
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