Your state pension covers less than half your earnings – discover today how big your retirement gap really is!
A financially secure retirement is a wish shared by many. However, reality often looks different, as the statutory pension alone is not enough for most people to maintain their accustomed standard of living. The resulting retirement gap – the difference between income during your working life and the income available in retirement – is easily underestimated. This effect is exacerbated by demographic change: the population is aging while the birth rate is declining, putting additional pressure on pension financing, as figures from the Federal Statistical Office demonstrate.
Understanding the Retirement Gap: More Than Just a Shortfall
What exactly is the retirement gap? Simply put, it’s the money you will be short of in old age to maintain your standard of living. It’s the difference between your desired pension and the actual net pension you can expect from the statutory pension insurance. This gap arises for several reasons. Firstly, the statutory pension typically covers only a portion of your previous net income. Secondly, inflation and rising living costs erode the purchasing power of your money over the years. What is sufficient today may not be enough in 20 or 30 years. The consequence: relying solely on the statutory pension risks drastic expense cuts in retirement, which is far from a worry-free old age. Recognizing the actual size of this gap is the crucial first step towards making additional provisions and closing it with supplementary funds.
Your Path to Financial Clarity: Calculating Your Retirement Gap
To determine your personal retirement gap, it’s essential to look at your projected pension benefits and your planned expenses in retirement. You can find your estimated statutory pension in your “Renteninformation,” a document regularly sent to you by the German Pension Insurance. Compare this estimate with your planned monthly expenses in retirement. Consider not only basic needs but also expenses for hobbies, travel, or unexpected costs. To simplify this calculation and provide a concrete assessment, an online retirement gap calculator is available. This tool helps you consider various factors and arrive at a specific number for your retirement gap. For example: If your desired pension is a certain net amount per month, but your statutory pension is a lower amount, a monthly retirement gap of €700 can arise.
Once you know your retirement gap, the question arises: How do I close it? There are various strategies. Private pension plans such as Riester or Rürup pension insurance, unit-linked pension insurance, or occupational pension schemes (bAV) are common ways to reduce the retirement gap. These products offer the opportunity to build capital in addition to the state system. The amount of your monthly savings is crucial. A common recommendation is to invest 15 percent of your net income each month for retirement. However, if you start saving later, for instance, at age 40 or even later, you should increase this amount to 20 percent to reach the same target sum. An important aspect of investing is considering inflation. With an inflation calculator, you can estimate how the devaluation of money affects your savings. The choice of the right investment depends on your individual risk tolerance and investment horizon. Resources like extraETF, Finanzfluss, or Finanztip offer valuable information and comparisons.
Planning your retirement is not a one-time event but an ongoing process. Create a personal financial plan that outlines your current situation, your goals, and the necessary steps to close your retirement gap. Regularly review whether your strategy still aligns with your life circumstances and if you are on the right track. Utilize the various calculators and information resources to support your decisions. Remember that starting early and saving consistently are key to a financially secure retirement. Start today by understanding your retirement gap and actively working to close it.
Try it yourself: Pension Gap Calculator
Sources
- Rentenlückenrechner: Rentenlücke berechnen
- Rentenlücke berechnen mit dem Rentenlückenrechner der R+V
- Rentenlücke berechnen: Lücke zur Wunschrente ermitteln - Finanzfluss
- Rentenlücke: Jetzt Versorgungslücke berechnen - Volksbanken Raiffeisenbanken
- Rentenlücke berechnen: So viel brauchst Du im Alter
- Rentenlücke ermitteln in zwei Schritten - ING