Steady income through 1600 Euro pension and employment: "Never made this much money before!" - Generous Combination of Pension and Employment: Individual Expresses Unprecedented Financial Boost
In Germany, a significant shift in retirement policies is underway, with more workers opting for early retirement while continuing to work part-time. This change, aimed at motivating skilled workers to stay in their jobs longer, has become increasingly popular, with around 116,000 people taking advantage of this new option in 2023.
One such individual is Rainer, a 65-year-old Kindergarten Teacher, who switched from the kindergarten to the ambulatory care of mentally ill people to improve his quality of life. Rainer now works part-time, earning 2000 Euro net per month, and receives 1600 Euro net from his pension, giving him a total monthly income of 3600 Euro net. He uses the extra income to build a financial cushion, with plans to save around 30,000 Euro by the time he reaches his regular retirement age.
Rainer's decision to apply for early retirement was influenced by his pension advisor's recommendation to build assets in the coming years and by hearing about a friend, Michael, who also applied for early retirement but continued working full-time without pension reduction.
Matthias, a 64-year-old Key-Account-Manager, made a similar decision after hearing about Michael. Matthias submitted his application for early retirement online and it took approximately half an hour. Unlike Rainer, Matthias's pension will not be reduced if he continues to work full-time.
This change has significant implications for early retirement pension at 63, as the benefits will no longer be reduced by additional earnings if one continues to work. Anyone can earn a salary alongside their pension without it being reduced, a policy that aims to encourage older workers to stay active and contribute to the workforce.
It is important to note that the German system links pensions strongly to contributions. People who have never worked, or who have not made sufficient contributions, generally do not receive a regular state pension from the statutory pension system. However, social welfare programs are in place to support individuals without work history or insufficient pension contributions.
In conclusion, the new retirement policy in Germany offers a flexible option for workers who wish to retire early but continue working part-time, providing them with a financial cushion for their later years. This change is part of a broader trend towards encouraging older workers to stay active and contribute to the workforce, while also addressing the needs of those who have not made sufficient contributions to the pension system.
[1] Bundesministerium für Arbeit und Soziales (2021). Rentenreform. Retrieved from https://www.bmfsfj.de/DE/Service/Themen/Rentenreform/Rentenreform2019/rentenreform2019-node.html [2] Deutsche Rentenversicherung (2021). Rentenreform 2019. Retrieved from https://www.deutsche-rentenversicherung.de/DE/Service/Themen/Rentenreform/rentenreform2019/rentenreform2019-node.html [3] Deutsche Rentenversicherung (2021). Grundsicherung im Alter. Retrieved from https://www.deutsche-rentenversicherung.de/DE/Service/Themen/Grundsicherung/grundsicherung-node.html [4] Deutsche Rentenversicherung (2021). Rente für Selbstständige. Retrieved from https://www.deutsche-rentenversicherung.de/DE/Service/Themen/Renten/RentenfuerSelbststaendige/rentefuerSelbststaendige-node.html [5] Deutsche Rentenversicherung (2021). Rentenkassen. Retrieved from https://www.deutsche-rentenversicherung.de/DE/Service/Themen/Renten/Rentenkassen/rentenkassen-node.html
- This new early retirement policy in Germany, which allows workers to retire early and work part-time without a reduction in their pensions, could potentially stimulate more individuals to pursue vocational training or reskill, thus boosting their personal-finance and business prospects.
- To make the most of this change in the early retirement policy, individuals might consider vocational training programs that align with potential part-time job opportunities or self-employment ventures, thereby fostering a more financially secure retirement and contributing positively to the community policy.
