The pension in Germany is 200 euros higher, and not many would refuse such an opportunity. Each year, the German Pension Insurance will inform everyone about the expected pension amount through a letter. Additionally, individuals can also view their pension notification through the "My Customer Portal" of the German Pension Insurance.
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The pension gap may turn out to be larger than expected, but countermeasures can be taken. There are specific options available for this.
Increasing the German pension by 200 Euros: How to achieve it
The simplest and most logical option is to purchase pension points.
For example, if the projected pension is 1500 euros but falls short of covering rent, insurance, and additional expenses amounting to 1700 euros, voluntarily contributing 42,683 euros to the pension fund is necessary.
- Currently, one pension point corresponds to a monthly pension of 37.60 euros.
- The cost of one pension point is 8,024 euros.
- With 42,683 euros, you can acquire 5.31 pension points.
This means that transitioning to the standard old-age pension now allows for an expected pension of 1700 euros. This approach enables achieving the desired retirement pension.
If there is a desire to forgo voluntary contributions to pension insurance and offset the pension deficit through an ETF savings plan, the same amount of money can be invested. That is, 42,683 euros in ETFs (exchange-traded funds).
For instance, if choosing an ETF that tracks the leading American index S&P 500, it historically yielded an average annual return of nine percent.
In 15 years, when retirement is planned, the portfolio's value ideally reaches around 155,472 euros.
Administrative expenses of 0.07 to 0.2 percent annually should be considered, which, in the worst case, reduces the profit by approximately 5000 euros.
Now, one can flexibly withdraw 200 euros from their ETF portfolio each month and increase their pension from 1500 euros to 1700 euros.
Everyone can choose the most suitable way to increase their pension. It is essential to note that purchasing pension points is a lifelong guarantee, while the ETF balance will be depleted over time.
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In the context of retirement planning, increasing your pension beyond the projected amount can be achieved by either purchasing pension points or investing in an ETF savings plan. If you opt for pension points, voluntarily contributing 42,683 euros to the pension fund allows you to acquire 5.31 additional pension points, thereby increasing your expected retirement pension from 1500 euros to 1700 euros. On the other hand, investing the same amount of money in ETFs can provide you with a flexible way to withdraw 200 euros each month and enhance your pension.
