22.04.2021 Sabrina Ludwig 7380

Pension provision: Don't fall into the pension trap

What is the best way to invest money for old age? What can women do today? Tips and tricks from Dani Parthum, money coach and financial blogger.

It is degrading. There is a lot in this sentence - sadness, anger, even a hint of bewilderment. It was uttered by an older participant in my finance courses. What is degrading? Her statutory pension entitlements and what she has saved up on the side.

In her mid-50s, she took her time for the first time to think about how she would live when she was no longer working. She studied, had an unsteady working life, got married, raised two children, worked part-time for a long time because of the children, worked mainly as a freelancer and now has her own practice. Her own assets are low, her statutory pension entitlements are low. She won't be able to live on them in old age. She finds that degrading. And it is.

Don't fall into the pension trap (as a woman)

The financial reality of women of retirement age is very clearly reflected in the statistical data of the statutory pension insurance scheme. In the old federal states, the average pension entitlement of women is only 60 percent of that of men. In the new federal states, the ratio is somewhat better. Here, women's pension entitlement is 82% of that of men.

700 euros pension on average

In absolute figures, this means that a pensioner in the old federal states receives an average monthly statutory pension of 700 euros, while a pensioner receives 1,169 euros. In the east, the average pensioner receives 1,033 euros and the average pensioner 1,264 euros.

These figures are sobering. The level of pensions for women in particular is staggering. In the best-case scenario, the low statutory pension entitlements may be supplemented by a company pension scheme or private pension insurance and assets saved, possibly from freelance work. But that is not certain. And it is also not certain that this together is sufficient.

How much pension will I get in old age?

One thing is certain: anyone who is employed and relies exclusively on the statutory pension - even if they work full-time all the time - will have to make some significant cutbacks in old age.

To put it simply, the amount that will be transferred to your account as a pension will most likely be less than half of your current monthly net income . Can you manage with that? With less than half a month's income?

The situation is particularly drastic for women when they become mothers. The majority of women end their own employment in favor of their child and husband and work part-time for many years without having negotiated financial compensation with their partner to build up additional pension provision. As a result, however, few pension points and pension entitlements are accumulated, which leads to pensions such as those described above. Pensions that are not enough to live on.

The 700 euro pension mentioned is also only an average pension. Many women receive far less, and only some receive significantly more. Women who cannot live on their own pension become financially dependent - on their partner or the state.

Where does my money actually come from?

Of course, women and men also share assets such as their own home, property rented out to third parties, share packages or financial assets and, in the best case, can expect payments from life insurance policies. But this is not recorded statistically.

So how do you live when you are no longer employed - or can no longer be? Do you know where the money for your life will come from? As an individual and as a couple? And are you satisfied with it?

If not, clarify it. It's best to start today.

5 tips for better retirement provision

1. Recognize that money is an important resource in life and take care of your money. Don't think: Oh, it will work out somehow. It won't.

2. Write down all your pension entitlements to date on a sheet of paper - from statutory pension insurance, occupational pensions and private life and pension insurance policies.

3. Also write down other monthly income, e.g. from renting out an apartment.

4. Calculate the possible monthly pension from all your entitlements and income. As a total amount. Compare this amount with your currently available monthly income.

This is the only way to see what you have. And what is still missing - roughly speaking. (A little more is needed to calculate the actual pension gap). 

Which brings you to the next important consideration and point 5:

5 What do I need as a pension? What money will I need in old age?

Don't push these thoughts away with the motto: "Oh money, it's not that important. It'll work out somehow. It won't somehow. Money is important. Only those who accept and acknowledge this for themselves will start to take care of it. And only those who take care of their money and act accordingly will have enough in old age.

Dani Parthum is an economist, certified financial investment specialist, money coach and business journalist. She also works as a reporter for NDR, WDR and ZDF, covering money, rating agencies and government debt. She shares her knowledge on her financial blog for women: www.geldfrau.de/blog-frauen-geld (Link opens in a new window)

Calculate your pension with the online calculator!

Calculate your pension easily with the online calculator from Deutsche Rentenversicherung and find out when you can retire: Online pension calculator (Link opens in a new window)

Income and budget advice for employees

Whether divorce or illness: when life circumstances change, this usually also affects the financial situation. What should you do if you are over-indebted, for example?

Over-indebted employees are often absent, lack concentration and can become a safety risk for your company.

We provide advice on income and budget issues to employees who have lost track of their finances and those who want to make more of their income. Further information on our life coaching service.
 

Contact:
Regina Benzinger
E-mail: regina.benzinger@familienservice.de