For some people, the statutory pension is barely enough to live on. But when other income is added, for example from one’s own pension or from a spouse, the income of pensioners is significantly higher – not to mention assets.
One in four pensioners recently received a retirement pension of less than 1,000 euros net per month. Looking at women alone, the proportion was over a third, as the Federal Statistical Office calculated. It is hardly surprising that there is a great concern about poverty in old age: according to a recent survey by the Allensbach Institute, a good 40 percent of Germans with a medium socio-economic status consider their previous efforts to provide for old age to be insufficient, and those with a high status still almost do so 28 percent. But although the statutory pension makes up the largest part of the income of old-age pensioners, it is by no means the only one.
In addition to savings or stock ownership, many older people live in their own homes. According to the Federal Institute for Population Research (BIB), seven out of ten older married couples and half of single people own their own home – which is of course much more common in rural regions than in cities. Once the house or apartment is paid off, there are fewer ongoing monthly costs, not to mention the value of the property itself.
Above all, however, a large proportion of older people not only receive a statutory pension, but also additional income from private or company pension schemes or other income. A third of men aged 65 and over received a company pension in 2019, and half earned additional income from private pension insurance or from employment. A quarter of the women in this age group received a company pension and 43 percent received additional income. The latter can also come from rentals or interest, for example. For many pensioners in particular, their husbands’ income is also crucial.
Every fourth woman over 65 receives 300 to 600 euros
The average retirement age was recently 64.4 years. The statutory pension continues to be the most important source of income for older people; 88 percent of men over 65 years of age received this according to BIB 2019. For women it was even 92 percent due to widow’s pensions. In 2020, male recipients received an average statutory pension of 1,430 euros gross per month, and female recipients received 1,110 euros. On average, women pay less into pension insurance, work part-time more often and earn less. Almost a quarter of them therefore only received a statutory pension of between 300 and 600 euros, 600 and 900 euros and 900 to 1200 euros after deducting health and nursing care insurance contributions. Only one in six received more than 1,200 euros – while for men, significantly more than half, one in six received more than 1,800 euros.
Pensioners and retired freelancers, such as former doctors or lawyers, received significantly higher amounts from their pension systems: retired male civil servants, for example, received an average of almost 3,300 euros. However, only a fraction of this flowed from farmers’ pension schemes: men received an average of just under 500 euros.
Across all professional groups and forms of pension provision, the pensioner generation received an average gross income of 1,870 euros, including private pension provision and earned income – men aged 65 and over 2,300 euros, women 1,530 euros. The number of people in employment beyond the normal retirement age has increased significantly in recent years; according to the Federal Statistical Office, almost one in five people aged 65 to 69 were still working in 2022. For the most part, this is additional income, but almost 41 percent of those in employment between the ages of 65 and under 75 used it primarily to earn a living in 2021.
Older married couples earn an average of 2,900 euros net
In 2019, a company pension brought pensioners an additional 660 euros gross per month, and female pensioners 330 euros. Additional income, such as from employment or private pension provision, meant an average plus of 830 euros gross for men aged 65 and over and 540 euros for women.
The overall lower income of pensioners is partly compensated for by their husbands. Married couples in this age group achieved an average net household income of 2,910 euros – more than a third earned over 3,000 euros together, around a fifth each between 2,500 and 3,000 euros and 2,000 to 2,500 euros. However, at least nine percent of older couples received less than 1,500 euros. Of the single people, one in six had to get by on less than 1,000 euros net, as did a quarter of the men and a third of the women on 1,000 to 1,500 euros. Only around three percent of people over 64 are dependent on basic security in old age; in 2021, according to the Federal Statistical Office, that was 589,000 people.
Income in old age depends heavily on your previous salary – those who earn less in their working life pay less into pension provision. According to the Ministry of Labor, more than half of the 25 to under 65-year-olds who earn less than 1,500 euros gross had no additional retirement provision in the form of company or Riester pension insurance in 2019. The latter were just as common as among higher earners, but company pension provision clearly depends on salary. If the monthly gross wage is between 3,500 and 4,500 euros, three quarters make additional provisions, and if the salary is higher, as much as 85 percent.
Anyone who has paid into statutory insurance for at least five years receives a statutory pension. The fewer years of employment, the lower the future pension. According to the Ministry of Labor in 2021, after 45 years of contributions, the average pension was just under 1,500 euros after deducting health and nursing care insurance contributions, after 25 years it was less than 900 euros, and after less than 15 years it was only a good 300 euros.
However, pensioners with short contribution periods sometimes have high other retirement incomes, for example if they became civil servants during their working life or made appropriate provisions as self-employed people. This is also shown by the comparison of the pension and income of married couples aged 65 and over: the lower the statutory pension, the higher the household income, as figures from the Ministry of Labor show. The ministry emphasizes that small pension amounts in particular are often supplemented by payments from other pension systems, additional income or the income of the spouse. An impressive example is the proverbial dentist’s wife, who may receive a very low statutory pension because she was not dependent on her own high income from work.
Your own precautions are becoming more important
Since politicians decided to spread retirement provision more widely across several pillars than just statutory pension insurance, the population has been asked to make additional provisions themselves. As a result, private and company pension provision must continue to increase. According to the Ministry of Labor, the amount of company pensions increased significantly between 2003 and 2019, to an average of almost 730 euros gross for men, as well as almost 290 euros for women’s own pensions and 390 euros for widows. According to the insurance industry, the number of pension insurance contracts has more than doubled during the period, most recently the number was 46 million – which, however, cannot be equated with the number of insured people, as one person can take out several contracts.
But the momentum slowed, as the ministry explains: The increase in company pension schemes occurred primarily in the years 2001 to 2005. From the end of 2013 to 2021, the number of entitlements only increased from 20.1 million to 21 ,2 million. The proportion of employees subject to social insurance contributions with a company pension scheme even fell from a good 56 to just under 54 percent between 2015 and 2019. The rate was already almost 49 percent in 2001.
In addition, the number of life insurance policies, another option for retirement provision, has fallen significantly since 2005, according to industry figures. Owning your own home is also likely to be less of a precautionary option for future generations of pensioners than before. In addition, the proportion of the statutory pension on which taxes are due is growing; By 2040, pensions will be completely taxable.
Mining jobs ensure high average pensions in Saarland
There are also such big regional differences, especially between East and West Germany, that the average values only serve as a rough guide. According to BIB 2020, pensioners in Saarland, where many men used to work in well-paid mining jobs, received an average statutory old-age pension of almost 1,470 euros. At the same time, female pensioners in Saarland were at the bottom of the range of regional differences with a good 640 euros. Brandenburg women received the highest statutory pension among women at 1,085 euros. Among men, Berliners took last place with just under 1,230 euros.
Today’s generation of pensioners is, at least on average, much better off than is often perceived. However, this does not change the fact that a not insignificant group will have to make a living with a low income, even in the future, especially since this Pension levels are likely to fall further. Low-income earners in particular are less able to make additional provisions.
The large gender differences to date should serve as a warning to women: the gap to men when it comes to their own statutory pension is narrowing, but the divorce rate was recently still at 35 percent. A good salary is the best security for old age – for both genders.