This step-by-step guide reveals how to get the most out of your statutory pension, a tip shared by an independent pension advisor from Versicherungen mit Kopf.
99.9% of people are unaware of this strategy, so stick around until the end to learn how to maximize your pension 100% legally.
This trick has been possible since January 1, 2023.
Since then, the earnings limit for the old-age pension has been completely abolished.
This means you can receive an old-age pension while continuing to work, and your work income will not be reduced.
Understanding the New Pension Rules
You might think this means I want you to keep working beyond your regular retirement age, typically 67. Retirement at 70, perhaps? While that’s possible, it’s not the trick I’m talking about here.
Yes, for this strategy, you should work until 67 instead of retiring early. But you will build your retirement smartly.
The Clever Retirement Strategy
Here’s how it works…
If you’ve met the 35-year waiting period, you can retire at 63 with a 14.4% deduction to your pension.
Here’s the clever part: at 63, you start receiving your pension but don’t actually retire. You continue to work.
The crucial point is that you need a well-paid job, even as a “pensioner.” This strategy doesn’t make sense if your new job pays significantly less than your old one or if you can’t get a new job at all.
But who says you have to change jobs for this plan? No one. Most employment contracts end when you reach the regular retirement age, usually 67.
By talking to your employer, in most cases, you can continue working there despite drawing your pension.
Reaping the Benefits
Here’s what happens: you receive your old-age pension, albeit with a 14.4% deduction, starting at 63, and you continue working, earning your full salary. Plus, you keep accumulating pension points, which will increase your pension when you reach the regular retirement age.
This approach is often much more lucrative than simply working until 67.
Although you will still have a deduction of around 6% when you turn 67, thanks to the additional pension points earned over the four years, the deduction is significantly reduced from 14.4%.
6% is higher than no deduction at the regular retirement age of 67, but you will have received tens of thousands of euros in pension during the four years before, which more than compensates for the deduction.
Flexibility and Further Planning
If you haven’t reached the 45-year waiting period in your professional life (yes, in the German pension system, there is both a 35-year and a 45-year waiting period) and thus an early retirement without deductions at 65 is not possible, you should definitely take a closer look at this model.
You don’t necessarily have to work until 67. For example, you can start drawing your pension at 63 and only work until 65. The pension points earned in the additional two working years will still benefit you from 67 onwards.
In any case, you should discuss this approach with an independent pension advisor of your choice to get the most out of your personal pension.
And if you’ve also privately secured yourself with a cost-effective and high-yield ETF pension insurance, nothing stands in the way of a worry-free retirement.
Maximizing your pension with this strategy involves starting to receive your pension at 63, continuing to work, and accumulating additional pension points. Although there is an initial deduction, the overall financial benefits gained over the years more than make up for it.
Always consult with a pension advisor to tailor this plan to your personal situation and ensure a comfortable retirement.
Pension insurance in Germany from €50 per month
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