Posted 16 March I got a letter from DRV. I can pay some thousands of € to increase my monthly pension which was reduced because I claimed early. A rough calculation suggests I would get the money back in 20+ years. But, pensions keep going up, so the extra 3.6% per year will be more in cash terms. But, nobody knows. My instinct is to pay for the extra, somehow feels better to get more each month than to have cash in the bank. What would others do? 0 Share this post Link to post Share on other sites
Posted 16 March You do understand that you will have to tax that pension? And pay public health insurance (in 2023: 7.3% + half the Zusatzbeitrag of your public health insurance, let's assume that is 0.8%) and public nursing insurance (in 2023: 3.05% if you ever had a child, otherwise 3.4%) on it? And that these percentages will go up in the future? You would not have to pay tax on your own money in the bank, nor have to pay 11.15% (11.5% if you never had a child) public health&nursing insurance on it... I once did a calculation comparing all options for someone in the family and the optimum result was taking the pension as early as possible and not paying in anything extra to get the pension raised back to the level it would have been if she hadn't retired early. And being female, she would have had a few additional years of drawing that pension over a male like you. For example, if you're now 63, as a male your average life expectancy is another 19.32 years, as a female it would have been another 22.78 years: https://www.sis-verlag.de/archiv/andere-sonstige-steuerarten/verwaltungsanweisungen/7430-bmf-bewertung-einer-lebenslaenglichen-nutzung-oder-leistung-vervielfaeltiger-fuer-bewertungsstichtage-ab-1-januar 7 Share this post Link to post Share on other sites
Posted 17 March I think the general consensus was that paying voluntary contributions to the DRV very rarely makes financial sense, unless you need to hit a minimum contribution record or something like that. 1 Share this post Link to post Share on other sites
Posted 17 March Predictions can be troublesome, especially when thinking about the future. I wonder what advice was given twenty years ago, if it turned out to be true. 0 Share this post Link to post Share on other sites
Posted 17 March I did a much less scientific calculation the PandaMunich as I am not resident, so have to worry only about tax and inflation, not health insurance, but I came to the same conclusion - take the pension as soon as possible and don't pay anything to DRV voluntarily. Neither for added years, not to buy-out the actuarial reduction. 2 Share this post Link to post Share on other sites
Posted 17 March 12 hours ago, Fietsrad said: My instinct is to pay for the extra, somehow feels better to get more each month than to have cash in the bank. Who gets it if you pop your clogs? 3 Share this post Link to post Share on other sites
Posted 17 March The problem is, you have to compare it to the alternatives, my company has changed my pension system voluntary contributions to the company pension. In the past I would get 1000 Euro out per month for every 175, 000 I put in (and the company would match what I put in as well), as an annuity, so I would need 13 years just to get the money out I put in. So if I retire at 67 plus 13 years takes it to 80 years, odds are I might get there. Now the system changed, I would get out 1000 Euro;s a month for 260,000 Euro's I have in the pension ( and the company does not contribute anymore), so 67 plus now 21 years to get the money, means I have to live to 87!, so little chance to get my money out before I die. I noticed that a lot of pension companies are offering 260 these days. Sure you can just put the money in a bank instead, but generally interest rates are lower than inflation, so the buying power of your money goes down hill each year Or your can put your money on the stock market and get better rates of return, but you have to be careful, `because the stock market can crash, and if you buy at the wrong time, you could be out of pocket. You should try pulling large amounts cash out and put it in a bank a few yeas before you start retirement. Just play lotto with your savings, only joking. Basically pensions are getting worse over time, but they do ( mostly ) offer a guaranteed amount of money for the rest of your life, which is nice to have. at least in Germany. For me I try to get a mix, of pensions and stock market investments and cash savings. yes DRV/other pensions are not good investments, but you are guaranteed a monthly income for the rest of your life, which will increase in value over time, and that feeling of security is worth money as well. I just do not know how the younger people joining my company will survive when they retire, with very high property prices in Munich, most will have to rent for life, and have a small pension at the end of it, and my company it a high tech company with well payed jobs. 2 Share this post Link to post Share on other sites
Posted 17 March All interesting thoughts but the question here is whether it is worth buying out the 0.3% per month reduction if you take your pension early. That reduction is calculated on average lifespans to reflect the fact that you will be drawing the pension for longer, so all you are doing is paying a shedload of money now to buy out that calculation in the hope that you will beat the odds and live longer than Mr or Mrs average. Personal choice at the end of the day but given my family history, only one close relative has made it that far, even if you look back 4 generations... Gulp. 2 Share this post Link to post Share on other sites
Posted 17 March 1 hour ago, fraufruit said: Who gets it if you pop your clogs? Not decided yet, any suggestions?😉 I have no close family, so rather than dying and leaving lots of money I wonder if it would be best to put all or most of my savings in a pension so I get more each month, and less or none is left when I die. 0 Share this post Link to post Share on other sites
Posted 17 March That sounds counter-productive. If it is in the bank you can use it for whatever, whenever. If you stick it all in a pension, you may or may not get tax relief on all of that lumpsum investment but it is then locked away and drip-fed back to you. Personally, if my pensions were going to pay enough for day-to-day living, I would keep the savings in a variety of accessible v less accessible pots. 2 Share this post Link to post Share on other sites
Posted 17 March I would say invest it and enjoy the dividends. Then leave the rest to me. 2 Share this post Link to post Share on other sites
Posted 17 March I think this is a personal decision based on what you want, there are no right and wrong choice here. I heard to buy and extra point in Germany will cost around 8000 Euro, sure you will get more money per month out of it, but its really up to you to decade if you need it, based on your current health and how long you think you may live and what quality of life you want. One other thing that you might consider, is take that 8000 Euro and spend it on something you would enjoy, maybe a round the world trip ???, maybe that would be worth something to you. Sorry but lets face it you are going to die one day, so if you get enough money per month now, maybe its better to spend any extra money on something you might enjoy, rather than increase your pensions, which may not make you any more happy. We all face these questions one day 1 Share this post Link to post Share on other sites
Posted 17 March 6 minutes ago, fraufruit said: I would say invest it and enjoy the dividends. Then leave the rest to me. I have to disagree it should be left to me 2 Share this post Link to post Share on other sites
Posted 17 March If you live in a high rent, high occupancy area, instead of leaving cash with a bank, consider buying a flat to rent out. 1 Share this post Link to post Share on other sites
Posted 17 March 8 hours ago, HH_Sailor said: If you live in a high rent, high occupancy area, instead of leaving cash with a bank, consider buying a flat to rent out. I live in a low-rent area fortunately. Buy to rent makes work with troublesome tenants, maintenance etc. I guess I have enough money already. Perhaps upping my German pension would motivate me to live longer. 0 Share this post Link to post Share on other sites
Posted 17 March 8 hours ago, yesterday said: I think this is a personal decision based on what you want, there are no right and wrong choice here. I heard to buy and extra point in Germany will cost around 8000 Euro, sure you will get more money per month out of it, but its really up to you to decade if you need it, based on your current health and how long you think you may live and what quality of life you want. One other thing that you might consider, is take that 8000 Euro and spend it on something you would enjoy, maybe a round the world trip ???, maybe that would be worth something to you. Sorry but lets face it you are going to die one day, so if you get enough money per month now, maybe its better to spend any extra money on something you might enjoy, rather than increase your pensions, which may not make you any more happy. We all face these questions one day World trip, maybe to Trumpland? I was wondering about buying a camper van for more than eight grand. It is quite a big vehicle, but inside there is not so much room. Just read an article in Stern about a trip in one, the author was surprised that he had to empty the toilet himself😉 0 Share this post Link to post Share on other sites
Posted 17 March 1 hour ago, Fietsrad said: World trip, maybe to Trumpland? I was wondering about buying a camper van for more than eight grand. It is quite a big vehicle, but inside there is not so much room. Just read an article in Stern about a trip in one, the author was surprised that he had to empty the toilet himself😉 This sounds like a really good idea, get a camper van, go see many places, empty the toilet yourself !, but seriously if you got enough money to live now, why get more, just spend the rest of the money on enjoying yourself, I never heard anybody on their death bed saying, I wish I had not gone on all those holidays Life is not all about collecting money all the time, get it spent and enjoy doing it !! Remember if you are going to Trumpland, you need to leave me all your money before you set off .... 1 Share this post Link to post Share on other sites
Posted 23 April Spoke to the DRV hotline service. "I guess the payment has gone down in the months since I got the Info", I said. "No, the price of a Rentenpunkt has gone up!" 0 Share this post Link to post Share on other sites
