Why is there old-age poverty in Germany?
Old-age poverty in Germany is steadily increasing and, according to the Federal Statistical Office, it is predominantly women of retirement age who are affected by the risk of poverty. It is striking that such a development can be observed not only in Germany but in the entire EU region. In this article we look at the causes of poverty in old age in Germany and why it is primarily women who are affected.
Which groups are affected by old-age poverty?
Numerous statistics show that some groups are more affected by poverty in old age than others. The poor income situation is particularly noticeable among the following groups:
- Women
- East Germans
- Long-term unemployed
- People without vocational training
Since pensions are calculated on the basis of the contributions paid in, these four groups are particularly conspicuous, along with people who fall into the low-wage sector despite having full-time jobs. While today about 15% of pensioners are affected by old-age poverty, more than 5% are even entitled to basic security from the state. According to statistics, these figures will rise rapidly from 2022 onwards. This is because the last representatives of the "baby boom generation" will retire in that year. From then on, there will be fewer and fewer working people for more and more pensioners, so that increasing problems with pension levels are to be expected.
de will, also and especially when the demands and expectations on the garden have changed?
Why women are affected
A large proportion of women put their careers behind starting a family. This results in absences due to pregnancy, childbirth and raising children. These absences are currently estimated at a flat rate of 3 years and are partially compensated by pension insurance. Nevertheless, it is overlooked that even after starting kindergarten, the children have to be cared for and the household has to be taken care of. For this reason, many women work part-time and continue to take care of the household and raise the children. Men do not have this problem - the absences mentioned due to child-rearing and around the birth are missing. As a result, men pay more into the statutory pension, which ultimately has a positive effect on their pension. Another point in favour of higher pensions for men is the fact that even today men often earn more than women.
Why East Germans are affected
Until the end of the 1980s, Germany was divided and the effects of this dichotomy can still be felt today: even today, people in East Germany sometimes earn less for the same work as in West Germany. This long-standing injustice has its effects on pensions, because East Germans have paid less into the pension fund on average and therefore currently receive less pension.
Why the long-term unemployed are affected
When people are unemployed, the state steps in and guarantees them a certain monthly benefit, but this is usually far below the average wage. Consequently, the pension contributions paid are also very low. If such low contributions are paid over several years or even decades, this has fatal effects on pension development. Most of the long-term unemployed are dependent on a basic state pension to make ends meet.
Why people without vocational training are affected
As already mentioned, the monthly salary and the contributions paid with it have a direct impact on the amount of the future pension. Since people without vocational training earn less on average than those who have completed vocational training or a degree, they are also affected by old-age poverty much more often.
What to do against old-age poverty - ideas of the state
For years, the government has been advising people to take out additional private insurance in order to be able to treat themselves to something in retirement and not have to forego any luxuries. Some programmes, such as the Riester pension, are additionally supported by the state.
With the Riester pension, the insured person saves at least 4% of their monthly income in a special account. They receive annual payments from the state. The savings can then be paid out as a lump sum or as an annuity when the insured person reaches retirement age. There are some special features of the Riester pension, which we will discuss in more detail elsewhere.
There are also numerous other programmes designed to help people save capital. For low-income earners, for example, there has been the Baukindergeld since 2018. If all requirements are met, a family receives 1,200 euros per child per year for 10 years. The family income must not exceed €75,000 per year, with an allowance of €15,000 per child.
For entrepreneurs, there is the possibility of securing themselves with a Rürup pension. This is intended to be an alternative to the Riester pension and is primarily suitable for the self-employed. We also deal with this form of pension in a separate article.
Tips for implementation:
Since it has long been known that the state will not be able to finance an adequate pension for us in the future, it is important to provide for ourselves. There are many options, the risks and advantages of which should be weighed up for the individual.
For example, it may well be worthwhile to take advantage of one of the state programmes (see Riester pension). On the other hand, it is important to determine one's needs beforehand to find out if there are no better alternatives.
The purchase of a property is also very worthwhile in most cases - for own use as well as an investment. It is worthwhile to compare different programmes for this purpose, because in addition to the "Baukindergeld" for low-income earners, there are also numerous other options. Landesbanken, for example, often offer their own alternatives to make the purchase or construction of real estate financially easier.
For people who are willing to take risks, investments in securities accounts or funds could also be interesting. However, such investments should not be chosen by laymen - it is advisable to seek help from an expert in this regard.
Conclusion:
Old-age poverty is an undisputed phenomenon that will increasingly occur in Germany. Nevertheless, it is possible and advisable to take out comprehensive insurance against it.
