How to Bridge the Pension Gap Before It’s Too Late
Many workers face a growing gap between their future pension and the income they’ll need in retirement. The statutory pension now covers only around half of a person’s final net earnings. Without extra savings, filling this shortfall will become harder as demographic shifts put further pressure on the system.
Experts recommend planning early to avoid financial struggles later. Online tools can help estimate the gap, while different savings options offer ways to build additional income for old age.
The first step in addressing the pension gap is calculating how much extra income will be needed. This involves comparing the desired net retirement income with the expected statutory pension. Online calculators simplify the process by factoring in gross earnings, planned retirement age, and economic forecasts.
Once the gap is identified, savers can target it with specific strategies. The Riester-Rente provides state support, including a basic annual allowance of €175 since 2018 and tax deductions of up to €2,100 per year. It guarantees minimum returns and works well for families, as additional child allowances are available. For those seeking higher growth potential, fund-linked Riester insurance blends capital protection with investments in ETFs, offering diversified asset allocation.
Self-employed individuals often turn to the Rürup-Rente, which allows significant tax deductions—up to €29,344 for singles by 2025. This option is tailored to those without access to employer-based pension schemes. Another long-term approach is ETF savings, where low-cost index funds steadily build wealth over time.
Demographic changes and funding pressures mean statutory pensions may shrink further. Without additional savings, many will struggle to maintain their living standards in retirement. Starting early and choosing the right mix of options can help close the gap effectively.
The pension gap is a real challenge, with statutory payments covering less than before. Calculators and tailored savings plans—like Riester, Rürup, or ETFs—provide practical ways to prepare. Those who act now can secure a more stable financial future in retirement.
